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Salaries gobble up Biti’s budget

Friday, 25 November 2011 10:42

Staff Writers

FINANCE minister Tendai Biti yesterday presented a $4 billion budget, most
of  which will be gobbled up by the government’s huge and unsustainable wage
bill that will take up more than 60% of the revenues. The massive imbalance
between recurrent and capital expenditures means there is less money for
investment or development spending, as most of the revenues would go towards
salaries and operating expenses.

Significant wage bill overruns relative to the budget and a large stock of
outstanding domestic payments arrears accumulated by end of 2010 were the
main sources of fiscal pressures this year. Government failed to eliminate
the fiscal gap through the removal of 75 000 ghost workers from the payroll,
reinforcing controls on employment levels, and reducing low-priority
transfers to state-owned enterprises. In all budgets since 2009, including
yesterday’s, government failed to significantly promote non-wage social and
infrastructure expenditure which is essential for sustainable, inclusive

Biti conceded yesterday the disproportionate situation between capital and
recurrent expenditures would not help economic recovery to pull the country
out of the doldrums after a decade of cumulative decline which resulted in a
meltdown and hyperinflation.

“Turning to fiscal performance, total expenditures to September 2011
reproduced the perennial challenge of disproportionate share of recurrent
expenditures at $1,68 billion, against capital expenditures of US$0,192
billion,” Biti said.

“Recurrent expenditures continue to be skewed towards employment costs,
which were originally budgeted at $1,4billion, but are now projected at
around $1,8billion or 63%of the total budget, following the salary and wage
review for civil servants effected in July 2011.”

Biti said this would translate into a $400 million expenditure overrun on
employment costs, comprising the wage bill for the civil service and
grant-aided institutions, pension entitlements and employer contributions
for medical aid and National Social Security Authority contributions.

“The bill for employment costs, which averaged $121 million per month in the
first six months, roseto the current monthlyaverage of $161 million, against
the 2011 budget provisionof around $113 million,” he said.

“Consequently, the employment cost outturn to end of September,at$1,21
billion, exceeded the target by around $193million.The above situation where
employment costs account for 63%of total expenditure and net lending,
against a budgeted ratioof 53%, is unsustainable,” Biti said. “This outcome
has consequentiallycrowded out non-wage expenditures in areas such
asinfrastructure development and social service delivery.”

Civil servants are approximately 235 000 representing 1,78% of the country’s
14 million population.
“The implication of this unsustainable equation is that government is
spending 63% of its budgetary resources on 1,78% of thepopulation, while the
remaining 98,22% have to share thebalance of 37%.”

Biti said the reality of our situation was that there has to be genuine
socialdialogue between government and its employees and the formation of a
Tripartite Negotiating Forum to craft a socialcontract that will create “a
win-win situation for all”.

The minister said further pressure on the budget has been emanating from
wasteful expenditures, including foreign and domestic travels by ministers
and other top government officials.

“Similarly, there has been increasing pressure emanating fromdomestic and
foreign travel, and other current expenditures,such as medical supplies and
services, interest on debt, rentalsand other service charges,” he said.

Of the $4 billion, $600 000 million is expected to come from the sale of
Marangediamonds. Zimbabwe is set to earn in excess of $2 billion annually in
gross revenues following the Kimberley Process Certification Scheme’s
decision to allow exports of Marange diamonds this month.

The Ministry of Education, Sport, Arts and Culture received the largest
chunk of the budget with a $707,3 million vote, while the Ministry of Higher
and Tertiary Education got $296,1 million, Health and Child welfare $345,6
million, Women’s Affairs $10 million, and the Constitutional Development
fund $10 million.

“Coming up with this budget was a daunting task given the political
environment, economic performance and the global economy,” Biti said.

The minister allocated $10, 5 million to the Ministry of Environment and
Natural Resource Management,  Home Affairs received $308 million, Defence
$318,2 million, Youth, Indigenisation and Economic Empowerment $48,2
million, Ministry of Public Service $126,3 million, Energy $49,7 million,
and Water $71,1 million.

“Careful management of the country’s balance of payments during 2012 will be
necessary, especially against a background of the anticipated adverse
effects of global economic slowdown on commodity prices, on export demand as
well as on capital flows,” he said.

Biti said this, coupled with the country’s limited options for external
revenue mobilisation in support of financing government development
programmes, makes it imperative that Zimbabwe’s fiscal stance accommodates
the rebuilding of fiscal buffers.

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Zanu PF tightens grip on the airwaves

Friday, 25 November 2011 10:34

Moses Matenga

THE Broadcasting Authority of Zimbabwe (Baz) yesterday granted two
free-to-air licences to Zimpapers and Supa Mandiwanzira’s AB Communications
in a move widely seen as a consolidation of Zanu PF’s grip on the airwaves.
Baz chairperson Tafataona Mahoso told journalists in Harare that Zimpapers’
Talk Radio and Mandiwanzira’s Zi Radio had been granted the licences ahead
of Hot Media’s Kiss FM and VOX Media’s VOX FM after scoring the highest
points in the selection process.

But media groups immediately dismissed the outcome as a farce and an
indication that government was not sincere in its pledge to open up the
Mahoso, who does not hide his disdain for the independent media, did not
field any questions from journalists during the media brief.

“On the basis of the total points scored by the applicants, AB
Communications and Zimpapers, having scored the highest number of points in
terms of the objectives of the (Broadcasting Services) Act in the selection
process, are deemed to be the winners of the two licences for the provision
of free-to-air national commercial radio broadcasting services,” Mahoso
said, amid gasps of disbelief from journalists.

The MDC formations and other political parties have complained that
Zimpapers is heavily biased toward Zanu PF.

Mandiwanzira, a former ZBC journalist and former president of the
Affirmative Action Group, has been linked to Zanu PF.

He claimed that he had turned down an invitation to stand as a Zanu PF
candidate in Nyanga in the forthcoming elections because he was not
interested in politics.

He is the biggest shareholder in Zi FM with 70% followed by Herbert Nkala
(15%), Urban Brew, a South African company (10%) and Molice Mandinyenya (5%)
making the company 90% Zimbabwean owned.

Misa-Zimbabwe chairperson Njabulo Ncube said the move was predictable adding
that the two companies awarded the licences were no different to ZBC.

“It’s tantamount to applying lipstick to a frog,” Ncube said. “It was and
still is our belief that as long as Baz is not reconstituted, Zimbabwe will
not have genuine independent broadcasters.”

Voluntary Media Council of Zimbabwe director Takura Zhangazha said as long
as the Broadcasting Services Act was in place, the airwaves would remain
closed to independent players.

“The process was not transparent and no one knows how they got to that
(decision),” said Zhangazha. “Unless and until there is a democratic
broadcasting framework, there will always be contestations and disputes on
(the) licensing process and the licensees.”

Mahoso was flanked at the media briefing by Vimbai Chivaura, his
co-presenter on the pro-Zanu PF programme National Ethos on ZTV.

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Govt tinkers with duty, tax regimes

Friday, 25 November 2011 10:29

Happiness Zengeni

GOVERNMENT yesterday introduced a raft of changes to various duty and tax
regimes in order to stimulate local production capacity on the one hand and
ensure availability of basic commodities on the other. Presenting the 2012
budget yesterday, Finance minister Tendai Biti scrapped customs duty on
selected raw materials used in local manufacturing until such time as local
production of the same improves in line with economic growth.

Biti suspended the 5% customs duty on soya meal and crude soya meal. There
is currently a national shortage of soya, with production at 20 000 tonnes
against a demand of 200 000 tonnes.

The suspension of duty is likely to reduce the price of products such
Olivine cooking oil, whose manufacturers had resorted to importing soya oil
and bottling it at a much higher cost.

The Finance minister introduced a 5% customs duty on wheat flour to enhance
the viability of the milling industry as well as encourage local production
of wheat.

He said pre-packed rice, flour and salt would be charged at between 5-15%
but bulk quantities would not be charged.
Imported fresh farm produce such as potatoes, tomatoes, onions and shallots,
cabbage, carrots, peas, beans, mushrooms and spinach would attract a 25%
duty rate, in order to promote local production.

The duty, would however be suspended during seasons when local production is
insufficient to meet demand.
Clothing manufacturers would receive duty rebate on imported raw materials
for use in the manufacture of clothing, provided that the raw materials are
not in production locally. This would take effect from January 1, 2012 and
would be extended to manufacturers registered with the National Employment

“The clothing industry provides an opportunity to grow the economy through
the resuscitation of the value chain in the production of clothing, since it
is a labour- intensive business requiring relatively little capital,” Biti

The duty rate on clothing was adjusted to 40% and an additional US$3 on any
extra kg, up from 40% and an additional US$1, 50 per kg.
The minister removed clothing from the list of items on the travelers’

However, clothing and textiles manufacturers said that the issue was not the
duty per se but that measures have to be enforced at the borders so that
there is zero tolerance of smuggling. Biti acknowledged the corruption at
border posts, including bribery of customs officials, which has led to
revenue leakages.

Biti also reduced customs duties on imported raw materials such as PVC
sheeting, PVC-coated sheeting, polyurethane sheeting, reflector materials,
tea bag paper, copper tubing, foil, waste sulphuric acid, some vegetable
saps and extracts and some cleaning substances. Duty on polyethylene
granules and sulphur was also scrapped.

Excise duty on local cigarettes was increased to US$10 for every 1000 sticks
from US$7, while imported cigarettes would be levied at 40% plus US$7 per 1
000 sticks from 40% plus US$5 with effect from December 1.

Biti said that capacity in the cigarette-manufacturing sector had increased
to 90% in 2011, with volumes rising to an estimated 1, 8 billion sticks.
However, Biti’s move was driven by the low price structure of
locally-manufactured cigarettes compared to prices obtaining in the region,
which provided an opportunity for illicit cross-border trade.

Biti also added that government is aiming at discouraging consumption of the
hazardous and addictive product, at the same time raising revenue to redress
associated social costs.

BAT has in the past said that the group makes excise gains for the first 7
months of the year but generally Zimbabwe’s excise potion at 18% was much
lower than that of South Africa at 37%.

Duty on galvanised wire, cold rolled steel coils and selected angles of iron
or non-alloy steel was reduced by half to between 5-10%.

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Legal wrangles stall Essar deal

Thursday, 24 November 2011 18:15

Paidamoyo Muzulu

ESSAR Africa’s US$750 million takeover of Ziscosteel has yet to be finalised
as three prominent individuals have lodged cases in court laying claim to
mining assets belonging to Buchwa Iron Mining Company (Bimco) which should
be transferred to Essar.
Evidence has emerged that the deal sealed in March was teetering on the
brink of collapse as the trio, with links to Zanu PF, are claiming ownership
of some of the mining claims.

Mines minister Obert Mpofu confirmed that the deal was being bogged down by
legal wrangles but insisted that it would sail through since the state owned
all minerals in the country.

“There are three claimants to part of Bimco mineral claims who have
approached the courts to stop the deal going ahead,” said Mpofu. “As a
ministry, we don’t recognise them as all minerals are reposed in the state
and no individual could have sold them the claims legally.”

Mpofu declined to divulge the names of the litigants in the case saying the
matter was before the courts.
“I cannot confirm the names of those involved since the case is before the
courts,” Mpofu said.

However, it has emerged that three individuals linked to litigation against
Bimco are Defence minister Emmerson Mnangagwa, MP Edward Chindori-Chininga
and exiled businessman Mutumwa Mawere.

Sources have revealed that the trio’s claims are significant enough to force
a renegotiation of the deal or see a complete collapse of the largest
foreign direct investment in Zimbabwe in the last decade. The trio are said
to have bought the Bimco claims from Ziscosteel between 2007 and 2009 when
the company was struggling to pay salaries to its employees numbering close
to 5 000.

“Mnangagwa and companies associated with him bought some Ziscosteel
properties, among them Redcliff Hotel and blocks of iron claims in Chivhu
area, around 2007,” a source said. “The sale was done as the company tried
to stay afloat during the hyperinflation era.”

Mawere and Chindori-Chininga are said to be involved in legal battles to
control the Bimco iron ore claims through a proxy.

“We have information to the fact that an associate of Mawere and
Chindori-Chininga is in the courts trying to block the transfer of Bimco
shares to NewZim Minerals, a successor company to Bimco, because he owns
some of the claims,” the sources said.
Mawere said he was not a litigant or party to any litigation over the Bimco

“I know the applicant Rodrick Mumbire who claims ownership of some of the
Bimco claims which are in a reserved area,” said Mawere. “Mumbire approached
us needing capital. It was in that respect that I was assisting them. The
dispute is between a company called Bearable Prospects (Pvt) Ltd whose sole
shareholder is Roderick Mumbire. Mumbire was granted rights to claims in a
reserved area in the Mwanesi Range. The claims were granted in his personal
name. He approached several parties including our company to assist in a
prospecting programme covering the claim area,” said Mawere.

Chindori-Chininga expressed shock at being linked to any mineral claims in
the country saying someone was trying to tarnish his image.

“I have no claims,” said Chindori-Chininga. “I don’t even own one mineral
claim in this country. Someone is trying to tarnish my image.”
Mnangagwa was not immediately available for comment.

Essar director Firdhose Coovadia confirmed on Tuesday that finalisation of
the deal was now behind schedule as the government had failed to deliver the
Bimco share certificates.

“The deadline for the finalisation of the deal was November 15, 2011 and we
expect to receive what government had spelt out in their tender documents,”
said Coovadia. “The deal is continuing as we trust they will deliver. There
is a legal battle between Bimco and an individual. The legal papers we have
showed that there is some clerical error or sort of irregularity over some
of the claims. These form a significant and sizeable piece of land.”

Commerce and Industry minister Welshman Ncube has admitted that the deal was
now mired in political wrangling as some quarters, particularly from Zanu
PF, were dragging their feet to finalise the matter.

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Govt set to launch National Trade Policy

Thursday, 24 November 2011 18:11

Chris Muronzi

GOVERNMENT plans to launch a National Trade Policy (NTP)to promote exports
and industrialisation of the economy through trade incentives and various
measures. According to adraft policy document crafted by the Ministry of
Industry seen by the Zimbabwe Independentthis week, the policy seeksto be a
guiding principle of future agreements between Zimbabwe and its trading
partners to ensure that the southern African country can effectively
participate in the regional and international trading environment.

The trade policy hopes to grow the country’s exports 10% annually from
US$2,5 billion in 2010 to US$4,5 billion by 2016.
The policy also seeks to promote enhanced value-addition of primary goods
while complementing the Industrial Development Policy 2011–2015through
restoring the manufacturing sector’s contribution to export earnings from
the current 16% to 50% by 2015.

Government reckons the policy will help the expansion of Zimbabwean products
into regional markets as part of a wider regional integration plan.

The policy is designed: “To give guidance on trade policy instruments such
as tariffs, non-tariff measures and trade defence mechanisms with the am of
promoting trade, protecting local industry from unfair trade practices as
well as improving access by consumers to a wider range of goods and

“Due to limited disposable incomes for domestic consumption and financial
liquidity challenges coupled with limited and costly access to capital,
internal demand for goods and services in Zimbabwe is expected to remain
low. Accessing regional and international markets will result in industry
benefiting from economies of scale which cannot be obtained because of low
demand and the small size of the internal market.”

Under the policy, government wants to promote export development and
promotionpackages that transform Zimbabwe from being an exporter of primary
commodities to a major exporter of high quality, processed and value-added
goods in line with the Industrial Development Policy.

Government will also spearhead the establishment and coordination of
linkages between Small to Medium Enterprises and well-established corporate
businesses and push for possible supply contracts, sub-contracting
activities and joint ventures.

The policy also aims to review the existing export incentives and modify
them so that they become more effective and relevant after consultation with
stakeholders.Government also noted that Zimbabwean companies need funding to
retool and increase production capacity, a weakness highlighted by Biti in
the 2011 fiscal policy statement.

Although Zimbabwe belongs to various trade blocks — Comesa, Sadc, ACP-EU,
Generalised System of Trade Preferences (GSTP) and the World Trade
Organisation — there has been no sound trade policy, with imports far
outweighing exports. Zimbabwe’s situation has been worsened by the
withdrawal of key balance of payments support from multilateral institutions
such as the International Monetary Fund (IMF) and the World Bank.

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Land reform in need of review— Ray

Thursday, 24 November 2011 17:59

Gamma Mudarikiri

UNITED States ambassador to Zimbabwe Charles Ray on Wednesday said there was
need to review the country’s land reform programme embarked on in 2000
because the majority of the population remained landless and destitute. Ray
was speaking in Bindura where he commissioned the US$2 million Mashonaland
Livelihoods Restoration Programme (MLRP). The MLRP is an irrigation project
which was funded by the embassy in partnership with the Africare and Zambuko
Trust. This irrigation project is set to help more than 5 500 vulnerable
small-scale farmers in Bindura and Guruve.

Immeasurable farmland, he said, lay idle countrywide while most people
remained landless, hence the need for an immediate review of the land reform
programme to ensure that the land-hungry majority are catered for.

Ray said more people should have a fair share of land if the country was to
meet the human dignity the armed struggle sought to secure. He said
Zimbabweans needed to think constructively and agree on transparent and
flexible measures in land administration to increase land productivity.
“The US and I personally believe that land reform in Zimbabwe is necessary,”
said Ray. “Far too many Zimbabweans, black, white and in-between, lack the
opportunity to make the most of their talents, ideas and ambitions.”

He said the US government was never against the general objectives of land
reform to economically empower people, but was against violence and
displacement of people through which the programme was implemented.

The US government, Ray said, had recognised the need for the ordinary people
to access land long before the controversial programme, which resulted in
the majority of the 4 500 white commercial farmers losing their land, but
had expected it to be done fairly.

Commercial Farmers Union (CFU) president Charles Taffs concurred with Ray
saying large tracts of farmland were lying idle in the country, and his
organisation had engaged the government to correct the irregularities but
this had yielded little results.

Taffs said the CFU had started training and mentorship programmes
countrywide in a bid to equip small-scale farmers with requisite farming
skills. He also urged subsistence farmers to shift to commercial farming to
increase food production in the country.

Ray also castigated the Zimbabwean government for failing to respect
property rights. He said American business leaders had seen opportunities
created by the economic recovery, but they were concerned with the security
of their investments.

“As Zimbabwe moves into its future, its greatest challenge is to show its
own citizens and foreign investors alike that their claims to property are
safe. Uncertainty in property rights is a deal breaker,” said Ray.

He stressed that consistent and clear laws governing property rights were
critical at this stage. He said the US was not opposed to empowerment and
equitable distribution of national wealth, but wanted it to be implemented
fairly and in a transparent manner.

“I hope you will remember that true empowerment does not come at a neighbour’s
expense,” Ray said. He said politically-motivated dispossession and
retaliation created conflict rather than empowerment.

Bindura district administrator Cuthbert Wubaye hailed the US government
support saying the programme had empowered the community since 180 community
members had been trained in agro processing and marketing with optimism that
the number would increase.

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Bulawayo a hive of activity

Thursday, 24 November 2011 17:53

Brian Chitemba

THE Zanu PF annual conference is two weeks away and Bulawayo is slowly
awakening from the deep slumber which has come to characterise the city over
the years. As preparations for the party’s indaba near completion, Bulawayo
is abuzz with the host province’s fundraising activities to raise the US$150
000 set as a target for each province.

Zanu PF is set to blow US$1,5 million on food and drink during the
conference,which runs from December 6 to 10, at a time the World Food
Programme has warned that vulnerable Zimbabweans totaling over one million
faced starvation between now and the next harvest around March 2012.

Zanu PF bigwigs have been running back and forth to ensure preparations for
the conference don’t falter. This has made Bulawayo a hive of activity as
party officials make frantic efforts to secure accommodation for its 6 000
plus delegates. Government schools in the city have been ordered to finalise
accommodation for the party’s ordinary delegates before December 5.

The conference will be held in the giant Hall 4 situated at the Zimbabwe
International Trade Fair (ZITF) grounds, the Zanu PF national coordinating
committee led by party national chairman Simon Khaya Moyo has been
frequenting the venue to inspect the progress being made.

Zanu PF had chosen the Bulawayo City Council pavilion, which is located
close to Hall 4, for use as offices by President Robert Mugabe and his
presidium, but the MDC-T-led council rejected the request. Although the
council pavilion does not have outstanding facilities compared to other
private companies’ stands, it had been chosen due to its proximity to the
conference venue.

Zanu PF Bulawayo provincial chairman Isaac Dakamela said efforts were
underway to access “other pavilions to be used as offices by President
Mugabe and other high ranking officials”.

Party national spokesman Rugare Gumbo accused the council of sabotage and
labelled the city fathers arrogant.
This week Hall 4 was still empty. The giant hall is expected to accommodate
over 6 000 delegates during proceedings.

Dakamela said top officials would be accommodated at three star hotels and
upmarket lodges situated in the affluent suburban areas such as Suburbs,
Kumalo, Famona, Hillside and Ilanda. Ordinary delegates would be squashed at
Hillside Teachers’ College, Bulawayo Polytechnic College, Gifford High
School and Founders High School whose facilities have become virtually
dilapidated over the years. The upmarket hotels and lodges are a sharp
contrast to the colleges and schools where windows are broken and toilet
facilities are in a bad state.

On Wednesday morning, a team of party officials was at the dilapidated Zanu
PF provincial offices located at Davies Hall in Makokoba for accreditation
of Bulawayo’s five district coordinating committee and provincial executive
members who would be attending the conference. The accreditation team will
visit other provinces prior to the indaba.

As the conference draws nigh, some provinces and party stalwarts have
already declared Mugabe’s office a no go area.

Mines minister Obert Mpofu and his Umguza constituency in Matabeleland North
was the first to declare support for Mugabe. Matabeleland North and South,
Mashonaland West, Masvingo and Midlands also sang the same old tune.
Bulawayo province is expected to hold its provincial conference this weekend
where Mugabe’s endorsement would dominate proceedings.

Khaya Moyo this week declared Mugabe’s job sacred until 2014 when the
congress is due because a conference is not elective. Mugabe and his
presidium were elected at the 2009 congress in Harare.

“The conference will merely endorse Mugabe as the presidential candidate and
there are no elections at the conference according to our constitution,”
said Khaya Moyo.

Zanu PF conferences have over the years become talk-shops with no binding
resolutions seeing the light of day. At last year’s conference in Mutare,
delegates resolved that elections would be held this year but efforts to
force early polls before implementation of critical reforms flopped due to
pressure from the Sadc-endorsed facilitator President Jacob Zuma of South
Africa and his team.

But political analyst Chamu Mutasa said any serious Zimbabwean would still
pay attention to the Zanu PF conference because the party still wielded
power and was determined to stay relevant.

“The conference can pull surprises because Mugabe may decide to use the
indaba to settle scores on those who bad-mouthed him as revealed by the
whistle-blower website WikiLeaks,” Mutasa said.

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Banking sector makes proposals to restore confidence

Thursday, 24 November 2011 16:33

Paul Nyakazeya

THE Bankers Assocation of Zimbabwe (Baz) has proposed a cocktail of measures
which they believe will restore confidence in the banking sector and key to
it mobilising deposits for on-lending to the productive sector.  Key among
the proposals Are refunding of the Corporate Foreign Currency Accounts funds
that the Reserve Bank of Zimbabwe helped itself to at the height of hyper
inflation and foreign currency shortages, compensation of the Zimbabwe
dollar account holders who lost their money when the local currency was
demonetised in February 2009 and the  re-capitalisation of the Deposit
Protection Board.

Baz is also advocating for the restoration of the role of lender of last
resort by the Reserve Bank and the taking over of bank statutory reserves by
the Finance ministry. The ministry should take over the Statutory Reserves
debt of ±US$70 million owed to Banks by the Reserve Bank of Zimbabwe.
The measures were submitted to the Finance minister Tendai Biti by Baz
president John Mushayavanu (pictured) ahead of yesterday’s budget
announcement, with the hope that some, if not all, could be addressed in the

Commenting on the proposals at the Zimbabwe Independent’s Banks and Banking
Survey 2011 last Friday, whose theme was “Banking on Stability”,
Mushayavanhu said Baz had made recommendations to the Finance ministry but
treasury seemed to be dragging its feet.

“Companies and individuals are now short of working capital and are
borrowing at high interest rates, threatening their viability, yet they were
owed money that they lost when their FCAs were raided and the Zimdollar
accounts were frozen,” Mushayavanhu said.

On the statutory reserves issue, Mushayavanhu said this  could be resolved
through the Finance ministry shouldering the liabilities by issuing Treasury
Bills to banks for what they are owed.  These Treasury Bills, which can be
for a tenor of up to 365 days, could be allocated from the 2012 budget.

Banks were currently facing liquidity challenges because these Statutory
Reserves were illiquid, the Baz president pointed out.  The Statutory
Reserves have been outstanding for over two years and Bank External Auditors
have suggested that these now be treated as non-performing assets.  If this
is implemented, it will result in huge losses for banks and resultantly
capital reduction.  The Treasury Bills can be used by banks to secure
overnight accommodation from fellow banks and overnight accommodation from
the RBZ under the lender of last resort arrangement.

Baz also says government should adopt measures to facilitate inclusive
banking, formalise the informal sector, and enhance activity on the
interbank market and enhance liquidity.

“Liquidity has become a major constraint in banks’ ability to lend to the
productive sector.  The country needs as much as US$15 billion in
medium-term lines of credit to enable industry to re-equip,” said Baz.

This could be done by government initiating a survey to establish the extent
and size of the informal sector which the Baz president had US$3 billion
within it, and how it can be brought back into the formal sector.  This will
also assist government in broadening its revenue base. Government could also
introduce presumptive tax at the point of licensing while market stall
holders, small shop owners etc would have to obtain trading licenses to
operate.  It is at that point that they could be taxed.

Baz said the Deposit Protection Board (DPB) should be re-capitalised to the
tune of US$12,5 as it is currently undercapitalised and only managing to pay
staff salaries and administration expenses. Owing to DPB
undercapitalisation, the Zimbabwean depositor has been left with no
protection at all.

Baz also proposed that the Finance ministry expedite the finalisation and
drawdown of lines of credit that have been under discussion for a long time.
To support agriculture, the issue of 99-year leases being made “bankable”
should be finalised as a matter of urgency, to enable farmers to have
collateral security for their seasonal borrowings, said Baz.

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Zim’s key economic indication now regressing

Thursday, 24 November 2011 16:28

By Linda Tsarwe

FOR a country that is coming from a low base economically, Zimbabwe is
expected to do so much more given its natural resources. Potential exists to
achieve growth but over the past few months, the economy has been

There has been very little activity on the Zimbabwe Stock Exchange (ZSE), as
foreign investors have withdrawn from the market. Inflation has been on an
upward trend since May this year and this casts some doubts on whether the
target average inflation rate of 4,5% for 2011 is achievable. In addition,
although government is adamant that the projected 9,3% economic growth can
be achieved this year, this is in contrast to the views of institutions such
as the African Development Bank (ADB) which is estimating growth of just
more than 5%.

For someone taking a broad view of the economy, a lot of things are not
going right. Despite the faltering economic recovery, some companies have
continued to achieve profit growth. The weakness in local businesspeople has
been their failure to capitalise on opportunities that arise when the going
gets tough.

Most Zimbabweans have developed a culture of running away from the fire
rather than putting it out. In the process of doing so, outsiders have taken
advantage of potentially good business deals. Food King, which is owned by a
Chinese businessman, was one of the first food chain stores to stock its
shops after dollarisation, relieving the country of food shortages with
imported products. Smaller Chinese businessmen have also been very swift in
their approach, penetrating into low-income markets by providing a range of
products at affordable prices. Although there has been an outcry over the
inferior quality of their products, the Chinese still enjoy satisfactory
traffic in their stores.

This year, the stock market witnessed one of the biggest deals since
dollarisation. Tiger Brands, a South African conglomerate, increased its
stake in Natfoods after acquiring shares from Innscor in a deal worth about
US$11,7 million. This resulted in Tiger Brands having almost the same
shareholding as Innscor and making it a major shareholder in Natfoods along
with Innscor. Most analysts have described such a move as a show of
confidence by Tiger Brands in Natfoods. For the four months to October 2011,
Natfoods increased production by 22%. Understanding the potential in OK,
Investec injected more than US$10 million into the company over a year ago.
At that point, OK was not well stocked due to working capital constraints as
well as significant debt obligations. It only took a year to turn that
business around, which is now very profitable and one of the most successful
retail chains in the country.

It is, however, pleasing to note that there seems to be a slow shift in
sentiment among local businessmen, who have been making headlines for
acquisition of new businesses. TN Holdings, which is led by Tawanda
Nyambirai, is an example of a very aggressive group which has been making
waves especially in the furniture business. Recent reports say that TN
Holdings acquired majority shareholding in Pelhams through TN Asset

If  true, then TN Holdings would occupy the lead position in the furniture
business in the country. Of late, the retail furniture business has been
buoyed by the reintroduction of credit. Pelhams has been doing very well and
riding on growth of credit sales which have given significant support to its
revenue. However, the group’s aggressiveness has become questionable with
recent press reports alleging that Rufaro Marketing was planning on leasing
24 of its branches to TN with the intention of converting them to banking
halls. The number of branches and the location of these branches cast doubt
as to whether this would be a viable move or not for TN Bank. Its either
Nyambirai has lost the plot, or is seeing an opportunity that we cannot see!

On the other hand, it is not entirely pessimism that has made local
investors inactive. After hyperinflation, many lacked the capacity to
undertake any significant investments when we dollarised. This is despite
the fact that a number of them had a lot of bright ideas in place. Banks
also had no resources to extend for productive purposes and up to this day,
businesses that are dependent on local money are struggling due to high
finance charges. Even the government cannot do much to relieve the situation
given that it is not able to finance its own obligations.

As we see more foreigners putting their money in what they perceive as good
investments, government can do a lot more to increase foreign participation.
Manufacturers’ survey indicate that industry captains recommend the revision
of indigenisation regulations. This, of course, is not the first time the
plea has been made, which is a clear sign of the negative effect the
legislation has had on business. It only makes sense for a country that
needs to go forward to court foreign capital if it cannot unlock value in
its resources due to lack of funds.

So much potential exists on the Zimbabwean market, though there tends to be
a lot of political noise that downplays its manifestation. However, some
foreigners have been able to recognise opportunities and realised good deals
out of them. Locals have been slow to react, partly due to lack of capacity.
It is important for the government to make investing in Zimbabwe more
certain and secure if we are to realise value from the country’s potential.
If there is scope for growth then this means potential exists which can be
explored. With the right investment policies in place, there is so much more
that Zimbabwe can achieve.

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‘I went into govt with a different attitude’

Thursday, 24 November 2011 18:03

CONSTITUTIONAL Affairs minister Eric Matinenga (EM) has indicated that he
will not run for political office when elections are held next year or in
2013. The Zimbabwe Independent’s political reporter Paidamoyo Muzulu (PM)
caught up with Matinenga to discuss his experience on the political scene
and tenure in the coalition government.
PM:What pushed you to leave your lucrative legal career and pursue politics
in an active manner?

EM: A number of factors, but mainly that I had always wanted to serve in a
political role when an appropriate time arose.When I agreed to serve in
2007, I did so because of circumstances beyond my control. I did not think I
was ready to serve in 2008. I thought I could serve better in my legal role
than political role. However, the 2007 delimitation created two more
constituencies in Buhera, West and Central in addition to North and South. I
was then approached because at the time the party (MDC) was failing to get a
credible candidate in Buhera West. I agreed to run.

PM:Who approached you?

EM: I come from the same constituency asPrime Minister Morgan Tsvangirai. He
interested me and asked why I would not consider running for public office.
The then Manicaland province organising secretary also drove all the way
from Mutare to Harare to persuade me to run.

PM: You mentioned the MDC support group, who was in the support group?

EM: The support group was made up of people who sympathised with the MDC.
These were men and women who could afford to give their time and resources
to the advancement of the party’s cause. Some donated vehicles, others gave
logistical support while some also gave administrative support to the
nascent party. It’s unfortunate that there is this culture to think if you
support a partyyou are aiming for political office. I think we managed to
provide assistance. We still have the group in Buhera, but renamed Buhera
West Development Association that meets the first Thursday of every month. I
received support from across the country.

PM: What are your thoughts on canvassing support for the MDC in rural
constituencies, perceived Zanu PF’s strongholds?

EM: As MDC we should go out and establish relationships with the traditional
leaders. In Buhera I have met over 95% of the chiefs, headman and kraal
heads in their homes. Creating these relationships guarantees support as
people begin to understand your objectives at a personal level.

PM: You once spent nearly a month in prison after the 2008 harmonised
elections on public violence charges? What are your feelings about that

EM: Yes, I spent 30 days in detention at different centres in Buhera,
Mutare, Rusape and Goromonzi. My worst fear was when I was taken by the
fraud squad to Goromonzi despite that I faced no fraud charges. I knew
Goromonzi was notorious for its torturing reputation. Most of the junior
officers were very civil and even gave me their mobile phones to contact my
family. I was relieved when I was put in the normal cells because I knew the
torture cells are at the further end.

PM: The decision to withdraw from the presidential run-off was made when you
were detained at Rusape Prison. What impact did that decision have on you?

EM: The decision to withdraw was taken when I was in prison. Everybody in
the prison was taken aback by the decision. We thought we were going to win
the election and (President) Robert Mugabe was not going to recover from the
earlier loss suffered in March.

PM: After the lengthy GPA negotiations, Tsvangirai nominated you for a
ministerial position. Did you anticipate the appointment?

EM: I did not know I would be appointed to a ministerial position. I had to
ask my wife first before I accepted. After getting my wife’s support I
accepted to serve.

PM: The coalition government is a product of the GPA. Do you think this
arrangement was perfect?

EM: I was not particularly happy with the overall terms of the GPA. However,
I believed if everyone was genuine, the arrangement could be made to work.
PM: Did you contribute in the GPA negotiations?

EM: Contrary to widely held position, I had zero input in the GPA
negotiations. I only read and saw the final document. I was not involved
even behind the scenes.

PM: What were your expectations when the coalition government was sworn in?

EM: I think I was a bit naïve. To me politics was about services to the
people and I thought everybody wanted to move from the past into the future
and build a better Zimbabwe.My role legally was limited and even
non-existent. I didn’t realise how some look at politics in terms of power
and control. Then I realised I was naïve.

PM: What are your thoughts on government and governance?

EM: Zanu PF controls arms of power in the main. MDC is in the service
ministries. When Zanu PF negotiated for these ministries, their attitude was
that they were there to regroup and regain what they had lost. In terms of
governance, Zanu PF certainly went in to regain power and control.

PM: Are MDC members guilty of the same charge of seeking power and control?

EM: I think sadly yes. Some want power and control, but I went in with a
different attitude since I had set myself a target to do my term only and
therefore I felt it not necessary to contest any position in the structures.
I am saddened by the perspective among my colleagues that I was an aloof

PM: What are your thoughts on violence in the MDC, particularly when you
were approaching the Bulawayo congress?

EM:  I was shocked at what I witnessed of that process. In Buhera, like some
of the districts, there was chaos, ballot papers were torn and thrown
around. Unprintable words were said. There was mayhem. I didn’t believe that
as the MDC we could sink that low and the election was aborted. On five
subsequent occasions the district elections were violently disrupted. I was
saddened and still saddened by that experience.

PM:  Do you think this was caused by factionalism in the party?

EM: As an ordinary member I got disappointed that this could be happening to
our party. I have never subscribed to the concept of belonging to a faction.
The reality is that there are those factions. I have asked colleagues not to
ascribe a faction for me. On this issue of violence, I cannot be seen to
take kindly to people seen propagating violence. I am not just in that
group. If I observe that you have that propensity I just keep away from you.
It’s an issue of principle. One thing dear to me is principle. If I had not
set out a target that I would serve one term only and give up, I thought I
was making a big statement by that action and encourage others even those
outside (the) MDC that power can be relinquished voluntarily.

PM: Did you inform Tsvangirai about the violence and what was his response?

EM: I briefed him and he expressed outrage. I met him subsequently and he
always said he would set up a body to look into this. I am hoping that this
body would carry a full investigation into the matter. The MDC can become
stronger if it addresses this issue. If I was in a position of authority, I
would have addressed this matter immediately, but people work differently. I
hope the way he is tackling the issue would bear positive results.

PM: How have you managed to infuse your philosophy of non-violent politics
in Buhera?

EM: In Buhera West, we do not do those slogans which promote violence like
the one that says “varovereipasi”(strike them to the ground). We should
never ever copy Zanu P F’s bad ways. Zanu PF thrives on violence. When you
do that slogan, you are not different. We knew we had to show that we are

PM: Was your stance not to seek re-election forced on you or the
circumstances in your constituency dictated that?

EM: Nobody pushed me out. If there was somebody who did that, I am not aware
and so help me God. I had participated in the process to find my successor.
Having said that, I should say we, however, had not agreed on the timing of
the announcement. I think John Makumbe is electable. He can give back to the
community. I am actually relieved.

PM: Do you think that the cabinet is working as a unit and pulling in one

EM: Ministers are addressing issues on partisan lines. When we debate issues
they simply go back to their political trenches. We are unlike Kenya. They
have shown a desire to move forward and make a complete break with the past.
I don’t see this in Zimbabwe and cabinet as a collective. This is a huge
disappointment. I simply don’t think we are there yet. I don’t think Zanu PF
wants to make a clean break with the past. Zanu PF positions on political
issues are rigid. We spend just too much time negotiating these issues. For
instance, amendments to the Electoral Bill and the Human Rights Bill have
not been able to move forward in the manner we should because people look
backwards too much.

PM: Having cited the Kenyan example, are you happy with the judiciary
reforms in this country?

EM: In Kenya, the Chief Justice retired because they were moving into a new
era. Various people holding influential posts accepted that they had to move
so that others could takeover.I believe the same should happen here.
However, it should not be done to be retributive.The judiciary interests me
a lot. Kenya put a law that every judiciary officer had to be reappraised. I
wish the same could be done in this country. I know this may remain a wish.

PM: Finally, where to after the next elections?

EM: I will have to re-apply to be admitted to the Advocate Chambers. My
office and library are still in place and I hope I will pick up from where I
left off. This would also give me the opportunity to get back to the MDC
support group and work behind the scenes.

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Tunisia: Inspiration to African media

Thursday, 24 November 2011 17:52

By Charlayne Hunter-Gault and Trevor Ncube

TUNISIA, the source and inspiration of the Arab Spring, witnessed a
significant milestone in the growth of the African Media Initiative (AMI)
and the maturity of African media last week. When we chose Tunis as the
fourth venue for our flagship programme, the African Media Leaders Forum
(AMLF), it was with the clear intention of positively exploiting their
revolution to enhance our programme of creating a revolution in the
management of African media. Social media played a significant role in the
extraordinary developments that launched the Arab Spring, and it was with
the idea of exploring the implications of social media for Africa that we
titled our annual gathering: Empowering Citizens Through Social Media and
Technology Adaptation: What Future For Traditional Media?

As our CEO, Amadou Mahtar Ba said: “Our meeting in Tunis was a way of paying
tribute to ordinary citizens whose courage and hunger to have a say in how
they are governed and by whom unleashed a revolution to restore justice and
accountability. And that is at the core of media’s responsibility: to ensure
citizens have the kind of information they need to achieve those ends.”

To be sure, revolutions in the past have happened without social or even
traditional media. And, no doubt in time, Tunisians and the citizens of the
other countries of the Arab Spring would have eventually thrown off the yoke
of oppression. As the American civil rights martyr, Martin Luther King, Jr
often said “No lie can live forever”.

But there is no question that social media accelerated the Arab uprisings
and in most cases, limited the human toll that sometimes accompanies
revolutions, as we are seeing, alas, in Syria. But that, thankfully, is the

Since our last AMLF meeting in Cameroon, which concentrated on helping
African media owners develop more effective business models, we have
concentrated on concrete projects that would take AMLF closer to the goal of
developing a media sector that would help citizens affect social, economic
and political change, not least holding their leaders accountable. Social
media has become key in realising those goals. So we held workshops that
gave experts time to explore the possibilities of the new technologies. And
the Tunis AMLF declaration emphasised the need to continue focusing on
improving professionalism, management, content and timeliness of reporting
by harnessing the strengths of media technology.

The declaration acknowledges that “deficits in democracy and governance are
inimical to the growth of Africa’s media sector”. But the body applauded and
endorsed AMI’s core principles of ethics and principled leadership. Our plan
now is to get media associations around the continent to endorse the
principles that promote ethics and best practice now being circulated among
them. Already the Tanzania Media Owners Association has endorsed these

What encourages our efforts to strengthen African media is that we are
clearly growing from strength to strength. From an attendance of 50 at our
first meeting in Dakar, Senegal four years ago, we have grown to a record
350 from 48 African countries at our Tunis meeting.

We are committed to building on the solid foundation of action and
innovation we have laid. And we intend to see that the ideas that drove the
Arab Spring also create the kind of revolution in African media that will
truly empower Africa’s people, giving them the freedom, justice, prosperity
and equality they so richly deserve.

Hunter-Gault and Ncube co-chair the African Media Initiative.

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MuckRaker: Where then is the sabotage Cde Gumbo?

Thursday, 24 November 2011 17:47

ZANU PF has “scoffed” at attempts by the MDC-T -led Bulawayo City Council to
“sabotage” its 12th Annual National People’s Conference scheduled for
Bulawayo early next month, the Herald reported on Tuesday. The city council
has reportedly “hatched a plan” to block the party from using its pavilion
at the Zimbabwe International Trade Fair grounds, which are the venue for
the conference.

Zanu PF information and publicity secretary, Rugare Gumbo, said his party
was not worried about such “arrogance”.
He said the party received resounding support from many organisations to use
their facilities at ZITF.
“The Bulawayo City Council has only one pavilion office from the many that
are here. When the provincial party leaders approached them to use their
facilities they refused,” said Gumbo.

“It is their right to refuse or give us the permission to use their offices.
That is not an issue to us. What matters is that we have already got all the
offices we wanted from other organisations.”

So if it is their right to refuse or give them the permission to use their
offices where is the sabotage then?
After being used to having their way with facilities –– sometimes without
paying –– they find any refusal of their demands as “arrogance”.

It’s understandable why they wouldn’t want to offer their facilities to the
revolutionary party. Who can forget how Zanu PF delegates, among them
members of the central committee who attended the 2004 congress, “liberated”
bed linen and towels from the hotels where they were staying.
Also annoyed by the behaviour of some of the delegates were groundsmen at
the Harare Sheraton and Harare International Conference Centre, the venue of
the congress.

According to the Standard, during the course of the congress, more than 9
000 delegates were being served food from tents pitched in the hotel
grounds. However, some of the delegates used trees and bushes in the hotel
grounds to relieve themselves. Although makeshift toilets were provided,
they soon became dirty because of the heavy rains which fell, forcing the
delegates to resort to the bushes in the grounds. Four women, in the full
glare of male delegates, were seen relieving themselves behind some bushes
at one point, the Standard reports.

Meanwhile, Zanu PF chairman Simon Khaya Moyo urged party youths in Bulawayo
to clean all graffiti on the walls and pavements before the conference kicks

He said it was embarrassing that the party youths were not doing anything to
remove graffiti that denigrated President Mugabe and the party. Khaya Moyo
said Bulawayo province should ensure that all graffiti was removed by the
time the conference starts.
Good luck with that one Cde Moyo.

While we admire Bona Mugabe’s award of a degree in accountancy, we are
unimpressed by the praise-singing that went on back home.
The Herald reported last Friday that Chegutu East constituency students and
youths congratulated Bona for graduating with a Bachelor of Business
Administration (Honours) Administration in Accountancy in Hong Kong.

In a statement, representatives of young people in the constituency, Hazel
Sillah and Dananai Murwira, said they joined the First Family as this was a
“national success over machinations by Western powers to cripple the country’s
education through various means such as sanctions”.

“Praises and salutations are appropriate to you for your great determination
tempered by your never say die attitude, great devotion, great courage and
great focus which resulted in this deserved achievement and victory,” read
the  statement.

They described Bona as the personification of the determination by the
country’s students and youths to excel despite externally induced
Unsurprisingly Media, Information and Publicity minister Webster Shamu is
also the MP for Chegutu East.

“Miss Mugabe’s success is a result of the scope, scale, nature and impact of
parental involvement and support in her education,” gushed the statement.
“Such parental involvement includes good parenting and the provision of a
secure and stable environment in the home,” it read.

“The First Family is an excellent model of how to impart constructive social
and educational values as well as high personal aspirations relating to
personal fulfilment.”

Muckraker was amused by the views of Herald readers in the readers’ comments
section who clearly did not share the views of the Chegutu East students and

One reader said Bona was enrolled in a top notch university as far away as
possible from decaying and substandard local universities.

“She didn’t endure the hardships of erratic power cuts, strikes, transport
blues, shortages of books and lecturers being faced by many Zimbabwean
students. If she had graduated from any local university I would have joined
the chorus,” one reader said.

Another said the first family shunned everything Zimbabwean from shopping
and education to hospitals.

There are numerous tertiary institutions in this country which have opened
their doors in recent years. And the president is chancellor of most of
President Mugabe managed to drag the British into his speech of
congratulation. Bona and her friend Nyaradzo had been “haunted and harassed”
by British journalists in their formative days at the university but the
authorities had acted to ensure the harassment was stopped, he said.

By the way, who was Bona’s friend Miss Nyaradzo Khimbini? We were not told.

We are always intrigued to note the Herald’s Nathaniel Manheru column goes
missing whenever the president travels abroad. That’s obviously a case for
some cracking of the editorial whip but that’s as likely as snow at
Christmas at the Herald.

And poor old HildegardeManzvanzvike having to repeat Manheru’s“ jokes” at
the end of her column.

But increasingly the Herald is having to recruit foreigners for its columns.
They are usually people who are not in the least bit interested in the
suffering of Zimbabweans but want to use the state press as a platform to
pursue their campaigns in support of Iran, Cuba and other such renegade
There was a mugshot  of Alexander Cockburn last week who was sporting dark

His article was headed ”Uncle Sam, the Iranian plot”.

Then there was a lengthy piece by Stephen Gowans who wanted to provide  A
“guide to why the US seeks to make Iran a global pariah”. Both articles were
turgid and unoriginal. Obviously, like Udo Froese, they can’t find
publishers in their own countries.

Zanu PF and the MDCs have been political foes for more than a decade now. On
paper, they seem to be like oil and water, propounding opposite ideologies.
However on the issue of cash, they seem to have found common ground.

NewsDay reports that Zanu PF senator for Gwanda, Japhet Dube, last week
attacked NewsDay and Studio 7 — a radio station run by exiled Zimbabwean
journalists — for allegedly campaigning against payment of outstanding
allowances for legislators.

Dube made the remarks while debating a motion moved by MDC-T
non-constituency senator Morgan Komichi on what he termed “unprofessional
media activities”.

“If we look at newspapers or (listen to) ZBC, Daily News, the Chronicle and
NewsDay, we realise that there are some papers that are biased.

“ZBC has reasons to be there because it is national, but Studio 7 has caused
so many problems to the extent MPs were not given the money that we were
promised because of the fact that they went ahead to claim MPs want money,”
Dube claimed.

“Studio 7 has destroyed our hope and whether you are Zanu PF or MDC-T,
Studio 7 has destroyed you too,” Dube added.

“Studio 7 claims that all current MPs love money and that is why MPs do not
want to conclude the constitution-making process — because they are

Dube described independent media as “small houses” and state media as
original wives.
“As men, we have to support our wives before our small houses. ZBC is your
wife and Studio 7 the small house, so start supporting ZBC,” Dube said.

Muckraker enjoyed the following snippet from the Rhodes Journalism Review.

“When Idi Amin grabbed power in 1971 his picture featured in the country’s
key daily, the Argus, 101 times in just five months. A year later it was up
to 157 times in the same period. By 1976 it was 215 times  –– an average of
twice in each edition.

“Among Amin’s bullying tactics was his attack on a black journalist at a
press conference.

“That question must have been asked by a white African and surely not by a
Ugandan,” the dictator menacingly pronounced.
The Review observed that President Mugabe must be following in Amin’s
footsteps, “but as a product of Jesuit education it’s unlikely he’d seek
sanctuary with the Saudis “, as Amin did.

Poor old Zimbabwe cricket captain Brendon Taylor. He must be the subject of
ribald comments from his team mates following the Herald’s decision to
christen him Brenda Taylor. It’s amazing the things one gets called in the
state press!

We loved the advice handed out recently by the Herald on how to avoid heat
exhaustion. Find a shopping mall or an air-conditioned library to seek
refuge in, the advice went.

Evidently lifted from another planet! And then there was the Miss South
Africa contestant who was asked what her favourite dish was. “Tupperware”
came the obvious response. No, seriously.

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Eric Bloch Column: Zim politicians should see the light

Thursday, 24 November 2011 17:42

AS a general rule, Zimbabwe’s politicians suffer from two chronic sight
ailments pronounced myopia and the weakness to see only that which they wish
to see, even if that is nothing but a mirage. These optical deficiencies
have plagued the majority of the country’s political leaders for many years,
especially insofar as their pursuit of the very necessary, most desirable,
indigenisation of the economy and attainment of widespread economic
empowerment is concerned.
The politicians recognise, justifiably, that not only must the immense
poverty that afflicts most Zimbabweans be eliminated, but that this must be
achieved by ensuring wide-ranging economic empowerment.

But they do not consider that the way to achieve that objective is by
pursuing vigorous growth of the economy, where most of the population are
the catalysts and developers of that growth and are effectively enabled and
facilitated to achieve it.  Instead, their rock hard, rigid perceptions are
that the only way to bring about that economic empowerment is to transfer
existing wealth from those who generate it, to those who crave it.  They
cannot recognise that it is not possible to legislate the poor into
prosperity by legislating the wealthy out of prosperity.  In like manner,
they are unable to acknowledge that one cannot multiply wealth by dividing

However, very occasionally, there is an exception to the rule. Last week the
Minister of Economic Planning and Investment Promotion, Tapiwa Mashakada,
said: “As long as the indigenisation and economic empowerment law remains in
its current form, it is difficult to lure investors…Investment will not flow
into this country.  It’s an elephant in the living room.  The sooner we
amend it, or replace it, the better.  We can’t market the country with this
piece of legislation.”

The fact of the minister’s statement was confirmed a few days later, when it
was disclosed that Foreign Direct Investment (FDI) in southern Africa during
the past year approximated US$20 billion, of which the comparatively
niggardly portion thereof attained by Zimbabwe was only US$541 million. This
was mainly from the Far East in general and China in particular, on terms
highly favourable to the investors, and much of the intended investment had
not yet reached Zimbabwe.

Although it is undeniable that this year (2011) Zimbabwe has enjoyed some
economic growth, that growth has been minimal as compared to that which is
needed to ensure the well-being of most of the population.  The growth has
been attained by very limited numbers, reflected primarily by a significant
improvement in the levels of agricultural production in general, and of
tobacco in particular, as well as from output of the mining sector, although
the volume of agricultural production still falls far short of those of a
little more than a decade ago.

But concurrently, the outturn from manufacturing has declined exponentially,
much of the commercial and financial sector is battling to survive,
teetering on the precipice of collapse (with more than 100 industries and
businesses having closed down, and most others having had to downsize their
operations considerably).  More than four-fifths of the employable
population is devoid of formal sector employment, and more than half of the
population is struggling to survive on incomes far below the Poverty Datum
Line (PDL).

Government is bankrupt, with a vast accumulated debt which it is unable to
service. Most of the national infrastructure is operationally ineffective
and the necessary investment funding is not forthcoming to achieve a
substantive economic turnaround. This would include governmental solvency,
and rehabilitation of the debilitated infrastructure.  New jobs are not
being created, whilst existing employment becomes ever less.

The overriding factor that precludes the economic upturn which could readily
be achieved is the absence of the large-scale investment, which would be
readily and rapidly forthcoming if investors had the conviction that their
outlays would be secure, and would generate just and  equitable yields.
However, when they are expected to provide substantial investment funding,
technology transfer, access to their established markets and are forced to
divest themselves of 51% of the enterprises, thereby being devoid of control
of their ventures, they prefer to look for alternative opportunities and
wholly disregard Zimbabwe as an investment destination.

The reluctance to invest in Zimbabwe is further intensified by the absence
of assurance of fair and equitable compensation for the enforced
disinvestment, non-timeous receipt of any compensation that is to be
forthcoming, and when the “indigenous investors” are, to a significant
extent, designated entities which are directly or indirectly controlled by
the State, and which are generally devoid of the specialised knowledge
needed for the viable operations of the enterprises.

Investment opportunities in Zimbabwe are vast, particularly in the mining
sector, in the revitalisation of manufacturing (with particular focus upon
value-addition), in tourism, and in provision of services, but few will
avail themselves of such opportunities in a non-conducive,
investment-insecure, environment.

Those opportunities will be pursued by foreign investors if the investment
environment is conducive, instead of being authoritarian, and would
encompass Zimbabwean participation, if at reasonable levels, and with
investor compatibility and minimal and non-overly authoritarian State
influence.  But those opportunities would also be available to very many
Zimbabweans, if they are properly schooled and trained for them, facilitated
in accessing required funding, and the ventures assured of viability by
constructive State incentives and support.  These would progressively be at
all levels, ranging from SMEs to steadily growing businesses to medium and,
later, large size enterprises, reinforced by facilitative State incentives.

Long overdue, but better late than never, Government needs to reform its
indigenisation and economic empowerment policies and laws.  It needs to
recognise realities, and see the light, as Minister Mashakada has done.  It
needs to appreciate that when half of the people get the idea that they do
not have work because the other half is going to take care of them, and when
the other half gets the idea that it does no good to work because somebody
else is going to get what they work for, that is the beginning of the end of
any nation.

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Will Mugabe’s party be torn apart?

Thursday, 24 November 2011 17:40

By Brian Hungwe

THE next two weeks before the Zanu PF annual conference in Bulawayo could
prove to be the most trying in the career of 87-year-old President Robert
Mugabe (pictured).
Until now it would have been unthinkable for him to doubt the support of his
Zanu PF party at the gathering of the party’s annual jamboree.
But party insiders say the country’s Independence leader, who has been in
power for 31 years, was stunned by recent disclosures on the whistle-blowing
site WikiLeaks that his close allies spoke to US diplomats about his
political exit and death.

With elections beckoning, the reality is that a string of his top officials
in his Zanu PF party believe he is now a liability and want him to go before
presidential polls slated for next year.

Insiders say he would like to stand for re-election, but in the light of
WikiLeaks, the president is now weighing his options.
The diplomatic cables –– covering the period 2004 to 2010 –– were relayed to
Washington from Harare, containing details of secret meetings US diplomats
held with top army officers and Zanu PF officials.

The meetings took place without the knowledge of Mugabe and his supposedly
omnipresent spies.
The general consensus is that although the top Zanu PF leadership wants
Mugabe –– who has cancer, according to the cables –– to go, no-one is brave
enough to tell him that to his face.

Party insiders say Mugabe is not too sure how to deal with his enemies from
within –– those officials he thought would keep party secrets under lock and

On the seventh floor of the imposing Zanu PF headquarters overlooking the
capital, Harare, party spokesperson Rugare Gumbo has been making a study of
the documents.

In the right hand corner of his office is a bookshelf and a file written in
bold letters “WikiLeaks”.
“My feeling is that [the WikiLeaks] issue, might have ruffled feathers,” he
So are heads going to roll at the annual conference in December when Mugabe
is expected to seek Zanu PF’s endorsement to serve another five-year term.

“We will cross the bridge when we get there,” he says.

It is not even clear, he says, if Mugabe’s future will be on the agenda as
“according to party constitution, the president of the party is a candidate
for any [presidential] elections that are held”.

“He is likely to be endorsed,” he adds.
The top party officials implicated in the diplomatic cables of plotting
against  Mugabe have powerful party constituencies which he cannot afford to
alienate by punishing them.

Vice President Joice Mujuru is wife of late army general Solomon Mujuru, a
kingmaker, believed to have pressured  Mugabe to step down during party
meetings. Mujuru has a huge support base within Zanu PF, as does party Legal
Affairs secretary and Defence minister Emmerson Mnangagwa, who is understood
to have mooted the idea of forming a new party to challenge Mugabe. Dozens
of others were named in the cables and Mugabe has indicated he would like
them investigated.

But there seems to be limited options for Mugabe. He may be damned if he
acts and damned if he does not. If he does not, he will come out as a weak
leader and his party will go into elections divided.

If he does act, he will also divide the party.
For Zimbabwean lawyer and author Petina Gappah it is good to hear senior
figures question Mugabe’s continued leadership, but she questions their

“The people who were talking to the Americans clearly take themselves and
the Americans more seriously than they take us,” says Gappah.
“That makes me angry,” she says.

Political commentator Brian Raftopolous sees the closed-door chatter as a
historical problem for the party, now in its 48th year.
“Succession issues have never been dealt with openly in Zanu PF. There has
also been violence and death and all kinds of skulduggery. It’s really the
inability of a liberation party to transform itself into a democratic
 party,” he says.

Nonetheless, the WikiLeaks cables have now brought the “Mugabe-must-go”
agenda into the public domain, says retired Major Kudzai Mbudzi, a veteran
of the war of Independence and a Zanu PF member.

“Everybody is now aware that there is unanimity within the party that Mugabe
must go. But there is also unanimity in the public denial that they would
require him to retire,” he said.

Some believe it will make Zanu PF stronger in the end –– like Jonathan Moyo,
who sits on the party’s politburo. He was cited in the documents calling for
leadership renewal and an exit plan for the president. While he does not
deny it, he says it happened during a time he had left the party, which he
has since rejoined. People now need to be clear which side they are on, he

“If anything, this is a God-sent event which will go a long, long way to
unite people, scare cowards.”

And given the smouldering discontent within Zanu PF, come December party
officials may just pluck up the courage to tell Mugabe to bow out ––
gracefully or not. –– BBC.

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GNU has failed on justice delivery

Thursday, 24 November 2011 17:39

By Pedzisai Ruhanya

ZIMBABWE’S attempt at a democratic political transition emanating from the
March 2008 general election failed to produce a clear rupture from the past
as was the case in eastern Europe following the collapse of the Soviet Union
in 1989. This failed totalitarian political rupture has grave consequences
for transitional justice issues because the negotiated settlement left the
repressive regime and its structures intact.

The functionality or otherwise of the Joint Monitoring and Implementation
Committee (Jomic) and the inclusive government itself have to be understood
and interrogated in terms of the nature of the political transition that
came out of that failed democratic transition.

The nature of the Zimbabwean state –– which I posit as a continuation of the
colonial state –– also has a bearing on any attempts to democratise
Zimbabwean politics.

It is, therefore, critical to appreciate what a political transition is, the
types of transitions, and the one that is operating following the signing of
the Global Political Agreement. Such kind of analysis will assist in
appreciating why Jomic and the inclusive government have failed to produce
the desired democratic political transition premised on the rule of law and
the respect for citizens’ fundamental civil and political liberties.

A political transition refers to a regime change or simply a change of
governance. A regime change is a change in the institutional structure of a
given country. It is the formal and informal organisation of political
power, and of its relations with the broader society. A regime determines
who has access to political power, and how those who are in power deal with
those who are not.

It is possible to have a regime change without changing a leader but a
regime change is not equal to the change of a leader. For instance, if
President Robert Mugabe loses the next election but the repressive and
totalitarian system remains, then there will be no regime change. So the
usual chorus of Mugabe must go is not good enough to democratise Zimbabwean
politics and its institutions. The Zimbabwe case needs both the faces of the
regime, that is Mugabe and other oppressive elements, and most critically
the system to be overhauled.

There are basically three types of political transitions:

Transition through transaction –– This happens when the authoritarian regime
initiates the process of democratisation of the body politic but remains a
decisive political actor  throughout the transition although opposition
political parties and other players are part of the process.

Transition via extrication –– This type of transition occurs when the
authoritarian regime is weakened but not as significantly as is the case in
the transition by defeat. However, in this situation, the authoritarian
regime has less power to negotiate as in transition by transaction. It will
be slowly phased out of power.

Transition via regime defeat –– This type of transition involves a decisive
defeat of the authoritarian government leading to the end of authoritarian
rule and the establishment of a democratic government. This is a very rare
form transition. It happens in cases where revolutions take place.

From these three types of transitions Zimbabwe is experiencing transition by
transaction where the three MDC formations led by Prime Minister Morgan
Tsvangirai and the others by Professors Arthur Mutambara  and Welshman Ncube
as well as President Robert Mugabe’s Zanu PF are in a compromise agreement
following the signing of the GPA in September 2008. This was after the
international community refused to legitimise the sham June 2008
presidential run-off.

Comparatively, the Zanu PF side of government has more power in relation to
its partners. That’s why the outstanding issues can only be resolved at the
pleasure of Zanu PF.

In a situation where a vanquished political party has total access to the
state as is the case with Zanu PF, it becomes difficult to talk about the
effectiveness of quasi-democratic bodies such as Jomic because what these
bodies attempt to do is to create conditions that will make sure that Zanu
PF is removed from power. Zanu PF has successfully blocked most democratic

My argument is that the nature of the GPA and not Jomic is the one that is
stalling the transition. What has failed is the GPA and the current
government. It failed from the start because the negotiators from the MDC
formations did not gain enough leverage during the talks to enable
transition through extrication as was the case with Zimbabwe after 1980. The
country experienced transition by extrication where Ian Smith (pictured) was
defeated in an election, accepted that defeat and elements of the colonial
regime were axed out of the state step by step until they were all flushed

To worsen the situation, Zimbabwe’s problems are compounded by the
undemocratic nature of post-independent Zimbabwe. Following the fall of the
colonial government, the nationalist government of Zanu PF did not
democratise the state. The theory of elite continuity came into effect in
which Zanu PF elements occupied state positions and structures such as the
security apparatus and media. Colonial and repressive laws were retained
without democratising them. The colonial political culture of violence as
well as dictatorship was taken aboard by the new rulers. Zimbabwe
experienced a false dawn in 1980 and experienced the same following the
signing of the GPA in September 2008.

The critical issue that confronts Zimbabweans is to work to democraticise
the state and its politics. They need to create rupture from both the
colonial and Zanu PF systems of governance and make sure that the state is
democratised. The state’s fundamental role is to protect and advance the
rights and needs of its citizens. The state must advance rather than inhibit
the democratic aspirations of the people. This cannot happen under its
current organisation and leadership.

However, there are certain things, under this very constrained political
environment, that civil society and the democratic forces should insist the
GNU should do. For instance, to address issues of impunity, the GNU should
be pressured to deliver justice to victims of the de facto police state.

International law requiring punishment for atrocious crimes can provide an
important counterweight to pressure from Zimbabwe’s ruling elite responsible
for the Matabeleland and Midlands massacres and the post-2000 human rights

This will assist in making sure that citizens know the price of trespassing
the rights of others. It will make vigilante groups such as Chipangano and
its leaders think twice before they commit crimes. This will not be done by
Jomic because this body actually has sympathisers of Chipangano in its rank
and file. It will be done by civil society and other democratic forces
through piling pressure on the prosecuting authorities and exposing the
heinous activities of such groups.

When prosecutions are administered and undertaken pursuant to the provisions
of both domestic and international law forbidding acts such as genocide,
crimes against humanity, torture and war crimes, they are less likely to be
perceived or opposed as acts of revenge.

If Zimbabwe is to return to democratic legitimacy, the GNU should further
respond to human rights violations by adopting laws which bar certain
categories of former government officials and party members from public
employment. Such measures will not be new to Zimbabwe; they have worked well
in post-communist governments in Europe and Latin America.

Such elements are rampant in country’s public service particularly in the
security forces. Zimbabwe is full of public officials who have been
associated with human rights violations since Independence and their role in
government is to block any judicial and political reforms that seek to make
them accountable for their crimes.

Ruhanya is a PhD candidate Media and Communication Research Institute at
CAMRI, University of Westminster, London.

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Paranoia haunts Mugabe allies

Thursday, 24 November 2011 17:35

By Rashweat Mukundu

OVER the past few weeks, the Zanu PF propaganda machinery has reached fever
pitch in its attempt to build a case against MDC-T leader Morgan Tsvangirai
and civil society as agitators of military intervention and regime change in
Zimbabwe.  President Robert Mugabe’s spokesperson George Charamba who is
believed to be Herald columnist Nathaniel Manheru started this hysteria
alleging that Tsvangirai is mobilising African countries and the
international community to do a Libya or an Ivory Coast on Zimbabwe.

This fear and unfounded paranoia gripping Charamba, as well as the state
media’s onslaught on the MDC and civil society, must be seen in light of the
opposition within Zanu PF towards the continued stay in power of President

More so there is an increasing awareness and acceptance within Zanu PF that
Mugabe is no longer a viable leader. This has prompted desperate attempts by
Mugabe’s supporters like Charamba to rally everyone behind the faltering
leader using the fear factor.

Charamba and the state-controlled media have been deployed to frighten
dissenters in Zanu PF with the possibility of a Western invasion of Zimbabwe
or jail time for crimes against humanity. In the same vein the dissenters
are reminded that it is only Mugabe who can protect them. On the fringes of
this propaganda war and with clear evidence of a struggle with clarity are
the likes of Tafataona Mahoso who a few weeks ago had Jestina Mukoko, a
victim of torture by Zimbabwe’s security sector, appear in the Sunday Mail
against his rambling article which claimed Zanu PF victimhood. He accused
the West of the very same crimes that Zanu PF and the security sector are
known for.

This hysteria by Charamba, Mahoso and the likes of Jonathan Moyo go against
documented sentiments expressed by senior Zanu PF leaders in discussion with
US government diplomats. This is the reason for the panic within Mugabe’s
camp hence the diversionary propaganda war that seeks to identify common
enemies in the MDC and civil society.

This is an old trick that we have seen in the past which is doomed to fail
as always. First there is no doubt in the minds of sober, well meaning and
indeed patriotic Zimbabweans, be they Zanu PF or MDC, that 2012 and 2013 are
watershed years in the political life of Zimbabwe.

The change that will take place can be compared to that of 1980. This
reality is alive in the minds of sober Zanu PF politicians who have
expressed displeasure with the continued stay of Mugabe in power while it is
clear that he is no longer capable of running the party, let alone
government affairs.

The attacks on Tsvangirai and civil society are meant to reorganise and
regroup Zanu PF behind their leader. For this reason phantom theories of a
Western invasion and jail time for senior party officials are conjured up to
create panic and anxiety hence support for the candidature of Mugabe.

Mugabe’s few remaining supporters in Zanu PF need to be reminded that the
only way out for Zanu PF is to embrace and allow internal processes of
change, stop violence against the people of Zimbabwe and return the party to
its founding tenets as a liberation and freedom-seeking party.  They have
been advancing a perverted thinking that it should be possible and
acceptable for Zanu PF to beat, maim, intimidate and kill citizens without

I am reminded of the statements by the South African ambassador to Zimbabwe,
Vusi Mavimbela, that the mere fact of a given nation state being a member of
the regional and international community means that it has a responsibility
towards the maintenance of peace and where it fails the region and the
international community has a role to play to ensure peace.

The power to stop Zimbabwe being thrust on the international stage as was
Libya and Ivory Coast is in Zanu PF’s hands. This can be averted by simply
ending violence and adhering to democratic practices on elections and
observing human rights.

There is nothing secret about civil society being supported by the West.
These same Western-funded organisations are assisting in life-saving
programmes in health, transforming education and supporting the
constitution-making process. The images of the wars in both Libya and Ivory
Coast and now Syria are sickening and no sane Zimbabwean would want that to
happen here.  On the contrary, I would want to see Mugabe retire to Zvimba
so as to write his memoirs. Zanu PF must be able to envision a Zimbabwe
without Mugabe because it is coming. That is the natural course of political
life, more so nature.

Mukundu is a journalist and former director of MISA.

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Independent Comment: Budget: Good progress but a long way to go

Friday, 25 November 2011 10:25

FINANCE minister Tendai Biti’s national budget presented to parliament
yesterday showed we have registered significant economic recovery since the
inclusive government came into being in 2009 following a decade of
recordmeltdown, yet we still have a long way to go. Coming from a low base
after a decade of cumulative economic and hyperinflationary pressures which
left the economy in ruins, the budget demonstrated we have made meaningful
progress towards sustainable recovery even though the process is mainly
concentrated in primary commodity sectors, in mining and agriculture
sensitive to exogenous shocks.

The economy has been slowly but surely emerging from the woods. As a result
social services have been restored to a large measure, even if there are
still water and electricity shortages, as well as infrastructural decay. We
need to revamp our water systems, electricity generation and supply, public
transport, schools, hospitals, and other public facilities. Infrastructure
needs repair or renovation.

For this to happen, the current pace of recovery must be sustained or even
improved on. Government and stakeholders must come up with a common vision
and strategy to use all of our collective knowledge, skills and resources to
tackle prevailing economic and social problems.

The biggest issue remains that of economic recovery and real growth to
expand the economy and create jobs. This is what is more important at the
moment.The progress made so far shows Zimbabwe can fully emerge from the
doldrums and once again be one of the most thriving economies in the region.
The key to all this is good leadership and viable policies.

Despite progress towards full recovery, the size of our budget alone, given
the country’s rich mineral resource and agricultural base, tells us a story
that the economy is still far from reaching its full potential.

Zimbabwe has huge diamond deposits (some claim the biggest discoveries ever,
although this assertion has not yet been fully substantiated), the world’s
second largest platinum reserves and other precious minerals. Almost every
district in Zimbabwe has minerals. The country is still virgin territory. So
against a backdrop of this, the budget is still very small. To illustrate
the point, Zimbabwe’s budget presented yesterday is about five times smaller
than South African’s current R165 billion allocation to basic and higher
education for 2010/2011. Even though South Africa is the continent’s largest
economy, Zimbabwe can and should measure up better.

Due to stronger policies and a relatively favourable environment, we remain
firmly on the right track, although politics still cloud the horizon.
Elections and political uncertainty are negatively affecting economic
recovery. Although the current coalition arrangement has restored
macro-economic stability, a legitimate government is still needed to run the
show and take us forward.

We need a properly-elected government to restore Zimbabwe’s position in the
international community, come up with a coherent economic policy framework
and development programmes, attract investment and stimulate growth to
creating jobs and improve the standards of living.

The current situation is not sustainable. Although there has been some
progress under the inclusive government, there are serious capacity problems
in leadership, policy and direction. For instance, disagreements on
indigenisation and alluvial diamonds show this government is largely
dysfunctional, although it is serving a useful purpose of trying to organise
free and fair electionsexpected to yield a legitimate government.

There are still economic challenges to be dealt with. Despite recovery thus
far, structural impediments still weigh heavily on manufacturing and
utilities, which used to be the locomotives of growth and employment
creation. Manufacturing companies and parastatals need to be revived to
create jobs and accelerate recovery. Although, real GDP grew by an estimated
6% in 2009, 9% in 2010 and an expected 7% or more this year, growth benefits
have not fully trickled down to many ordinary Zimbabweans outside the public
sector and the growing segments of the formal private sector, thus poverty
remains widespread. The majority of people remain outside the realm of the
multicurrency economy.

And the road might be even more difficult given that global economic
problems. Economic activity has weakened and confidence has fallen sharply
recently, while downside risks are growing. Given all this and local
challenges, it is clear that we still have a long way to go.

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Editor’s Memo: BEE: Mugabe volte face a setback

Friday, 25 November 2011 10:23

Constantine Chimakure

SILLY season is upon us! President Robert Mugabe on Wednesday was back to
his old ways of double speak, throwing once again into opacity the country’s
indigenisation policy. Officiating at the launch of the Tongogara Share
Ownership Trust at Unki Mine, Mugabe decreed that foreign firms resisting
the controversial indigenisation drive should “leave the country now”.

Mugabe’s stance is a sharp contradiction to what he preached last month when
he launched a similar scheme –– the Zimplats-facilitated
Chegutu-Mhondoro-Ngezi-Zvimba Community Share Ownership Trust –– where he
exhibited rare pragmatism by calling for rapport in implementing the widely
condemned indigenisation programme, which many view as a drive to rob Peter
to pay Paul.

In October, Mugabe abandoned the populist rhetoric in which he had
threatened to nationalise mines and instead spoke about the need for
partnerships with foreign companies in empowering locals.

He claimed that the indigenisation policy wasnot meant to chase away foreign
companies, hence Wednesday’s pronouncement came as a shock to the firms and
would-be investors.

This flip-flopping is unacceptable since it comes from a head of state with
the power to effect those threats.
Not a single firm has resisted the indigenisation and empowerment
programme.They have been calling for a win-win situation.

Foreign companies have been questioning the modus operandi of the policy,
especially on thresholds, which they argued were unreasonably high and not
attractive to investment. They argued that indigenisation should be
incremental and on case-by-case basis, not a one-size fits all approach.

These calls ware initially resisted by government, but were later embraced
with Saviour Kasukuwere, the Indigenisation and Empowerment minister,
inviting companies to submit their indigenisation and empowerment plans,
which led to the launch of community trusts. It was commendable.

But Mugabe’s volte face is a drawback. He should urgently realise that we
need flexibility and rapport if the empowerment programme is to succeed.
Even Mugabe’s friends from the East cannot invest in the country when this
policy is as murky as it is.

Investment is timid, it goes where there is guarantee for a return and where
property rights and the rule of law are upheld.

We have said it before and we will say it again:Investors are very sensitive
to all the incoherence and confusion that has characterised the announcement
and implementation of the regulations. Until the channels are clear, they
will steer clear of the country. Mugabe and company would do well to take

The indigenisation regulations are premised on the wrong grounds as they are
not premisedon fostering wealth-creation but on grabbing what is already

It is an anti-entrepreneur policy whereby, instead of encouraging the
formation of new companies and businesses, local investors are being egged
into parcelling out shares from operating firms.

There is no doubt that Mugabe is bullying foreign firms to capitulate to his
and Zanu PF’s demands ahead of anticipated elections next year or in 2013,
like they did with the chaotic land reform in 2000.

Mugabe and Zanu PF want to radicalise the political-economic environment
with promises of benefits to the electorate through indigenisation and

History has shown that only a cabal of elites benefit from policies such as
indigenisation as they usually cannibalise the companies, leaving them as
mere shells.

While indigenisation is necessary, it can only be beneficial if the
methodology is right.

In its current format, the policy threatens to reverse the slow progress
made in the economy and precipitate a decline that could take years, if not
generations, to recover from.

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Candid Comment: Phew! No mention of elections in budget

Friday, 25 November 2011 10:20

Itai Masuku

THE 2012 budget announced by Finance minister Tendai Biti offers a glimmer
of hope from one perspective, that there is unlikely to be a general
election next year.
At least that’s what we picked up from his budget presentation yesterday. He
referred to putting aside a budget for the constitutional process and
referendum and also sprung a national census slated for next year.

Although we had not received the full text of his presentation by the time
of going to press, we did not hear him talking about putting aside money for
a general election, unless this is buried under the vote for the parent
ministry of the Zimbabwe Electoral Commission.

In fact we didn’t hear any mention of funds for the reform of the electoral
laws, which is part of the fundamental GPA requirements. It might therefore
be safe to assume that this would be covered in the context of the new
constitution. That being the case, the economy can heave a sigh of relief in
the interim and be rest assured that any talk of elections during 2012 is
mere politicking.

More importantly, industry still has at least one more year in which they
can try and consolidate the gains made over the past three years, this year
included.  Biti’s forecast of GDP growth of 9,4%, which is just a basis
point higher than this year’s budgeted 9,3 % may be achievable, other things
being equal. This assumes that the GDP growth target for this year is
achieved. But it also signifies economic growth rates coming to a plateau.
As we’ve always said in the past, we’re still talking of recovery here
before clawing back to 1997 levels.

Thereafter we shall be talking of real growth. A rather disturbing feature
of next year’s budget still remains the heavy dependence on the mining
sector, which continues to account for more than 50% of output. This is
particularly worrying given the cyclical nature of commodity prices.

As Biti pointed out, the top performers were platinum and gold, whose prices
shot up exponentially between last year and this year. What always has to be
borne in mind is that these same prices can similarly plummet in a much
shorter space of time in this volatile global economy that has this year
been dogged by the eurozone debt crisis. Ferrochrome, which came in as the
number four contributor, might be the first victim, given the dip in Chinese
manufacturing; the biggest consumer of base and industrial minerals over the
past decade or so.

The minister put in earnings from diamonds in third place, and if it’s true
that these are forever, that might provide a hedge for the minerals.

However, that only US$80 million from the sales of the gems found its way
into the fiscus leaves a lot to be desired but will be given benefit of the
doubt prior to last month’s Kimberley Process suspension. Biti says he now
expects US$600 million diamond revenue in 2012, putting his budget outturn
for the same at US$4 billion.

Sadly, three fifths of this simply go towards the recurrent expenditure in
the form of the civil service. It’s difficult to say whether we have a
bloated civil service that needs rationalising but if that’s the case, the
money would be better mobilised for severance packages. What we do know is
that the civil service does lack capacity in many respects, hence
retrenchments may worsen the government’s capacity to deliver the much
needed services. Whatever the case, the target of 20% as the standard for
civil service salaries should have been adhered to.

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