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Wave of price hikes dampen hopes for recovery

Zim Online

Monday 06 November 2006

      HARARE - Zimbabwe is experiencing a fresh wave of price increases as
the local currency nosedives on a thriving black market while manufacturers
suffer escalating financing costs, hitting hard consumers already grappling
with a deep recession.
      The southern African nation once boasted one of the continent's model
economies during the early years of independence but critics blame President
Robert Mugabe's 26-year-old rule for plunging the country into serious
political and economic chaos.

      Economic analysts said the soaring prices have all but ended Reserve
Bank of Zimbabwe's efforts to put brakes on rampaging inflation - the
highest in the world at more than 1 000 percent - and put a damper on any
prospects of economic recovery.

      "We have this surging demand for foreign currency from companies and
even from parastatals all seeking to buy raw materials on the parallel
market and we have seen the exchange rate going up on this market, which has
the effect of increasing prices," Harare consultant economist John Robertson
told ZimOnline.

      Crunch foreign currency shortages, along with food and fuel shortages,
have continued to dramatise a seven-year economic recession that has also
spawned an unemployment rate of above 80 percent and rising poverty levels.

      Analysts said as the central bank moves to tighten operations in the
financial sector by mopping up excess liquidity, interest rates have begun
spiralling, increasing manufacturers' costs of doing business.

      "Obviously the manufacturer would have to pass on the costs to
consumers but also let's not forget the wage pressures that producers face
and in the end we very well know that this creates a vicious inflationary
cycle," Robertson said.

      The analysts said consumers should none-the-less brace for more
increases before year-end as state-owned utilities start to adjust to market
prices for their services after the central bank announced it was halting
subsidies to the companies.

      Central bank governor Gideon Gono, who has been tasked by Mugabe to
change Zimbabwe's economic fortunes - and famous for his "failure is not an
option" catch phrase - has branded inflation the country's chief enemy.
Analysts agree with Gono but say the central banker looks surely to fail to
tame the inflation monster.

      Last Thursday, ZESA Holdings was allowed to hike electricity tariffs
by up to 270 percent, a move likely to fuel inflation. Commuter bus fares
rose 33

      percent last week, the second such hefty increase in a month, forcing
many workers to walk to work while others have resorted to cycling to work.

      Some municipalities have hiked service charges by more than 100
percent, while others are proposing even larger increases in a bid to pare
their losses and raise the quality of services.

      Consumers continue to suffer in silence as manufacturers have resorted
to quietly hiking prices of basic commodities almost on a weekly basis,
justifying it on the sliding Zimbabwe dollar on the black market, where the
bulk of forex is traded.

      "The pricing model being used now is basically influenced by the
exchange rate and to a certain extent the interest rate. Companies have to
borrow to either buy foreign currency on the black market or to finance
their operations, so naturally the impact on prices is quite significant,"
James Jowa, an economist with a Harare financial services firm said.

      The Zimbabwe dollar is artificially pegged at $250 to the United
States unit but very few can access it at that price, forcing many to buy
greenbacks on the black market at over $1 700. The central bank has not
given any hints of devaluing the dollar.

      But a 500 percent fare hike by state-owned Air Zimbabwe last month
gave a glimpse of how parastatals are battling to price their services. The
airfare increase showed the national carrier had used a rate of $1 500 to
the greenback, an admission that the official rate was unsustainable.

      The Consumer Council of Zimbabwe's (CCZ) monthly budget for a family
of six has risen 26.4 percent to $141 706 in October on the back of
increases in health services and food prices.

      Salaries have however continued to lag behind the price increases,
with a government employee - the majority of employees work for the
government - grossing $30 000 every month, almost five times less than the
CCZ monthly budget.

      Analysts say if Zimbabwe is to successfully tame inflation, it needs
to address food shortages, which have stalked the country since 2001.

      Although Mugabe blames the shortages on drought, critics say
disruptions caused by the government's chaotic and often violent land
reforms have resulted in the food shortages.

      Food accounts for a third of the consumer price index basket used to
calculate inflation. Analysts expect inflation to quicken when the Central
Statistical Office releases its October data later in the week. - ZimOnline

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Junior police officers barred from Kosovo duties

Zim Online

Monday 06 November 2006

      HARARE - Zimbabwe Police Commissioner Augustine Chihuri has barred
about 150 junior officers from taking part in lucrative peacekeeping duties
in Kosovo because of their "questionable loyalty" to President Robert Mugabe's

      The Zimbabwe Republic Police (ZRP) has over the past years been
sending officers to Kosovo and other troubled regions of the world on United
Nations (UN) peace-keeping missions and where the poorly paid officers get
handsome UN-set wages.

      Apart from Kosovo, the ZRP also has officers deployed in Liberia,
Sudan and East Timor.

      Sources within the police say Chihuri last week ordered the Police
Internal Security Intelligence (PISI) to weed out junior officers suspected
of backing the main opposition Movement for Democratic Change (MDC) party.

      "I have lost interest in working for people who want to put me on the
forefront in defending the government but do not care about my welfare.

      "I also regret using my hard earned cash in participating in a process
that views my services with suspicion," said a police officer who refused to
      named who was among those barred from taking up the Kosovo assignment.

      The police officers paid $20 000 to have their applications to be
posted to Kosovo considered.

      The source said Chihuri had privately expressed displeasure in
deploying junior officers on the lucrative duties because "they have a
questionable level of loyalty to the government."

      Chihuri is also said to have warned officers during pre-deployment
briefings not to make any negative statements about Zimbabwe while abroad.
Zimbabwe, which at independence from Britain in 1980 had one of Africa's
most brilliant economies, is in the grip of a bitter economic meltdown,
critics blame on mismanagement by Mugabe.

      Police spokesman Wayne Bvudzijena however denied the selection process
for officers to be deployed abroad was biased against individuals suspected
of being sympathetic to the MDC.

      Bvudzijena said: "We select our officers on merit and those who
finally make it to the duties are people whom we are confident will
represent the interests of the country in the best way possible.

      "Those who feel they have been treated unfairly are free to present
their concerns and reasons would be given to them as to why they do not

      Chihuri has in the past openly backed Mugabe's ruling ZANU PF party
and threatened to expel any police officers backing the MDC.

      Human rights groups accuse the Zimbabwean government of weeding out
opposition supporters from the police force and replacing them with pliant
brainwashed youths from the controversial national service programme. -

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Archbishop Ncube endorses ecumenical proposals for Zimbabwe

Independent Catholic News

BULAWAYO - 6 November 2006

Bishop Pius Ncube of Bulawayo has endorsed the new joint ecumenical
publication 'The Zimbabwe We Want: Towards a National Vision', issued by the
main Christian Churches last week.

The Archbishop was speaking on SW Radio Africa with journalist Violet Gonda,
last week with Bishop Trevor Manhanga of the Evangelical Fellowship of
Zimbabwe and Bishop Levee Kadenge of the Christian Alliance.

Describing the document as "Rushed" Archbishop Ncube said: "Well I just
thought 'OK, half a loaf is better than nothing'. If we could get peace
initiatives going and we settle the problems for the people of Zimbabwe and
people return to normalcy and live happy lives. Zimbabweans are desperate;
we are looking for every possible way. So we are saying if this document can
be a road map towards peace then perhaps half a loaf is better than

He said he hoped it would be taken seriously by the government, who had up
to now been "feathering their own nests' rather than considering the needs
of the people.'

To hear the full interview or see a transcript visit:

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Corruption in Africa

Washington Times

By Arnold Beichman
November 5, 2006

Let not your eyes go MEGA ("my eyes glaze over") on me as I recite some
eye-popping statistics about the continent of Africa. In fact when you read
this report you'll ask: "Why, for heaven's sake, is Africa South of the
Sahara (SSH) the world's Number One Basket Case?" (Obviously, the African
tragedy stops at the border of South Africa, which has a successful economy
and the stirrings of a successful democracy.)
    Look, here is what is below ground in the African continent: 90 percent
of the world's cobalt; 90 percent of its platinum; 50 percent of its gold;
98 percent of its chromium; 64 percent of its manganese, one-third of its
uranium. Africa is rich in diamonds. And get this: Africa has more oil
reserves than all of North America.
    Great, wonderful. So why is Africa SSH the world's Number One Basket
    It would be a logical fallacy to ascribe a single causal explanation for
Africa SSH but there could be a hierarchy of causes. At the top of the list,
I would put corruption among African elites as a major reason why Africa SSH
has become a latterday Death Valley. One simple corroborative example:
Zimbabwe, a one-time land of milk and honey, is now an abyss of tyranny and
starvation, except, of course, for dictator Robert Mugabe, his family and
    Says Professor George Ayittey, a native of Ghana, an economist at the
American University in Washington, D.C.:
    "Africa has been totally mismanaged and misruled in the past decade.
Nobody wants to talk about that because of political correctness. But
Africa's begging bowl leaks, horribly."
    And how it leaks. The African Union's own estimate, according to Peter
Goodspeed of the Toronto National Post, loses $148 billion a year to
corruption. While Prime Minister Tony Blair wants to increase aid to Africa
by an extra $25 billion a year, British taxpayers are unaware of the grand
larceny being committed by crooked African leaders.
    The Economic and Financial Crimes Commission of Nigeria last year said
that a series of Nigerian military dictators had squandered -- hold your
hat -- $500 billion, a sum equivalent to all Western aid to Africa in the
past four decades. In Kenya, $4 billion disappeared during the presidency of
Daniel Arap Moi's 24 years in power. This is how the National Post describes
the Kenya larceny:
    "The country's Central Bank was looted, money was stolen by making
fictitious payments on foreign debt, kickbacks were collected on all public
contracts and when that didn't supply enough cash, politicians awarded
themselves phony contracts."
    And all this looting was going on in a country with 70 percent
unemployment and while nearly two-thirds of Kenya's population of almost 30
million were living below the poverty line. Said Tunde Obadina, economics
editor of Africa Today magazine:
    "The failure of democracy and economic development in Africa are due to
a large part to the scramble for wealth by predator elites who have
dominated African politics since independence.... Africa's tragedy is not
that its nations are poor. That is a condition that is a product of history.
The tragedy is that it lacks ruling classes that are committed to overcoming
the state of poverty."
    But that's not all of the problem. Says Jerome Pope, director of
Transparency International:

 "The international banks, the western businessmen who bribe to get the
contract, those who are in cahoots with all the millionaires, they are all
up to their eyeballs in what is taking place. When it comes to moral
standing, everybody belongs in the gutter together."
    Africa SSH is poor, its people starving, its children malnourished and
unschooled -- but there's cash on the barrelhead for guns and bullets, for
civil wars, tribal-ethnic wars, territorial wars. Is it possible, as a
Nigerian newspaper editor once wrote, that Africa was better off under
    Someday one hopes Africa will come into its own. But when?

    Arnold Beichman, a research fellow at the Hoover Institution, Stanford
University, is a columnist for The Washington Times.

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China Pledges Billions in Aid to Africa

The Guardian

Sunday November 5, 2006 5:16 AM


Associated Press Writer

BEIJING (AP) - China is launching a sweeping effort to expand its access to
Africa's oil and markets, pledging billions of dollars in aid and loans.
Chinese entrepreneurs on Sunday signed deals with African governments and
firms worth $1.9 billion, state media reported.

Some 16 deals were signed at the conclusion of a conference of Chinese and
African entrepreneurs on the sidelines of a two-day forum in Beijing
attended by dozens of African leaders, the official Xinhua News Agency said.

African leaders at the forum said they welcomed Chinese investment and
business ties, but Beijing also faces criticism that it is treating Africa
like a colonial territory and supports regimes with poor human rights

President Hu Jintao pledged to double China's aid to Africa from its 2006
level by 2009. Speaking at the conference's opening ceremony Saturday, he
promised $3 billion in loans, $2 billion in export credits and a $5 billion
fund to encourage Chinese investment in Africa.

It was not immediately clear if the government's promised $5 billion
investment fund played a role in the deals announced Sunday.

``Chinese assistance to Africa is sincere, unselfish and has no strings
attached,'' Premier Wen Jiabao said at the gathering of Chinese and African

Possibly reacting to criticism that China's aid to Africa might fuel human
rights abuses or corruption, Wen promised to ensure that projects are
``open, just, fair and transparent.''

The event included heads of state from 35 of the 53 African nations and top
officials from 13 others - one of the largest such gatherings in history.

China's trade with Africa soared to $39.7 billion last year, four times its
2000 level, according to Wen. He called for efforts to boost that to $100
billion by 2020 and promised to open China's markets wider to African

China's state oil companies are expanding in Africa, signing deals in
Nigeria, Angola, Sudan and elsewhere. Manufacturers are trying to expand
exports to African markets.

Human rights activists accuse China of supporting governments such as Sudan
and Zimbabwe that are accused of chronic abuses. African business groups
complain about poor treatment by Chinese companies and competition from a
flood of low-cost imports.

But a succession of African leaders who spoke Saturday said they want closer
commercial ties with China and hope to learn from its two-decade-old boom as
they try to reduce poverty.

``Chinese companies can become key players by investing in our development
processes,'' said President Paul Kagame of Rwanda.

Hu said Beijing also will forgive debts owed by the poorest African
countries and grant more of their goods tariff-free import status.

China will train 15,000 African professionals, build schools, hospitals and
anti-malaria clinics, send agriculture experts and youth volunteers to
Africa and build a new conference center for the African Union, Hu said.

He said China would double the number of scholarships given to African
students to 4,000 by 2009.

At a banquet Saturday, Hu invoked the shared history of colonialism in China
and Africa and their struggle with poverty.

``The Chinese people rejoice at the achievements made by the African
people,'' he said. ``The Chinese people will continue to provide assistance
and support to African people in an effort to achieve common development.''

The New York-based group Human Rights Watch appealed to Beijing on Saturday
to be judicious in giving aid. It called on Chinese leaders to avoid giving
Sudan assistance that might fuel the Darfur conflict and to stop supplying
Zimbabwe with electronic surveillance and Internet-censoring technology.

``Africans do not need another external power enabling abusive regimes,''
the group said in a statement.

World Bank President Paul Wolfowitz accused Chinese banks last month of
ignoring human rights and environmental standards in Africa. He warned that
their surge in lending could fuel corruption and debt burdens.

This weekend's conference was a major prestige event for China's communist

The capital was hung with banners welcoming the African leaders. The
government called on residents to avoid driving to keep streets clear for
their motorcades.

On Saturday, state television showed Chinese surgeons working in African
hospitals, a Kenyan stadium paid for by Beijing, and Chinese and African
students dancing together.

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China in Africa: boon or burden?


Sun 5 Nov 2006 2:47:12 GMT
By Lindsay Beck

BEIJING, Nov 5 (Reuters) - When workers rioted at a Chinese-owned copper
mine in Zambia, it symbolised the worst of China's deepening relationship
with Africa.

China, it seemed, was going after the continent's natural resources to feed
its own booming economy, handing out grants and loans to ease entry for its
companies and blind to standards of human rights and governance.

But as Beijing hosts 48 African leaders for a summit aimed at deepening
trade and political ties, both the best and worst of its engagement are on
display: investment that is fuelling the highest growth in decades in parts
of Africa, but also its friendship with countries like Zimbabwe and Sudan.

Critics say China has ignored corruption and rights abuses and undermined
international efforts to isolate rogue regimes.

However, analysts also say China's investment is giving a much-needed boost
to African economies otherwise largely ignored by Western investors.

"Unlike some other countries, China is working to help Africa restore
infrastructure, such as roads and bridges destroyed by wars. Those are
essential for the entire economic recovery," said Chu Tianshu, a development
economist at the Southwestern University of Finance and Economics in

In Angola, ravaged by three decades of civil war, China was criticised after
Luanda turned down an IMF loan in favour of a package of oil-backed loans
and credit from Beijing worth more than $3 billion that came with far fewer
strings attached.

But while it let Angola escape IMF monitoring intended to curb graft, China
was also praised for tackling reconstruction needs in a country few other
investors would touch.

"They were the only ones on the horizon that were willing to come in," Paul
Hare, head of the U.S.-Angola Chamber of Commerce, said at an American
Enterprise Institute event in Washington.

The pay-off for China? Angola this year surpassed Saudi Arabia to become its
largest supplier of crude oil.


There also are signs that China's engagement in Africa is beginning to
respond to local concerns.

China pledged to voluntarily cap clothing exports to South Africa amid fears
its goods were stifling local industry, and in the face of criticism that
its projects were staffed only with Chinese workers, it is beginning to hire
more nationals.

Then there was the mining unrest in Zambia.

"Zambia was a big wake-up," said Chris Alden of the London School of
Economic and Political Science.

"Where African leaders take these issues to the Chinese and do so
emphatically, I think the Chinese have demonstrated generally that they've
been pretty responsive," he said.

In an interview with China's official Xinhua news agency, State Councillor
Tang Jiaxuan recognised the concerns.

"China appreciates the concern of some African countries on trade deficits
and textiles and is taking measures and working with the countries concerned
to resolve them," he said.

But he also stressed the growing export market for Africa that China's boom
has created.

Rights groups counter that China's engagement with any and all is preventing
the development of better governance in Africa.

"Africans do not need another external power enabling abusive regimes -- 
they need all powers, including China, to place human rights at the centre
of their policies," Sophie Richardson, deputy Asia director at Human Rights
Watch, said in a statement.

Particularly scrutinised has been China's relationship with Sudan, from
which it imported more than 14 million barrels of oil this year, and to
which it sells arms that activists say are fuelling the conflict in Darfur.

But analysts also point out that China has been shut out of legitimate oil
deals elsewhere, citing political opposition that forced state-owned oil
giant CNOOC to withdraw a bid to buy U.S. producer Unocal.


Still others argue that China's engagement is not feeding Africa's growth,
but threatening it with loans that could undermine recent debt forgiveness
and investments that contribute to environmental destruction and poor labour

For African leaders themselves, China, which in 30 years grew from a poor,
isolated state into the world's fourth-largest economy, is an inspiring

"The idea is that we share something with China and not with our other
partners -- not with the United States, not with Japan -- which is the fact
that we belong to the same group of countries, developing countries," said
Aly Houssam el-Hefny, Egypt's ambassador to China.

And with trade between Africa and China projected at $50 billion this year,
up from about $11 billion in 2000, there are bound to be rewards for the
continent's economies.

"It's like trade between any two trading partners -- some industries are
going to expand and some will shrink," said Chu, the development economist.

But, she added: "Overall, the pie is getting bigger." (Additional reporting
by Paul Eckert in Washington and Ben Blanchard in Beijing)

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Zimbabwe tourism industry targets Middle East

Xinhua 2006-11-05 20:57:03

          HARARE, Nov. 5 (Xinhua) -- The Zimbabwe Tourism Authority
(ZTA)would continue targeting the Middle East in its tourism marketing drive
as the market has the potential to raise revenue levels for the sector,
state media reported on Sunday.

          The state news agency New Ziana quoted the authority's chief
executive Karikoga Kaseke as saying that they had made inroads into the
market which would likely result in increased numbers.

          Tourists from the Middle East, especially those from the United
Arab Emirates, are well known high spenders who travel in low numbers.

          Kaseke said the Authority's strategy to capture a share of that
market was being guided by the principle of low volume, high value.

          "Even if we have low numbers in terms of visitors and manage to
raise our target earnings, we are happy. Tourism at the end of the day is
about earning foreign currency and not necessarily the number of tourists
who visit," he said.

          He said as a result of the Authority's initiatives, a number of
buyers from the Middle East also attended the International Travel Expo held
in the capital last month.

          Meanwhile, Kaseke said the tourism sector was confident of
realizing its set target of 300 million U.S. dollars this year, taking into
consideration increased activity in the sector.

          Next year, the sector would be looking at raising at least 500
million U.S. dollars with the ultimate objective of increasing earnings to 2
billion U.S. dollars annually by 2010.

          With rekindled interest in the country's tourism, the tourism
sector hopes to contribute meaningfully and increase contributions to the
gross domestic product.

          In the first three quarters of the year, tourist arrivals
increased by about 45 percent, a sure sign that the marketing initiatives by
various players in the tourism sector are bearing fruit.

          International media criticism of the government's land reform
programs and designation of the country as an unsafe tourist destination had
negatively impacted on tourist arrivals in the last five years.

          The government is focusing its attention on tourism because of its
quick turnaround potential and strategic role in economic revival

          The tourism industry contributes six percent to the Gross Domestic
Product (GDP) and 10 percent of the country's total foreign currency

          At its peak in 1998, tourism accounted for eight percent of gross
domestic product, 12. 5 percent of formal employment and about 11 percent of
foreign exchange earnings.

      Editor: Pliny Han

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