Trial of Zim murder accused starts 09 September, 2005

FRANCISTOWN - The trial of four Zimbabwean prisoners charged with murdering another inmate, Tshenolo Gabaitse, started on September 6 before Justice John Mosojane at the Francistown High Court. The four are Edwin Ngangezwe Sibanda, 39, Baalakani Maliki Chuma, 32, Dennis Nyathi, 39, and Charles Ambrose Ngwenya, 38. The accused are jointly charged for the murder of Gabaitse on January 19, 2003. The first witness Ranchi Ntaletsang, 42, who is also a prisoner, told the court that the murder occurred during a stampede involving Batswana and Zimbabweans on January 15. The stampede followed a quarrel over sugar between Nyathi (third accused) and Gabaitse. Ntaletsang told the court that as the quarrel between the two intensified, some inmates intervened. He said the second accused, Baalakani, then told Nyathi to slap Tshenelo, which he did. Thereafter, Ntaletsang said a fist fight erupted but was brought under control by other inmates. Ntaletsang further narrated that after the fight, Gabaitse conducted a church service, saying that church precedings were common in prisons. He said the fight took place at cell 11 courtyard. Ntaletsang said the Zimbabweans held a meeting at the opposite courtyard (front of cell 8). Court also heard that after the church service prisoners dispersed to their cells, but were prevented by first accused Ngangezwe from entering cell 8 courtyard. Ntaletsang further told the court that when the deceased moved from church service to his cell (2) he was confronted by Baalakani, Nyathi and Ngwenya. I realised that there was a fight and I moved towards the entrance gate with other prisoners, said Ntaletsang. Ntaletsang told the court that he saw Baalakani hit Gabaitse with a broomstick. The deceased then fell to the ground and both Nyathi and Ngwenya took a dustbin full of rubbish with which they hit Gabaitse thrice on the head. He told the court that Ngangezwe took a knife from his pocket and scratched the deceased on the chest. Ntaletsang said prison warder, a certain Marmano, opened the gate and many prisoners ran outside the courtyard. Ntaletsang mentioned so many cells that the arrangement of the prison was not clear to the court. State counsel Antoinette Kula then made an application to the court to have a geographical inspection of the prison. The request was granted. During cross examination, the defence counsel for first accused Ngangezwe, Lyndon Mothusi told the witness that he had inherent hatred of Zimbabweans. In other words you are xenophobic? asked Mothusi. Ntaletsang responded by saying that he could not hate Zimbabweans when his sister was married to a Zimbabwean. Ntaletsang told the court that a tense animosity between Batswana and Zimbabweans only started after Ngangezwes arrival, adding that before there was peace between the two nationalities. Ntaletsang also denied that the Gabaitse was a bullying prisoner. He described him as someone who loved peace as he used to attend ZCC services in prison. The second accused, Baalakani, is represented by Charles Tlaagae, McBain Kaang for Nyathi while Oganeditswe Marata intercedes for Ngwenya.The trial continues. BOPA

Sugar shortages in sight, warns producer
Eric Chiriga

ZIMBABWE is likely to experience more sugar shortages as Zimbabwe Sugar Refineries (ZSR), the country's biggest sugar producer, says they would not be able to produce to their normal capacity because of logistical problems.

ZSR, which produces about 40% of Zimbabwe's sugar requirements, is currently hamstrung by the shortage of coal and foreign currency problems.

The company has a production capacity of 220 000 tonnes per year at its two refineries.

In an interview with businessdigest, ZSR chief executive, Pattison Sithole, said sugar production had been adversely affected.

"We are facing problems in moving raw sugar from the Hippo and Triangle estates," Sithole said.

"This has been compounded by the shortage of coal," he said.

Sithole refused to disclose how much sugar they expected to produce this year.

He said ZSR used to import coal from Botswana but they had since stopped due to lack of foreign currency.

Sithole also said price controls introduced by government had a negative impact on their business.

"The price of sugar has not been going up at the same rate as the cost of production and this is affecting our margins," he said.

Sithole refused to comment on the effects on their business of the takeover of part of their sugar estates under the land reform programme.

"You will need to ask Triangle and Hippo Estates on that issue," he said. Sugar has become a scarce commodity and long queues have become a common sight outside supermarkets where consumers expect supplies.

Meanwhile, the sugar crisis will be further exacerbated as cane producer, Hippo Valley Estates (Hippo), says that the move by the Reserve Bank of Zimbabwe (RBZ) to liquidate US$2,68 million from its Foreign Currency Account (FCA) will severely undermine production.

On August 12, the RBZ directed that US$2,68 million be liquidated from the company's FCA on the grounds that the company's banker had violated exchange control regulations with respect to the liquidation of FCA balances within the specified period.

"This development will adversely impact the company's ability to import critical inputs and thus seriously undermine production," Godfrey Gomwe, the chairman of Hippo, said.

Gomwe said this contention is rejected and the company has since lodged an appeal with the RBZ for the reversal of this directive on the grounds that the applications in question were indeed lodged with, and approved by the Exchange Control Authorities within the stipulated retention period.

He said the monitored domestic sugar prices, which are grossly unviable and uncompetitive when compared to the regional market, precipitated intense speculative activities, thereby exacerbating shortages of sugar in the local market.

"The economic improvements recorded during the greater part of 2004 and early 2005 in response to the RBZ monetary policy interventions have started to reverse," Gomwe said.

He said Hippo remains listed for compulsory acquisition under Section 5 despite objections being lodged with the relevant authorities, and this has also affected their yields.

In his annual report for 2004, Gomwe said the company achieved an overall cane yield of 86,45 tonnes per hectare - a decrease of 18,7% from the prior year's average yield of 106,28 tonnes per hectare.

Govt seeks $10,5 trillion for IDBZ
Eric Chiriga

THE government plans to raise $10,5 trillion for the new Infrastructural Development Bank of Zimbabwe (IDBZ)'s proposed authorised share capital in which it intends to hold 70% shares.

The money will be raised through direct allocations from the budget.

Government is consolidating its shareholding in the former Zimbabwe Development Bank (ZDB) after Fidelity, Zimre and other private investors pulled out.

Government had a 67% stake in the ZDB, which now forms the core of the new bank, but will have 70% in the new entity while the remaining 30% will be offered to local and offshore investors. The 30% is valued at $4,5 trillion.

"The government will raise $10,5 trillion for the proposed authorised share capital on a phased approach through direct allocations from the budget," said the Minister of Finance, Herbert Murerwa, last week.

The new bank will have an authorised share capital of $15 trillion.

"Initially, the bank's paid-up capital will be a trillion dollars," Murerwa said.

He said the amount had already been catered for in the 2005 budget.

"The initial capital injection," Murerwa said, "will trigger the mobilisation of additional resources from both the domestic and international capital markets."

The IDBZ was officially launched on August 31, about five months late due to problems with funding although Murerwa said the delay was caused by "wider consultation".

Murerwa said the bank would play a critical role in financing strategic infrastructural projects.

He said the bank, through the Public Private Partnership initiative, would also be expected to broker partnerships and come up with viable financing options for the private sector to participate in infrastructure investment.

Three new divisions will be added to the current ZDB structure, comprising housing, energy and amenities and utilities.

Murerwa said during the transformation phase, the ZDB would continue with its existing business activities, but as a separate division of the IDBZ.

An interim management board chaired by the secretary for Finance, Willard Manungo, has been put in place to manage the IDBZ.

Charles Chikaura has been appointed the chief executive officer with effect from September 1 for a period of five years.

Chikaura retired from the RBZ as deputy governor in August last year.

The board will include Andrew Bvumbe, the permanent secretary in the Ministry of Economic Development, engineer Ngoni Kudenga and Vincent Hungwe.

ZABG puts spotlight on RBZ's integrity
Shakeman Mugari/Conrad Dube

THE Supreme Court ruling on the Zimbabwe Allied Banking Group (ZABG) delivered by Justice Wilson Sandura this week is a direct assault on the integrity of the Reserve Bank of Zimbabwe (RBZ).

It raises questions of credibility in the way the RBZ handled the banking crisis last year.

The ruling, delivered after six months of consideration, found that the sale and transfer of Trust Bank and Royal Bank's assets to the ZABG was "null and void, and of no force or effect".

The judgement said the RBZ acted unlawfully when it approved the sale of the assets to the ZABG.

It also questioned the conduct of the curators who were instrumental in the sale of the banks' assets to the ZABG.

"Accordingly, subsection (2) of Section 55 of the Banking Act does not authorise a curator to dispose of all the assets of a banking institution. It follows, therefore, that the curator acted unlawfully when he sold the assets of Royal Bank to the ZABG. In the circumstances, the sale and transfer of the assets were null and void, and of no force or effect," the Supreme Court ruled.

It made the same startling revelations in the Trust Bank judgement.

Justice Sandura said the central bank failed to comply with the provisions of the Troubled Financial Institutions (Resolution) Act, a law that it instigated to justify the takeover of troubled banks.

From government's point of view, the ruling might be one of many that it may ignore to suit its motives and plan. It is likely to be treated like many other court orders and rulings that the government has disobeyed in the past - especially in land cases.

RBZ governor Gideon Gono is determined to see his project succeed at any cost.

"Even if it means opening (the ZABG) on January 31 midnight, we will do so," Gono said before the bank was launched. But in the rush to open the bank he forgot - maybe conveniently so - to follow the law.

He infringed the same principles of corporate governance that he has been accusing bankers of breaking, calling it "corporate incest".

In practice the ruling does much damage to the integrity of both the central bank and the ZABG.

It reveals double standards. It exposes the central bank and the curators' deliberate sidestepping of tenets of corporate governance, which should, in a normal economy, make the foundation of a central bank.

It portrays Gono as a governor who is determined to disregard the law to achieve his plan. His plan was to set up a bank, and he did.

The ruling sets a crucial precedent in future cases dealing with troubled banks and any other company. It also puts the curator's integrity into question.

Justice Sandura said in his judgement: "This is an appropriate case in which this court (Supreme Court) should mark its disapproval of the unlawful conduct of the Reserve Bank, (the) ZABG and the curators".

The ruling was critical of the conduct of the curators who instead of nursing ailing banks back to life decided to bury them alive by selling their assets.

For the ZABG, the ruling removes its very foundation stone as it was set up and operated using assets unlawfully seized from their legitimate owners. It reminds Zimbabwe about property rights which for sometime have been wantonly disregarded.

If the sale of the assets to the ZABG was unlawful, null and void, it means the bank is operating on stolen assets and capital. If Zimbabwe was a country that respects the law, the ZABG should have closed immediately.

The ruling stated clearly that the assets that the ZABG claims to own still belong to Trust and Royal Banks. The employees working for the ZABG belong to the two banks, so do the cars, offices and IT systems.

Financial institutions that continue to deal with the ZABG are putting themselves at risk because they are trading with a technically insolvent bank. According to the Supreme Court ruling, the ZABG is insolvent. It does not have a loan book, offices or assets of its own.

The Treasury Bills, bonds and any instruments that the bank is using as security in dealing with other banks do not belong to it. The court said all that the ZABG calls its assets belong to Trust and Royal.

The judgement also has an implication on the profits that the bank claims to have made in its first results. If it is true that it made $28 billion, according to the court ruling, that money belongs to Trust and Royal being benefits accruing from the use of the two banks' resources and assets.

The shareholders and depositors of the two banks can also sue for any loss that the banks made because of the forced marriage.

By allowing the ZABG to continue trading, the central bank is telling the market that one can walk into another's premises to take over the business and start operating as long as the RBZ approves.

Worse still, given the emphasis that the Supreme Court put on the unlawful transfer of assets, the RBZ could be found in contempt of court.

The Zimbabwe Independent has warned in the past that the RBZ is now playing both roles of referee and player in the banking sector. It has a special interest in the ZABG to which it played the midwife.

How can Zimbabwe woo local and foreign investors when the same institutions that are tasked with supervising and monitoring good corporate governance are the first to break the rules?

The wanton seizure of private property is however not peculiar to the financial services sector.

It is the reason why Zimbabwe is begging for food when it has the capacity to feed its own people.

Self-exiled businessman, Mutumwa Mawere, has lost diversified SMM Holdings that he has been at pains to prove that he used personal funds to buy from T&N plc.

The government has used yet another conveniently crafted law to grab the company, just like it amended the Land Acquisition Act to legalise the seizure of white-owned commercial farms.

What is of major concern is that the unlawful sale and transfer of Royal Bank's assets happened with the full blessing of the RBZ, including the total disregard of the Troubled Financial Institution (Resolution) Act and the Banking Act.

That the central bank is found right in the thick of an illegal disposal of private property is baffling. It's exactly 195 days since the Independent wrote saying the launch of the ZABG would stir a legal furore.

Mediagate: Mirror's Kanengoni fired
Dumisani Muleya

ZIMBABWE Mirror Newspapers Group CEO Ibbo Mandaza, who is also editor-in-chief, has fired his deputy Alexander Kanengoni in the aftermath of the mediagate scandal.

Sources said Kanengoni was fired last week after he failed to attend a disciplinary hearing following his suspension last month in the wake of disclosures by the Zimbabwe Independent of the takeover of three independent newspapers by the state security agency, the Central Intelligence Organisation (CIO).

As has been widely reported by this paper over the past few weeks, the CIO had a buy-out at the Financial Gazette and the Mirror group's two titles, the Daily Mirror and Sunday Mirror. The CIO, who own the Financial Gazette through a front, reportedly also wanted to take over other newspapers and communication agencies.

"Kanengoni has been fired after failing to appear before a disciplinary committee for a hearing to answer charges of insubordination," a source said. "A letter of his dismissal signed by the CEO was sent to his Warren Park (Harare) address last week."

Kanengoni was accused by Mandaza of insubordination, harassment of journalists, shouting abuse, and causing chaos in the newsroom. He was initially suspended on August 18 before his dismissal last week.

Before joining the Mirror, the Chivhu-born Kanengoni (54) was ZBC head of TV services and a CIO media desk officer. He is also an ex-combatant and a short stories author.

Kanengoni's dismissal came as further information showing CIO control of the Mirror group has emerged. It was established this week there were four directors on the Mirror's board who had CIO links and not two as at first concluded.

The Mirror's directors were Mandaza, Kanengoni, Thomas James Meke, Ambassador Buzwani Mothobi, John Marangwanda, Charm Ndaba Mukuwane, Tendai Mangezi who has resigned, and Jonathan Kadzura. Amy Tsanga was appointed later to replace Mangezi. Musi Khumalo resigned.

Sources said four of the eight Mirror directors - Kanengoni, Meke, Mukuwane and Marangwanda - worked for the CIO during different times and represented their interests on the board. This puts beyond any reasonable doubt that the CIO owned and controlled the Mirror group.

Kanengoni's dismissal follows dramatic clashes with Mandaza in the wake of the mediagate reports. Sources said Kanengoni clashed head-on with Mandaza over how to react to mediagate.

"There was drama at the Mirror after the first mediagate story," a source said. "Mandaza wanted to react in the Daily Mirror a day after the story, on August 13, but he was blocked by Kanengoni.

"In the process Kanengoni and Mandaza exchanged harsh words. But Kanengoni prevailed for the first four days before Mandaza got his way after roping in politicians."

After failing to publish a denial on August 13, 14, 15 and 16, Mandaza won support from politicians and then managed to block Kanengoni and his camp's attempted denial of the story on August 17. On August 18 Mandaza finally got his way to run a denial the following day although the reaction failed to cover up the issue.

This battle of wills, sources said, poisoned the environment at the Mirror and created dangerous hostility between Mandaza and Kanengoni.

"The situation was explosive but what is interesting is how Mandaza wanted to drag Kanengoni before a disciplinary committee when the guy didn't even have a contract with the Mirror," a source said.

It was said Kanengoni had been seconded to the Mirror by the CIO and was not accountable to Mandaza as a result.

Sources said although Kanengoni has become the first casualty of the media scandal there would be more victims in the long run. Mandaza is struggling for survival in the group but is still hanging on - at least for now.

Zimpapers reels as hard times bite
Augustine Mukaro

ZIMPAPERS, which now operates almost exclusively as a government propaganda mouthpiece, has embarked on drastic cost-cutting measures by clearing sit-in correspondents and freezing recruitment of new staff.

Zimpapers' cost-cutting strategy came amid rising concern over the use of the group's flagship daily, the Herald, by President Robert Mugabe's spokesman George Charamba to attack foreign heads of state and people he does not like.

Highly placed sources at Zimpapers - which runs 10 publications - said management last week resolved to implement sweeping measures at a time when the cost of producing newspapers is soaring. Sit-in correspondents, students on attachment and stringers have been told to leave.

"Out of more than 14 students and sit-in correspondents at different publications only two remain. The rest have left," an inside source said.

The source said management also resolved to freeze recruitment in all departments, reduce the number of direct telephone lines, cut fuel allocations to management by half and decrease the print runs of the stable's struggling publications.

"The state of affairs is critical and management is trying to reduce costs. The situation is worsened by the fact that a number of our publications have not been making any profit," the source said.

"Some of the papers were being financed from profits generated by other papers. The cover prices alone could not meet the increased printing costs."

Zimpapers has increased the cover prices of its flagship Herald, Sunday Mail, Chronicle, Sunday News, Manica Post, Kwayedza, Umthunywa, New Farmer, Trends and Zimbabwean Travel with effect from today.

Juts like other media houses, Zimpapers cited steep increases in input and production costs, especially newsprint, inks, printing plates, labour and fuel.

Herald editor Pikirai Deketeke would not comment on the issue, saying he was in a meeting.

Charamba has reportedly been using the Herald's anonymous Nathaniel Manheru column to abuse those he does not agree with.

The most prominent victims of Charamba's vituperation have been Nigerian President Olusegun Obasanjo, South African President Thabo Mbeki, Zimbabwe Independent and Standard publisher Trevor Ncube, Zanu PF newspaper editor Lovemore Mataire, and Independent MP Jonathan Moyo who, ironically, is said to be the founder of the column.

Moyo recently said Charamba was the author of the column. He described the presidential spokesman as Mugabe's "reckless and irresponsible wordsmith".

Charamba hit back against Moyo whom he linked with the debate on the "Third Force", suggesting it was a hopeless initiative.

After attacking Obasanjo, Mbeki, Moyo and Ncube, Charamba last week took his attacks to new levels against Mataire by insulting the journalist in vicious personal terms.

Mataire said he would not respond to Charamba's "malicious attacks".

"I can't dignify those scurrilous remarks against me by responding to them as if they were serious points of constructive engagement on an issue of public interest and debate," Mataire said.

"But I find it obnoxious that a public and national paper like the Herald can be used as a weapon for character assassinations. It's repugnant in the extreme."

The issue, which is part of the battle for control of information between the Zanu PF and government propaganda departments, has raised grave concern among ruling party leaders who were said to have been angered by Charamba's attacks.

"There is serious concern about Charamba's conduct in government and Zanu PF circles," a source said. "Officials are wondering how a presidential spokesman, permanent secretary and senior civil servant could do such unprofessional things like writing an abusive column with no information value whatsoever."

Observers say even under Moyo, the Manheru column was mostly about insulting people, not raising serious debate on relevant issues. But some say it has now got worse under Charamba who uses it as a platform for personal vendettas.

Gono in US to plead Zimbabwe's case
Roadwin Chirara

A ZIMBABWEAN delegation led by central bank governor Gideon Gono left for Washington on Tuesday in a bid to avert the country's expulsion from the International Monetary Fund (IMF).

The IMF executive board is meeting today to decide Zimbabwe's membership of the Bretton Woods institution.

Although Zimbabwe last week made a surprise US$120 million partial payment, it is still in danger of expulsion because of huge arrears.

The delegation's payments arrangement will seek ways of paying off over US$174 million in arrears owed to the IMF.

Sources said although the country's arrears were long overdue, Gono and his team would parade last week's payment as an indicator of a change of tenor to meet Zimbabwe's international obligations.

The high-powered delegation, made up of senior staffers at the Reserve Bank of Zimbabwe, also includes the two deputy governors, Charity Dhliwayo and Nicholas Ncube.

Munyaradzi Kereke, an advisor to the governor who had been widely tipped to make the trip, is said to have gone only as far as South Africa where the central bank is negotiating a loan to service part of its external debt.

Minister of Finance Herbert Murerwa confirmed Gono had gone to Washington for the IMF board meeting to be held today.

He however denied that Gono was going to make a US$50 million payment to the IMF.

"No, in fact no one has asked for that amount," Murerwa said.

On the chances of the country being expelled from the IMF, Murerwa said if such a decision was taken it would likely be a political decision.

"Remember that the last country was expelled from the IMF in 1954. Zimbabwe is important in the region and if we are expelled, it would be because of politics and nothing else," said Murerwa.

'Proudly Zimbabwean' agency set for launch
Godfrey Marawanyika

THE Reserve Bank of Zimbabwe is setting up a fully-fledged "Proudly Zimbabwean" foundation that will formulate standards for locally-manufactured products.

The foundation will also vet, accredit and establish standards, according to bankers who said the foundation was expected to be fully operational by year-end.

"The foundation will not be used by anybody. The Reserve Bank has started drafting a document on the programme," a senior banker said this week.

"The foundation will set strict criteria of how companies that wish to adopt the 'Proudly Zimbabwean' logo will apply to meet certain laid-down procedures."

The "Proudly Zimbabwean" concept is in line with the labelling of goods which meet set guidelines in South Africa and is meant to promote locally made products.

Industrialists said although the idea was noble, its implementation would take time as firms were worried about their bottomline earnings.

There are concerns in industry that their products would be shunned owing to "xenophobic feelings" about Zimbabwean products and the negative publicity the country has attracted over the years.

Earlier this year, the Standards Association of Zimbabwe invited bids for firms to monitor and control goods coming into the country.

Most of the sub-standard goods which have flooded the market originate from West Africa and China.

Over the years, government has been lobbying business to shift attention from traditional markets in the West and look East instead.

However, business leaders argue that they cannot focus on the East to the exclusion of other potential markets as the practice was contrary to the spirit of entrepreneurship.

Dollar on downward spiral
Eric Chiriga

THE Zimbabwe dollar continues to weaken on the foreign currency auction, hitting an all-time low of almost $25 000 against the US dollar this week.

Reserve Bank of Zimbabwe governor, Gideon Gono, recently devalued the dollar from $10 800 to $17 500 to the US dollar.

The devaluation came barely two months after a 45% adjustment that failed to stem the thriving parallel market.

A fortnight after the devaluation, the US dollar surpassed the $17 500 rate on the auction market.

As at September 5, the Zimbabwe dollar traded at US$1:$24 520 on the auction.

Analysts say the firming of the US dollar against the Zim dollar is a response to market forces.

"It should have been recognised long ago that the exchange rate should be determined by market forces," economist John Robertson recently said.

Meanwhile, the shortage of foreign currency on the auction has worsened, with demand about 16 times the amount on offer.

On Monday this week, bids totalled US$206 955 565 against a fixed allotment of US$12,5 million.

On the parallel market, major currencies like the US dollar and British pound are trading at $40 000 and $70 000 to the Zimbabwe dollar respectively.

On August 1, 7 358 bids were rejected out of 7 418.

According to Finhold's monthly economic report for March, the amount of bids surpassed the US$100 million mark on February 10 and 14 auctions, translating into demand of nine times more than the fixed supply of US$11 million per auction.

"The average rejection rate rose from 93% in January, to 97% in February, reflecting the continued excess demand of foreign currency on the auction," Finhold said in its Economic Update.

Zimbabwe faces worst season

ZIMBABWE, once a regional breadbasket, is facing its worst agricultural season since Independence in 1980, with shortages of seed, fertiliser and equipment threatening next year's harvest before it even has been planted, farmers and other experts said.

Some of those warnings were issued in testimony before parliament's agriculture committee on Wednesday.

Fertiliser companies said their warehouses were empty.

The Zimbabwe Seed Traders Association said there were only 28 660 tonnes of corn seed in the country - slightly more than half of what was needed.

The Agricultural Dealers and Manufacturers' Association has run out of plough disks for the first time in its history. There also are key shortages of irrigation piping, pumps, pesticides and other chemicals, suppliers said.

"The information you have given us simply shows that there is no season," committee chairman Walter Mzembi was quoted as saying.

The seizure of thousands of white-owned commercial farms for redistribution to black Zimbabweans, on top of years of drought, has crippled Zimbabwe's agriculture-based economy.

About four million people will need food aid before the next harvest, UN estimates indicate.

"This coming season's production prospects are the worst since 1980 due to inputs shortages and the lack of a strong message to allow all farmers to produce with confidence," Doug Taylor-Freeme, president of the Commercial Farmers Union, said on Wednesday. - AP.

Consumers to pay more
Itai Mushekwe

LOW income earners already reeling under economic hardships now have to dig deeper into their pockets after a drastic increase in the monthly consumer basket to nearly $7 million, up from $6,1 million last month, a Consumer Council of Zimbabwe price survey has revealed.

Basic commodities for a family of six now cost about $2 860 477, while transport costs covering 21 working days will chew up $336 000.

Rentals, health and education, combined with detergents and clothing take up $4 097 375, giving a total of $6 957 852 in monthly expenditure.

However, analysts warned that Wednesday's fuel price increase would affect the basket.

They estimated that a 10-15% adjustment in transport costs was inevitable. This would raise transport expenses to $1 million, resulting in the basket pushing close to $8 million.

Soaring prices and triple digit inflation have left consumer-buying power enfeebled, putting basic goods and services beyond the reach of many households.

Inflation in 2000 stood at 55,9% and rose to 71% the following year. It rose to over 600% in January last year before starting a downward trend for most of the year. It was nearly 130% in March this year before reversing the trend to around 254,8% now.

Expulsion threat earns IMF Mugabe's ear

UNTIL last week, it seemed as if nothing could shake President Robert Mugabe's determination to destroy any dissent against his Zimbabwe presidency.

Somehow, the threat of being kicked out of the International Monetary Fund has changed that - at least a little bit.

As he flattened slums and allowed farmland to lie fallow in the midst of racial violence, foreign governments' frustration with him was almost equalled by their frustration with Thabo Mbeki, the South African president, who has preferred to engage Mugabe rather than to isolate him and has sometimes appeared to work at cross purposes with openly hostile politicians from Britain and the United States.

Now, Mbeki seems to hold the key to saving Zimbabwe's membership in the IMF.

Apparently fed up with Mugabe's actions, Mbeki may finally be using his influence to the advantage of the Zimbabwean people.

The strain in Zimbabwe's ties with the IMF date back to 1999, when arguments about the value of the country's currency and its troops in the Congo caused the fund to withhold aid.

Within a year, the African Development Bank and the World Bank had followed suit.

By 2001, Zimbabwe had stopped paying back all foreign loans. In early 2002, Zimbabwe's arrears with the IMF amounted to more than US$100 million, and the government's own deficit was ballooning.

In 2003, the IMF suspended Zimbabwe's voting rights in the organisation.

Finally, in December of that year, the fund started the process of expulsion. Of course, it is not as simple as saying: "You're out."

Last year, Zimbabwe began taking steps to placate the fund. It started paying back its debts and undertook a new monetary policy aimed at denting annual inflation of 600% and shoring up the shrinking economy. Inflation came down, to slightly less than 400%.

The fund was mollified and decided in July 2004 to delay Zimbabwe's potential expulsion by six months.

Meanwhile, the IMF closed its office in Harare. Though the move did not affect the expulsion decision, according to the fund, it was an ominous portent. Meetings with Mugabe ensued a couple of months later.

Then, last December, Zimbabwe's main opposition party, the Movement for Democratic Change, stepped into the fray. Its leaders optimistically argued that the IMF should allow Zimbabwe to remain a member so that any post-Mugabe regime would have an easier time obtaining aid.

In February of this year, the IMF gave Zimbabwe another extension.

Now, another six months later, Zimbabwe again is trying to appease the fund.

On August 29, it paid US$120 million to the IMF, reducing its arrears to about $174 million. An IMF team was in Harare to review economic developments and prospects, and it will report to the IMF executive board, which meets today to decide Zimbabwe's fate.

Clearly, Mugabe is paying attention. Zimbabwe has been pleading with South Africa for aid. So far, no deal has been reached, a South African government spokesman, Thabo Masebe, said on Tuesday.

A package from Pretoria would allow Zimbabwe to pay some, or all of what is overdue - perhaps salvaging its relationship with the fund.

By itself, this is a remarkable development. Much like Kim Jong Il in North Korea, Mugabe has seemed impervious to foreign pressure, even as his own country has experienced extreme hardship and starvation.

That he should care about the IMF is intriguing. Perhaps he values the prestige of membership in one of the few international groups that wields real power in the form of cash, or perhaps he is hoping for new loans from which to skim cash - something that Britain and the United States have accused him of doing in the past.

Mugabe may even want the money just to keep the lights on in Harare. It actually doesn't matter. The important thing is that the leverage is there.

The leverage, however, does not reside with the IMF. By allowing itself to be placated mainly by repayment, the fund has limited its own ability to affect policies in Zimbabwe. That may be for the best, since insisting on specific changes would allow Mugabe to score political points by rejecting the IMF altogether.

But the upshot is that the leverage sits solidly in Mbeki's hands. He seems willing to bail out his northern neighbour, provided Mugabe makes some lasting changes.

"Whatever we do," said Masebe, "be it a short-term loan to help them to pay their arrears on their IMF debt or any other intervention that we do, should be seen in the context of an economic recovery for Zimbabwe so that we don't give them money now and find ourselves in the same situation in a year's time."

He added that while Mbeki has not made specific political demands, the conduct of Mugabe's regime is under discussion.

"You can't remove economic issues from the politics," Masebe said. Besides the insight into Mugabe's choices, there are two broader lessons to be drawn from this episode. The first is that unconditional debt relief may be a bad idea.

Anti-poverty groups have called for the IMF, the World Bank and major creditor nations to scrap all of Africa's debts. If the presence of debt can create positive changes in Zimbabwe, even indirectly, then it is surely a useful thing.

The second lesson has worldwide implications. As any economist will tell you, people will usually do what you want, as long as you give them the right incentives.

For the past couple of decades, most attempts at persuading so-called rogue states to shape up have relied on restraint of trade or military threats. It could be time for a little more creativity. - The International Herald Tribune.

Mean-spirited

PITIABLE Zimbabwean spin-doctors have had their tails up over the past 10 days. They are getting their own back against the US government. Like all mean-spirited cowards, they have been celebrating the United States' failure to deliver humanitarian assistance to victims of Hurricane Katrina which struck New Orleans last week.

The Zimbabwean government could not miss an opportunity to put the boot in on the fallen giant which, despite its vast resources, reacted slowly in evacuating those trapped on roof-tops and struggled to deliver food and water to thousands of refugees on flooded streets.

Black activists saw streaks of racism in the handling of the tragedy by President George Bush surmising that the response was slow because the afflicted are mostly black. Critics of the war in Iraq say if more troops were at home, they could have been mobilised to help move supplies and save lives.

Our presidential spokesman could not miss the fun.

"The US has experienced its own tsunami and we have seen the ineptitude of their relief agencies in dealing with the situation," said George Charamba in an article in the Herald on Saturday.

Then there was the paper's political editor Caesar Zvayi on Tuesday trying to draw parallels between Hurricane Katrina and Mugabe's infamous Operation Murambatsvina. "Do I hear sceptics say Operation Murambatsvina was man-made and New Orleans is natural? Wrong," wrote Zvayi. "New Orleans is man-made as can be seen from the way the US government settled over a low-lying area dangerously close to the Atlantic coast that is always ravaged by hurricanes."

No sympathy here. And a striking ignorance of the city's history which had more to do with France than the US government.

The difference between Operation Murambatsvina and Hurricane Katrina is seen in the world's response to the tragedies. Both presidents Mugabe and Bush have been pilloried for their handling of the crisis in their respective countries. Bush appears to have taken more punches both at home and abroad. But is it not amazing that America's foes like Iran, Cuba and Venezuela - whose president Hugo Chavez has described American "neo-liberal capitalism" as "hell on earth" - are among the list of countries that have offered assistance?

Not only has the crisis blurred longstanding ideological differences, but it has also turned rich-poor politics on its head. Tiny nations like the Dominican Republic, Guyana and Armenia are among three-score countries that have pledged to send aid. Sri Lanka, which was last year hit by a tsunami, will also assist the world's richest nation. The poor assisting the rich; this is how powerful the forces of nature are.

"I hope that will remind Americans that we are all part of the same community," Secretary of State Condoleezza Rice was quoted by AP as saying last Friday. Are we, when in July President Bush resisted British prime minister Tony Blair's ambitious goals for aid to Africa?

The United States has a history of financing international relief efforts in the event of disasters. It however lags behind other rich nations in providing aid commensurate with its fortunes. Bush has said the US will double aid to poor countries to US$8,6 billion by 2010. After the gesture by poor nations to help, there should be greater pressure on Bush to revise the figure upwards.

Rice said contributions from poor countries were being accepted because "it is very valuable for people being able to give to each other and to be able to do so without a sense of means".

Compare this statement by Rice to Zimbabwe's Ambassador to the United Nations Boniface Chidyausiku's reaction to the UN's attempts to mobilise assistance for victims of Operation Murambatsvina.

He said the countries the UN would seek money from "are the countries that are very vocal in trying to bring a regime change to Zimbabwe".

Charamba supports this view. "Despite strained relations, the US was clamouring to help Zimbabwe to gain cheap political mileage outside its frontiers."

This is partly the reason why the international community, including Zimbabwe's so-called friends, has not responded quickly and favourably to our crisis. Those coming to help are frisked at the gate to ensure they are not agents of regime change. All sorts of concerns are raised as to why they want to help. The quest by Cuba and Venezuela to help the United States is testimony that the world has long stopped operating on the basis of friend or foe, especially in dealing with disasters. But our rulers just love to preside over poverty in the name of sovereignty.

All the same, Zimbabwe has an obligation to help the multitudes afflicted by Katrina. We await the swearing in of a team to mobilise assistance to help as we did when the tsunami struck Indonesia in December. Come on George, get the Tsunami Committee working again. Show us you're not just full of hot air!

Govt backs down on new tax
Eric Chiriga/Rodwin Chirara

IN a major climbdown, the Ministry of Finance has agreed to reduce the recently introduced capital gains withholding tax charged on marketable securities from the initial 10% to 5%, bowing to pressure from brokers who had boycotted trade on the Zimbabwe Stock Exchange (ZSE).

This move is expected to restore normal trading on the bourse after 18 days of insignificant trade.

Brokers had stopped trading on the bourse in protest at the reintroduction of the capital gains withholding tax on marketable securities at a rate of 10% in the mid-fiscal policy review of August 16.

The introduction of the capital gains withholding tax resulted in serious resistance by stockbroking firms, resulting in buyers boycotting the stock exchange.

The new 5% will be with effect from October 1.

"To allow the ease of administration, the capital gains withholding tax on marketable securities is now collected on a gross basis and at 5% that does not compromise the revenue collection targets," a statement issued by the Ministry of Finance, the Zimbabwe Stock Exchange (ZSE), and the Zimbabwe Revenue Authority (Zimra) said.

When asked for comment on the developments at the bourse at a CZI conference in Nyanga yesterday, Finance minister Herbert Murerwa blamed poor consultation for the impasse.

"This was a regrettable problem. There was poor consultation from the beginning," he said.

Murerwa said the issue would be adequately addressed in the coming 2006 budget.

"There will be fuller consultation and a team will be dispatched to South Africa to see how the tax system works."

The Finance ministry has also agreed that insurance companies and pension funds will apply 40% of their net monthly cashflows to purchase prescribed assets. This will be with effect from November 1, but will be reviewed annually.

"In order to facilitate the implementation of the prescribed asset ratio, the industry and the Ministry of Finance have agreed that insurance companies and pension funds will apply 40% of their net monthly cashflows to purchase prescribed assets," said a statement issued by the Ministry of Finance in conjunction with stakeholders in the insurance sector.

In his mid-term fiscal policy review, Murerwa announced that the insurance and pensions industry will have to hold prescribed assets of 25% for the short-term insurance, 30% for the long-term insurance and 35% for pension funds at market value.

Pension funds - the biggest investors on ZSE - have been calculating the 35% based on book value.

Murerwa said pension funds must calculate these assets based on market value, a move traders said would force companies such as First Mutual and Old Mutual to offload shares to raise money to buy bonds and bills and meet the required percentage.

After the announcement of the prescribed asset ratios, Emmanuel Munyukwi, the chief executive of the ZSE, predicted that pension funds will be forced to sell shares to meet the shortfall created by the new requirement, but added, no one in the market has the capacity to absorb the shares.

Harrowing time with Zimra at Beitbridge

LAST week, a friend and I drove back from South Africa, arriving at the Beitbridge border post at 2 pm. On the South African side, the authorities were as efficient as ever, but on arriving on the Zimbabwe side, we were met with the usual chaos.

The process of paying one’s duty was more convoluted than ever, with scores of cars strewn all over the place and literally over a hundred people milling around. The Zimbabwe Revenue Authority (Zimra) customs declaration system had once again changed, and as normal, there was no one and no printed information to tell you where to go or what to do.

First we had to join the first queue to get our customs declaration stamped. Then we joined another queue to have our duty calculated, as we were both bringing in goods around the R4 000 mark each.

That is before being informed by our number written on it to join the duty calculation queue. We did this, and struggled along in the queue with the other 50 or so people, most of who were moaning at the fact that there was only one Zimra official doing all the calculations. Of the other two on duty, one was handing out the numbers for the main queue and the other was taking the payments for the duty calculated.

Why, I asked myself, could not all three have done the calculations, and

taken the duty money at the same time? Maybe I was missing something.

After two hours in this queue, we came to the front, only to be told by the Zimra official that because we were each declaring over R3 000 worth of goods, we had to get a clearing agent to do it for us. We asked why the threshold was so low?

Using a clearing agent for goods worth say R10 000, we could understand, but R3 000? Why had we not been told this two hours previously, and why were there no leaflets, posters, or officials telling people that on arrival?

We were met with a blank stare, and then informed that it was the policy, and that was that. Another rather rude and officious Zimra official also informed us that if we did not use a clearing agent our goods would be impounded. At this point, and becoming just a little exasperated, I informed the Zimra official that we were after all customers and not criminals. This didn’t seem to help much.

So, there we were at 4.30 pm stuck at the border, having to find a clearing agent out of thin air, once again with no help from Zimra. Luckily, my colleague phoned a friend who knew a clearing agent whom we made contact with. He met us and went away for two hours to do the paperwork to clear our goods. This, in fact, took three hours, so we had our paperwork back at 7.30 pm.

Off our agent went to find a Zimra official to clear our goods. Yes, we thought, we would now be out of there in, say, an hour, having paid our duty. Fat Chance!

Our agent was in another queue, and apparently there was also a problem with the Zimra printer, which was adding to the delay. Another three hours went by, 10.30 pm.

We now felt like we were in prison, with no parole. I saw my life fading away before me, forever entombed at Beitbridge Border Post!

My friend, having had enough of all this, managed to join our agent in the said queue, upstairs in the Zimra offices. He says he found several Zimra officials sitting around, looking as though they were half-asleep, and one in particular, in a dingy half-lit office, doing the duty calculations.

Eventually, at 1.30am our paperwork was cleared, our goods were inspected, and our duty was paid, which incidentally was just about the same amount as we would have had to pay at the beginning.

Zimra has a duty to collect tax at the border. That is undeniable. However, with just a modicum of efficiency and organisation on the front desks, particularly during peak traffic hours, they would not only do this but also make life tolerable for those entering the country.

All I can say is: welcome to Zimbabwe and God help any law-abiding resident returning via Beitbridge who brings in and declares goods worth R3 000 or over. By the way, I believe the Zimra motto printed on a board on one of their walls is “We aim to serve”.

A Pickford,

Harare.

Celebrating tyranny

WITNESSING Zanu PF's well-nourished legislators singing and dancing "revolutionary songs" in celebration of their "historic" constitutional amendments, I didn't know whether to laugh or cry. What a surreal exhibition of remoteness from the reality of the lives of the struggling, suffering Zimbabweans they purport to represent.

The nation is in crisis. The government is deep in debt. Many Zimbabweans - though obviously not Zanu PF legislators - are starving. There are chronic shortages of many essential items.

So what does parliament do to address these issues? Absolutely nothing except taking steps to further entrench themselves in power.

A senate is created to provide more patronage to more political deadwood. Private property rights and redress to the courts are severely curtailed. The right to a passport is under threat.

That some of these legislators claim membership of various religious denominations made the whole sorry spectacle even more nauseating.

Vice-President Joice Mujuru comes immediately to mind, especially when just last week she addressed an international gathering of the Salvation Army assembled at the National Sports Stadium, proudly wearing her new Salvation Army uniform.

I am surprised that no one has taken the Salvationists to task over their total silence during the recent Operation Murambatsvina campaign by this regime as the homes, livelihoods, and basic human rights of the poorest Zimbabweans were disregarded and trampled upon.

When the vice-president dresses up in her Salvation Army uniform does she have any idea of the origins of the Salvation Army - a concern to assist and provide for the growing numbers of poor and destitute during the industrial revolution in the United Kingdom?

Is this sorry band of Zanu PF parliamentarians even less connected with the real world they have created than was Adolf Hitler in his bunker as the Second World War came to an end?

Why does the MDC continue to waste its time participating in this mockery of a supposedly democratic institution? Why engage in debate when there is not one single Zanu PF member of parliament with the political courage or personal integrity to ever do anything other than obey the dictates of his or her master?

Next time Reuben Barwe or any other media sycophant refers to this "august" house please excuse me if I choke. For the benefit of the semi-literate who purport to bring us the news, the word "august" means "inspiring reverence and admiration", "venerable" or "impressive". Sycophant means "servile flatterer".

RES Cook,

Harare.