After polls, can Mugabe rig the economy?

By Dr Clifford Chitupa Mashiri, 7th August 2013

After the polls, the question people are asking is whether Mugabe has started to rig the economy following claims and counter claims about price increases and rate cuts, as economists predict a bleak future.

The Herald, on Tuesday claimed the Zimbabwe Energy Regulatory Authority (ZERA) had dispelled reports of fuel price increases.[i]  Quoting its “analysts”, the paper said the reports were designed to influence a pike to fulfil MDC-T’s hardships mantra.

The Bulawayo–based Chronicle picked up on that and in an editorial entitled “Those wishing Zimbabwe are the worst outcasts,” Wednesday 7th August, 2013, the paper agonized:

“Some Zimbabweans are really an amazing lot. After the announcement of the results of the just ended harmonized elections, some could be heard wishing the country the worst in the days to come.” In the paper’s view, “it is these people who are making false allegations of fuel price increases.”

However, Newsday on Wednesday 7th August (see ‘Fuel prices confirmed’) reported that despite vehement denials by Zera, the price of fuel in Bulawayo had slightly increased with garages yesterday (Tuesday) confirming the hike amid fears the increase might spike rises in the prices of basic commodities.

In what looks like the dilemma of the state media – of trying to bury the bad news (fuel price increases) and making a case for the “good news” rate cuts amid a decline in manufacturing capacity to 44% and a bloodbath on the Zimbabwe Stock Exchange since the polls, former Editor of the Chronicle and The Sunday Mail, Stephen Mpofu came to lend a hand.

Writing in The Herald Wednesday 7th August, “Today is another country,” Mpofu had some advice [“cum – warning”] for the commissions who he said were defying the Government’s order to cancel bills for rates water and rentals.

“The commissions running those councils should be made to roast their fingers because the decision by Government was meant to relieve residents of their back-breaking burden brought about by the illegal Western sanctions that have eroded people’s earnings or quashed them altogether as jobs vanished, like vapour,” wrote former editor Stephen Mpofu.

We will address the issue of debt cancelling later, after the sanctions bit. Probably when Mpofu wrote his instalment with the sanctions mantra, he didn’t know that only hours earlier, U.S. Federal prosecutors had charged two Chicago men with allegedly violating U.S. law by agreeing to help Robert Mugabe get sanctions against him lifted. Whether Mugabe and his allies have a case to answer before U.S. courts it is too early to say.

Reports say the charges were unsealed Tuesday 6 August in U.S. District Court in Chicago against 72-year old Prince Asiel Ben Israel and 71-year old C. Gregory Turner. [ii]

The complaint states that Ben Israel and Turner had a Nov. 26, 2008, “Consulting Agreement” that called for an initial payment of US$90,000 and three subsequent equal installments of US$1,105,000. We await the Zimbabwe Herald’s coverage of that story for details.

Meanwhile, outgoing or maybe ‘incoming’ Minister of Local Government Ignatius Chombo has implored the national power utility Zesa and water authority Zinwa to write off individual consumers’ utility debts in line with Zanu-pf policies (Newsday, Zanu-pf wants Zesa, Zinwa bills scrapped, 07/08/13).

For Chombo, there is no logic in Zesa and Zinwa to continue pursuing the debts, because he believes that people had been genuinely unable to pay due to financial difficulties. But Chombo seems to forget how the Zesa debt came about. However, we could help refresh his memory.[iii]

By the end of February, 2012 Zesa reportedly disconnected electricity supply at the homes of three cabinet ministers for non-payment of bills. One of them was believed to be Zanu-pf Local Government Minister Ignatius Chombo who allegedly owed the power utility US$129 656.44 for power supplies to his Allan Grange Farm in Mashonaland West.[iv]

Robert Mugabe’s four plots at Foyle Farm plus a cottage as well as Gushungo Dairy Estates had a total power bill of US$143 667.33 as at 31st December 2011. His Gwebi Woodlot 1st farm owed US$24 901.05. Mugabe’s Sigaro Farm 1st PO, 2nd PO, 3rd PO and 4th PO owed a total of US$78 218.71.

Properties owned by Robert Mugabe’s wife, Grace in particular Iron Mask Cottage, Iron Mask Farm 2nd POIN, Iron Mask 3rd POIN, Mazowe Wholesalers, Annant Cottage, Iron Mask Farm 5th, 6th, 7th and 8th owed a total of US$98 306.60 as at 31 December 2011.

The Prime Minister Morgan Tsvangirai told Parliament in March 2012 that he had settled his US$5 000 Zesa bill ‘only recently’. Critics said Tsvangirai had settled his outstanding electricity bill for his Strathaven home in Harare after a threat of disconnection by Zesa.

In 2003, Zesa offered the lowest tariffs in the region at US$0.5per kWh as compared to US$2.3 per kWh by Eskom, US$3.3 per kWh by South Africa, US$4.4 per kWh by Namibia and US$5.2 per kWh by Botswana Power Company (BPC).[v]

Zesa Chief Executive Josh Chifamba was quoted as telling the parliamentary portfolio committee on energy in November 2011 that the utility was providing electricity at a loss and ‘two months ago’ the situation was so bad they imported it at 45 cents per unit and sold it at seven-and-a-half cents per unit.[vi]

In February 2012, Zesa found itself in a “catch 22 situation” over power disconnections, as its debtors’ book was believed to be in excess of US$500million.[vii] After revealing that Zesa owed about US$800 million to its service providers, Energy Minister Mangoma said the power authority was in turn owed more than US$400 million part of it by government departments.

Owed about US$550million (itself an unverifiable estimate), Zesa’s billing system is based on estimates, a situation that has seen consumers refusing to settle their bills.

Zesa’s problems are more to do with lack of transparency by Mugabe than all the spin we see. For example, controversy arose in the 1990s when a UK company, NPower (National Power) won the contract to carry out work at Hwange Power Station, but Mugabe preferred to give the job to YTL of Malaysia, a company that belonged to the son of the then Malaysian premier Mahathir Mohamed for a ‘paltry’ US$350 million[viii] but the plan met with resistance from within the ranks of Zanu-pf.

At that time the World Bank had promised US$1.6 billion for the project and an additional US$800 million for the refurbishment of Hwange power station. However, the final nail in the coffin came in 1998 when ZESA was forced to surrender a massive US$88 million to the government for the payment of war veterans”, The Zimbabwean newspaper said.[ix]

What remains unclear is whether or not the rich and powerful elites eventually paid their bills or they mooted the bills amnesty so as to kill two birds with one stone – electoral ‘victory’ and debt relief.

Although, the full impact of the debt cancellation is yet to be felt, local authorities depend on rates and water for the payment and servicing of their debts, which leaves the Commercial Bank of Zimbabwe exposed just to the City of Harare alone to the tune of  US$13 million.

Potentially, seven banks are reportedly jittery about Chombo’s directive.[x] We hope they need not worry. However, City of Harare has reportedly failed to pay salaries for July. Again whether these are signs of things to come, it is still early to say. But can Mugabe rig the economy?

About the author:  Clifford Chitupa Mashiri is a London-based political analyst, former diplomat, and author of Robert Mugabe: A Tyrant’s Quest for Legitimacy, ISBN 978-3-659-44423-4. He is studying for a second PhD at LSBU.

  •  [i] See “Fuel Price Increase Reports False- Zera”, 06/08/13.
  • [ii] See The Zimbabwean, ‘Israeli men in US court over Zimbabwe sanctions bid’, 07/08/13; and New Zimbabwe, ‘US men charged for Mugabe sanctions plot’, 07/08/13.
  • [iii] Based on Clifford Chitupa Mashiri’s forthcoming book, ‘Failed MDGs, Zesa and AirZim: Is this the legacy of a tyrant?’
  • [iv] Patrick Chidzero, “Zesa disconnects two ministers over unpaid bills,” Nehanda Radio, 29/02/12.
  • [v] The Herald, “Zesa Debt Stands At US$334m,” 03/03/06.
  • [vi] Verenanda Langa, “Ban incandescent bulbs – Zesa,” NewsDay, 15/11/11.
  • [vii] Zimbabwe Energy Regulatory Authority ZERA Chairman Canada Malunga put Zesa’s debt to the  equivalent of seven months of its total revenue. See Daily News, “End Zesa monopoly,” 07/02/12.
  • [viii] Interestingly, Malaysia’s ex Premier Muhammad confirmed that his government gave Mugabe timber to build his private multi-million pound Borrowdale mansion saying it was a normal undertaking to promote his country’s products abroad. See Clifford Chitupa Mashiri (2013) Robert Mugabe: A tyrant’s Quest for Legitimacy, p. 57; Also see Mark Baker, “Mahathir defiant over gift for Mugabe mansion,”, 14/06/04.
  • [ix] MISA, A history of ZESA’s fall from grace, The Zimbabwean, 18/02/10
  • [x] Bernard Mpofu, ‘Seven Banks Face Closure- Biti,’NewsDay, 26/07/13.

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