SENIOR ZANU
PF politicians and army officers have grabbed prime wildlife-rich farms
along the route of the Zambezi Water Project in Matabeleland, as they
strategically position themselves to benefit from the stalled project, which
is expected to create a 450-kilometre greenbelt.
Government
sources privy to land redistribution in Matabeleland North told The
Financial Gazette yesterday that the majority of the farms and safaris along
the envisaged route of the pipeline, from the Victoria Falls to Bulawayo
road, had been grabbed by prominent politicians in ZANU PF and officials
from the army, police, prison services and war veterans. While some of
the politicians had been allocated the farms at the height of the land grab
in 2002, there has been a stampede for the properties along the route of the
pipeline largely due to the fact that the government had shown interest in
proceeding with the Zambezi project, first mooted in 1912. Top on
the list of politicians eyeing or already allocated farms in the area
stretching from Nyamandlovu to Matetsi near the Victoria Falls are ZANU PF
chairman and parliamentary speaker John Nkomo, Obert Mpofu, the Minister of
Industry and Commerce, Thoko Mathuthu, the new Governor for Matabeleland
North, Cain Mathema, the metropolitan Governor of Bulawayo and Dumiso
Dabengwa, the chairman of the Matabeleland Zambezi Water Trust
(MZWT). Nkomo, according to sources, is planning to muscle his way
into Lugo Ranch; Mpofu has settled for River Ranch in Matetsi Block,
Dabengwa, using Nitram, a former PF ZAPU company, is understood to have
shown immense interest in Goodluck Ranch. Mathuthu is at Antonia
Extension while Mathema has been allocated Gwayi Ranch. Other ruling party
officials allocated farms along the route include Matabeleland North ZANU PF
chairman Headman Moyo (GoodLuck Farm), Alice Nkomo and Siyazama Ndlovu
(Sonata Ranch). Jacob Mudenda, the suspended ZANU PF provincial chairman for
Matabeleland North, has been allocated Sikume Estate. The property
previously allocated to Jonathan Moyo, the former government-spin-doctor has
reportedly gone to the Rainbow Tourism Group (RTG). "There's
nothing wrong with them being on these strategically positioned properties
but what is interesting is the coincidence that all these top people are
positioned on the route, which promises to be a greenbelt when the project
is finally implemented," said a lands ministry official privy to the
allocation of farms. "The properties, which are rich in wildlife, range
between 4 000 and 12 000 hectares," added the source.
THE ZANU PF government, which is pushing controversial
amendments to the Constitution through Parliament, has vowed to bar the
courts from hearing cases related to its chaotic land redistribution
programme, further demonstrating its distaste for the rule of law.
Government tabled the Constitution of Zimbabwe Amendment (Number 17) Bill in
Parliament this week and the opposition immediately tore into the proposed
amendments to the country's fundamental law, particularly changes to
Sections 16B, 18(9) and 22 - which deal with the acquisition of agricultural
land as well as the freedom of movement. The amendment to Section 16B
of the constitution will allow the acquiring authority to expropriate
agricultural land without paying any compensation "except for any
improvements effected on such land before it was acquired." "The
provision of any law referred to in Section 16(1) regulating the compulsory
acquisition of land that is in force on the appointed day, and the
provisions of Section 18(9), shall not apply in relation to land referred to
in subsection (2)(a) except for the purpose of determining any question
related to the payment of compensation referred to in subsection (2)(b),
that is to say, a person having any right or interest in the land shall not
apply to a court to challenge the acquisition of the land by the State and
no court shall entertain any such challenge," reads part of the amendment
Bill. Government also proposes to amend Section 22, which deals with
the protection of the freedom of movement by appending undefined "national
interest" as well as the "economic interests of the state" as constitutional
grounds for restricting any person's freedom of movement. If passed
in the present state, the amendment will give the state the right to suspend
or withdraw the travel documents of citizens. The proposed tweaking of
the constitution has been roundly condemned by the opposition and civic
groups, with Movement for Democratic Change (MDC) legislators this week
taking on ZANU PF Members of Parliament in a marathon debate over the
constitutional amendments. However, government chief whip Joram Gumbo
revealed that his party would push the amendments through, regardless of the
muted concerns raised by Parliamentary Portfolio Committee on Justice, Legal
and Parliamentary Affairs chairman Shadreck Chipanga (ZANU PF). "We
cannot be challenged by the courts when we want to resettle our people,"
Gumbo said, signalling the ruling To Page 31 party's resolve
to crush any dissent within its ranks and vote the amendments
through. Chipanga reported that his portfolio committee, which only
held one public hearing in Harare on the Bill, felt it would be against
natural justice to bar aggrieved landowners from seeking recourse through
the courts. "Your committee further recommends that it would be in
the furtherance of tenets of natural justice that any aggrieved persons be
given the right to approach the courts for arbitration where there is a
dispute," Chipanga said. Civic society groups have condemned the
proposed 17th amendment, with the Zimbabwe Lawyers for Human Rights (ZLHR)
charging that the Bill "presents legislators, the judiciary, the entire
legal profession and ordinary Zimbabweans with perhaps their greatest
challenge yet." "The amendment is the latest in a long line of
alterations to a Constitution which, by its very nature and history, is
fundamentally deficient and problematic, especially in the protection
offered under the Declaration of Rights. The amendment seeks to effectively
remove the fundamental rights to property [section 16], secure protection of
the law [section 18(9)] and freedom of movement [section 23] from the people
of Zimbabwe who rely on the Constitution for protection against unchecked
state action. "The amendment effectively usurps the authority of
the courts of Zimbabwe by denying the people of Zimbabwe recourse to the law
in challenging state action which violates fundamental human rights. This
puts paid to the principle of separation of powers, by allowing the
Executive to initiate, implement and adjudicate upon its own actions
ensuring that the state will not be scrutinised nor its actions reviewed by
an independent and impartial tribunal," ZLHR said.
THE horticulture
industry has suffered a 59 percent plunge in export earnings in the past six
years with foreign exchange receipts falling from US$143 million in 1999 to
an estimated US$90 million this year.
Basilio Sandamu, director of
the Horticultural Promotion Council, said the industry could have raked in
US$300 million - enough to take care of the country's arrears with the
International Monetary Fund - had it maintained pre-1999 growth
patterns. In the 10 years leading to 1999, the industry had grown by
about 15 percent annually before being rocked by disturbances in the
agricultural sector, the mainstay of Zimbabwe's economy. At least
90 percent of productive white-owned commercial farms have been
redistributed to landless blacks since the beginning of controversial land
reforms in 2000. "Structural changes in the agricultural sector
affected the supply base of horticultural production. People allocated farms
have no technical expertise to maintain horticultural projects," Sandamu
said, adding the number of growers has also fallen sharply.
Horticulture earned US$143 million in 1999, US$120 million in 2000 and
US$100 million last year. Admitting that the new farmers did not
have the financial wherewithal to produce, Sandamu said the industry had
also been dealt a hammer blow by the withdrawal of several airlines from
Zimbabwe citing a huge drop in tourist arrivals. The industry's
woes have been compounded by the diplomatic row between the European Union
(EU) and Zimbabwe over Harare's violent land seizures and its style of
governance. The EU, which accounts for a large chunk of the country's
horticultural exports, slapped Harare's ruling elite with a string of
sanctions described by President Robert Mugabe's government as meant to
punish Zimbabwe for redistributing land from the minority whites to the
landless blacks. Horticultural production has also been affected by
the violent seizure of Kondozi farm, a horticultural farm, which enjoyed
average earnings of US$15 million from exports of fresh produce to the EU
and South Africa annually. Interfresh, a Zimbabwe Stock
Exchange-listed horticultural firm is also still battling to retain control
of 88 percent of its Mazoe Citrus Estates and farming equipment confiscated
by hordes of government and ruling party supporters. The
agricultural industry grew by 2.5 percent in 1999, 4.1 percent in 2000 but
the trend was to be reserved at the height of the chaotic land reform
programme when output sharply declined by 13 percent, 20.8 percent, 22.5
percent and 20 percent respectively from 2001 to 2004. This year the
government expects the sector to grow by a marginal one percent, down from
the initial projection of 28 percent. Foreign currency earnings from
the industry have also plummeted from US$855.2 million in 2000
(1999-US$844.4 million) to US$400 million in 2004. Earnings from
tobacco, the major foreign currency earner in the agricultural sector,
dwindled from US$663 million in 1999 to US$240 million in 2004.
AN internal audit has
been instituted at the Higher and Tertiary Education Ministry amid shocking
revelations that billions of dollars in taxpayers' funds were paid to ghost
workers, while vehicles worth $3 billion were purchased without
authority.
Government officials privy to the goings-on at the
ministry revealed this week that an initial perusal of the ministry's books
had unearthed "unscrupulous" activities by certain senior officials,
prompting a request for an internal audit. The same sources alleged
some senior ministry officials had spent about $3 billion on the purchase of
vehicles from a Harare-based car dealership without the knowledge of their
superiors at a time when the ministry is facing a critical shortage of
furniture and petty cash. Some of the missing millions are said to have
gone towards payment of salaries for ghost workers created by senior
officials in the ministry. "What has irked us is that the officials
claim there is no money but we have recently discovered there is a $3
billion hole in the books. Senior officials have bought cars without
following proper procedures," said an official, speaking
anonymously. It is suspected the senior officials behind the purchase
of the vehicles were allegedly given kickbacks to facilitate the
deal. "The vehicles in question were bought without the knowledge of
the Minister (Stan Mudenge) and his deputy (Sikhanyiso Ndlovu)," added the
source. The ministry is said to be experiencing a serious shortage
of funds resulting in some officials using their own "meagre" resources to
undertake government work. Lack of funds had also created a serious shortage
of furniture such as chairs, tables and filing cabinets. "There is
a serious shortage of furniture which needs to be addressed but people
proceed to buy cars. The $3 billion was chewed up in less than three
months," said the source. "Some of the cars are parked at the homes of
senior officials yet some members of staff are failing to carry out their
duties because there are no cars." Mudenge was yesterday not
available to comment but Ndlovu expressed ignorance over the alleged
scandal, promising to investigate the issue. "If there is anything
untoward, we will investigate. We have nothing to hide," said
Ndlovu. The Financial Gazette established yesterday that what first
raised suspicions was the failure of the senior officials to fully account
for the vehicles. "There is information that some of the vehicles
are parked at a senior official's house. The senior officials say there are
no cars yet they went behind everyone's back to buy vehicles in mysterious
and suspicious circumstances," the source said.
AFTER three futile
attempts to dislodge the ruling party from power, Movement for Democratic
Change (MDC) leader Morgan Tsvangirai has resolved to go back to the people
to brainstorm for ideas to end the stalemate between his party and ZANU
PF.
MDC insiders said Tsvangirai had launched a series of rallies
countrywide to consult party supporters after President Robert Mugabe
snubbed talks on Zimbabwe's political and economic crisis. Cracks
have reportedly been widening within the MDC after the March 31
parliamentary elections as frustrations heightened over the six-year-old
party's failure to end ZANU PF's 25-year grip on power. The MDC
tried to use the ballot box to gain ground but failed amid an outcry over
vote rigging, intimidation and an uneven electoral playing field.
Attempts to put pressure on the ruling party by lobbying influential heads
of governments, regional and international bodies as well as through mass
action have also failed to bring about change. Analysts said apart from
seeking guidance from MDC supporters, Tsvangirai was also using the rallies
to update them on the achievements and failures of the past five
years. Tsvangirai's spokes-man, William Bango, confirmed yesterday the
party was seeking a way forward after ZANU PF's refusal to engage in
dialogue to end the country's crisis. "Tsvangirai feels compelled
to go back to the people to get ideas on how they want the party to react
given the stubborn refusal by ZANU PF to acknowledge the existence of a
crisis in the country. "The key question is that if Robert Mugabe can't
seem to see a crisis situation in this country, then the people have to
decide how to find a way out of this crisis. The MDC has been using a number
of strategies in the past five years, which have failed to deliver
meaningful democratic change," said Bango. President Mugabe has
rebuffed an African Union initiative by Nigerian President Olusegun Obasanjo
to talk to the MDC to end the political stalemate in Harare, blamed by the
West and other critics of ZANU PF on lack of dialogue between the two
protagonists. Just last week Obasanjo's chosen emissary act as mediator
in the Zimbabwe conflict, former Mozambican President Joaquim Chissano,
threw in the towel after President Mugabe indicated the ruling party would
only meet the MDC in Parliament. "The meetings that kicked off at
the weekend are reviewing all these issues in order to come up with a
meaningful alterative that goes beyond the attempts of the past five years.
It is in this spirit that the MDC wants the people to come up with a range
of alternatives. "The general mood at the two meetings held in
Matabeleland North was that the closure of all other peaceful avenues to
resolve the crisis in this country is likely to limit in a significant way
the people's options. "The people are calling for a radical paradigm
shift, which they see as necessary in order to meet the crucial adaptive
challenges ahead," added Bango. MDC insiders said Tsvangirai, his
deputy Gibson Sibanda, organising secretary Esof Mdlongwa and national
chairman Isaac Matongo had started consultative rallies across the
country. Last weekend Tsvangirai and his team held two rallies in Binga
and Hwange East constituencies in Matabe-leland North where insiders said
party supporters said there was need for a paradigm shift in engaging
President Mugabe and ZANU PF. More rallies are lined up for
Matabeleland South, Masvingo, the Midlands, Manicaland and
Mashonaland.
A PROTRACTED
price war between bakers and the government, resistant to free-market
principles, has had a devastating impact on the baking industry that has
unsuccessfully fought against price controls since October 2000.
Industry experts say 320 bakeries that had sprung up in major cities and
towns have closed shop since the advent of the much-maligned price controls
- invoked to suppress a recurrence of the violent food riots of 1998 -
making redundant an estimated 10 000 employees. Half of the surviving
80 bakeries, reportedly struggling to replace ageing plant and equipment on
their shoestring budgets, might also go under unless the government, eager
to appease the International Monetary Fund, which pulled the plug on
Zimbabwe in the late 1990s, lifts the lid on prices and improves fuel and
wheat supplies. Harare, whose ad-hoc Soviet-style populist policy
interventions partly triggered the current economic crisis, characterised by
shortages of foreign exchange and fuel, has stuck to price controls on bread
and a few other essential commodities to make them affordable to the restive
consumer. Its critics, however, believe there may be much more to the
price controls than meets the eye. The government has always suspected an
unholy alliance between industry and the main opposition party in fuelling
prices in the hope of whipping up anti-state emotions. To leverage
the embattled bakeries, the government fixed the price of flour, the major
input in the making of bread. While this might have held for a while,
relentless price increases of other critical uncontrolled inputs such as
sugar, yeast, fats, anti mould, pan oil and flour improvers have wiped off
the benefit. Industry experts claimed this week that bakeries were
suffering heavy losses of $5 000 for every standard loaf of bread, painting
a gloomy picture for the industry. Peeved by the pricing strait
jacket, industry players have responded by drastically scaling down on
production of the controlled standard bread to cut down on losses resulting
in supermarket shelves remaining empty. But this has only been a
stopgap measure to stem the losses, as bakers are required to maintain an
appropriate mix of standard bread and other confectionary in their
production lines. A parallel market has since emerged with the standard
loaf fetching twice the gazetted price. Burombo Mudumo, chairman of the
National Bakers Association (NBA), said the shortages coupled with the
industry's depressed state, should force the government to have a rethink on
price controls. "The controls have benefited no one. The consumer, whom
they are trying to protect, has had to do with poor quality products, lack
of choice and the emergence of the highly-priced black market bread. Not
much in terms of tax revenues has been going into the government purse
because of sector-wide retrenchments and company closures," said
Mudumo. "The problem is that costs are going up on a daily
basis and yet, from our experience, it is taking up to 12 months for us to
get a price review and by the time we get it, our costs would have risen
sharply. Industry is collapsing and investors are closing shop or
disinvesting from this very critical sector," added the NBA
chairman. Former Mashonaland Chamber of Industries president David
Govere, who also owns one of the country's largest bakeries, said the
expected wheat shortages ahead of the next harvest in October, would be the
last straw to be suffered by the industry. Govere said: "All
industry players submitted that they had tried all tricks to help the
business to keep afloat but they had now reached a level where nothing
except a reasonable price increase couple with good flour and fuel supplies
can save the baking industry in Zimbabwe." In the past, economists have
warned that the imposition of price controls would heighten the drying up of
investments, kill competition and worsen the food shortages. Unlike
with parastatals that can be supported through the fiscus, private
enterprises need to earn a decent return for reinvestment in plant and
equipment and rewarding their shareholders. "When a business is making
huge losses like what is happening in the baking industry, a time will come
where the business just ceases. A time will come when where the machines are
worn out and need replacement but the cost is so high that the business has
no capacity to do so," said Mudumo. Industry players said they have
struggled to get price reviews, which are sanctioned by Cabinet, the highest
decision making body in government that meets only once a week.
"Now and again we wait for one Cabinet meeting after another without any
joy. Most of the times, Cabinet ministers are not well informed about what
is happening on the ground or the ministry of industry and trade may not be
strong enough to convince Cabinet about the seriousness of the situation on
the ground. As business, we start losing money as soon as inputs go up and
everyday without the right price is too expensive," said Mudumo.
Fierce rivals MDC, ZANU PF find rare common
ground
Felix Njini 8/25/2005 10:07:57 AM (GMT
+2)
THE ruling ZANU PF and its main political rival, the Movement
for Democratic Change (MDC), have unexpectedly found rare common
ground.
The two parties, whose rivalry started at the formation of
the MDC in 1999 and have rarely agreed on anything, were this week singing
from the same song sheet on the much-hyped "Third Way", linked to former
government spin-doctor Jonathan Moyo. The Third Way is a proposed
new political alternative that would bring together disgruntled members from
both ZANU PF and the MDC into one strong party. Officials from the
two major feuding parties this week scoffed at the initiative. They
questioned the integrity of the architects of the Third Way, whom they said
suffered from a serious "credibility crisis". MDC secretary-general
Welshman Ncube said the emergence of the Third Way was not a threat to his
party's existence. Ncube slammed the initiative, saying the struggle should
be about "freeing political space and creating freedom for political parties
to operate". He added that the problem in Zimbabwe was not a lack of
political parties but that of "political space". "We do not believe
that the people of Zimbabwe would simply follow the wind wherever it blows,"
Ncube said. ZANU PF political commissar Elliot Manyika laughed off the
new idea, saying it did not exist in the Zimbabwean political
framework. "The Third Way does not even feature in our political
mindsets. It is not our concern. We have only heard about it through
hearsay," he said. Moyo has said the Third Way was Zimbabweans' last
political frontier (chimurenga). According to the dismissed former junior
minister, where there was a "powerful thesis, especially a bad one such as
ZANU PF, facing an equally ineffectual antithesis such as the MDC, there
must result a good and effective synthesis". Moyo has been
criticised for his harsh treatment of political opponents and media
practitioners while he was still in the government. Using the draconian
Access to Information and Protection of Privacy Act, he masterminded the
closure of Zimbabwe's largest circulating daily, The Daily News, and its
sister weekly, The Daily News on Sunday, The Weekly Times and The
Tribune. A senior ZANU PF official, requesting anonymity, said the new
political thinking "has no place at all" in Zimbabwe. "The people
who want to lead it have serious credibility issues with the Zimbabwean
public. I do not know anybody who will listen to him (Moyo). I would like to
think he is the most despised political figure in Zimbabwe. Moyo is the kiss
of death," said the politburo member.
Regional
summit fails to tell Zim enough is enough
THE Southern African
Development Community (SADC) summit ended in Gaborone, Botswana at the
weekend without even a fleeting glance at the deteriorating situation in
Zimbabwe, raising questions about the commitment of the regional bloc to
shirking its peer defence mechanism in favour of frank peer review.
Expectations were high on the eve of last week's summit of the 13-member
regional grouping that it would finally read the riot act to the Harare
authorities in the wake of rising international condemnation, particularly
following the chaotic shack demolitions described by the United Nations as a
"destructive venture". The meeting also came as President Robert Mugabe
remained adamant he would not enter into internal dialogue with his
political foes in the opposition, despite calls to do so by South African
President Thabo Mbeki and Nigeria's Olusegun Obasanjo. It was hoped
that Mbeki, whose country is hammering out a financial bail-out package for
the embattled Zimbabwe government, would use this leverage to coax President
Mugabe to embrace an African Union (AU) initiative for internal political
dialogue. However, any hopes of SADC leaders nudging President Mugabe
to accede to engagement with the opposition Movement for Democratic Change
(MDC) came to naught when former Mozambican president Joachim Chissano,
appointed by Obasanjo as mediator should any dialogue materialise, announced
in Gaborone he was throwing in the towel. As he was to reveal
during a press conference, Chissano was told in no uncertain terms by
President Mugabe that ZANU PF saw no reason to engage the MDC outside
parliament. Analysts said the omission of the Zimbabwe crisis from the
agenda of the summit was proof of SADC's habitual reluctance to ruffle
President Mugabe's feathers. "It was a high sounding but empty
gathering in that it failed to seize the opportunity to rein in Mugabe,"
said an African diplomat accredited in Harare, speaking
anonymously. "We expected SADC to tell the Harare authorities enough is
enough but they have missed the opportunity. It will be difficult to believe
any SADC leader in future when they say the grouping is doing something
regarding the crisis in Zimbabwe," added the diplomat. MDC
spokesperson Paul Themba Nyathi charged that the SADC leaders were
benefiting from the political fall-out in Zimbabwe, hence their
accommodative attitude towards the crisis in Zimbabwe. "They are
benefiting from our crisis and as such they are not worried at all by the
Zimbabwe crisis. Their economies are growing at our expense," said Nyathi.
Zimbabwe's non-governmental organisation (NGO) sector, which unsuccessfully
tried to lobby the SADC leaders at the summit, has also expressed
disappointment at the regional bloc's inaction. Some representatives of
the NGOs noted that instead of zeroing in on the excesses of the Harare
authorities, the SADC leaders limited themselves to "petty" agendas that
would do little to advance the lot of the suffering peoples in their
respective countries. The NGOs were denied observer status at the SADC
Summit. The Crisis in Zimbabwe Coalition this week implored the AU to
take decisive action on Zimbabwe, or risk being perceived as
toothless. "The situation in Zimbabwe presents both SADC and the AU
with a golden opportunity to force President Mugabe to reform. National
dialogue, not only between ZANU PF and MDC, but also including civil society
- faith based institutions, business, women, youths, students' organisations
and workers - is the only way that can mark an end to the current
crisis. "The AU must not heed calls from ZANU PF that the Zimbabwean
issue must only be solved by SADC because this renders the continental body
toothless. Equally, President Mugabe must be censured for trying to set SADC
against the AU," THE coalition said in a statement this week. A
communiqué issued at the close of the summit indicates the SADC leaders
spent the best part of the two-day summit discussing development in the
region with emphasis on the economic, social, food security and political
situations. The debt-relief proposals announced by the G8 countries in
July and the need for details on the debt-relief programme were top of the
agenda. However the analysts who spoke to The Financial Gazette said as
long as the region was complicit in the Zimbabwe crisis, very few African
countries would positively engage the G8 countries. "Delegates
observed that for most member states to achieve the Millennium Development
Goals (MDGs), there was an urgent need for SADC countries to institute
policies and programmes aimed at accelerating social and human development,
individually and collectively," reads part of the communiqué. With
regard to food security, the summit noted that the region might be
self-sufficient in maize despite deficits in a few countries such as
Zimbabwe, which is presently battling to procure about 1.2 million metric
tonnes of grain to fill empty silos. Affected countries were urged
at the summit to mobilise resources to import food that may be required to
prevent hunger and starvation. Zimbabwe, which has so far failed to
garner international funds to buy grain regionally and overseas, has no
capacity to raise the funds for grain and fuel imports, according to the
analysts. Without assistance from the international community, analysts
say, Zimbabwe would not be in a position to feed the about 4.2 million
people estimated to be facing starvation owing to poor harvests blamed on
the drought and chaos at commercial farms.
THE government,
starved of cash, has rejected a fresh plea from the Zimbabwe Stock Exchange
(ZSE) to withdraw new tax measures that have halted trade for seven straight
days and taken the market to the brink of collapse.
ZSE chief
executive officer Emmanuel Munyukwi said the bourse was waiting for the
Zimbabwe Revenue Authority (Zimra) to hand over a promised report detailing
how the tax authority expects the damaging new withholding tax to be
administered, but said government, which has admitted to being broke, had
already indicated it would not budge from its position. "They (Zimra)
are scheduled to come back to us today (yesterday). We will of course point
out to them where we think there are shortcomings," Munyukwi told The
Financial Gazette yesterday. "We want this resolved as quickly as possible
because we are all losing revenue the longer this drags on." No
comment could be obtained from Zimra by late yesterday. For the seventh day
yesterday, the trading floor was empty, although a small share parcel went
through on Interfresh. FML Limited was To Page 31 the only
counter to trade on Monday, while only CFI Holdings and Old Mutual traded on
Tuesday. The ZSE has not seen any trade since last Tuesday's
introduction by Finance Minister Herbert Murerwa of a 10 percent withholding
tax and a more damaging demand that pension funds have 35 percent of the
value of their portfolios in traditionally low yielding government scrip.
Pension funds account for 90 percent of ZSE business, and their withdrawal
last week raised the prospect of a market crash as panic-stricken sellers
radically knocked prices down. Brokers this week continued to
report for business, but trading floors were soon deserted, as the brokers
got no deal orders from investors. A meeting was held Monday between
the ZSE and senior Finance Ministry officials, but people familiar with the
talks say the government officials would not back down on the new tax,
saying it had become law after Parliament approved Murerwa's extra
budget. Monday's meeting came after earlier attempts by the ZSE to
dissuade the government from proceeding with the proposed measures. Last
Monday, on the eve of Murerwa's budget statement, ZSE officials and other
investor groups had made a last-ditch bid to sway government to ditch the
tax. Four weeks before that meeting, The Financial Gazette has heard
from various sources, the ZSE, upon being informed by government that it was
introducing the new tax, wrote a letter to Finance Ministry Permanent
Secretary Willard Manungo seeking consultation over the matter. The plea was
ignored, as were several others that followed. Brokers say the
withholding tax is a serious threat to their industry, as it is virtually
impossible to administer. The new tax is charged on gross proceeds, and
dealers say they now have to make a return higher than 20 percent just to
break even. This means investors now have to wait for the value of
their shares to rise by at least 20 percent before they can sell.
EDITOR - Zimbabwean civil servants
have been reduced to beggars and destitutes due to the government and its
cheer leaders' mismanagement of a once-vibrant and admired
economy.
An honourable man admits failure and asks for a
neighbour's help. May the honourable men in government stand up and be
counted unless they still want to hang on to loot and plunder?
Remember it may take a day to destroy a house, but years to rebuild
it.
EDITOR - The past few years have presented
Zimbabweans from all cycles of life with their greatest
challenges.
It would be simplistic of me to chronicle all the
troubles bedevilling the country as every Zimbabwean, young or old, has a
tale to tell. My concern today is in search for answers. I previously
wrote to this paper exhorting all Zimbabwean man and women to take a stand
against oppression. I write again today with a simple basic question that I
presume every man needs to ask themselves: "Hasn't the government done
enough harm to our lives, our families, our future, and our hopes?"
It is common practice to look forward to certain people to make a difference
for us but I want to tell everyone today that each and everyone of us must
strive to be an agent of that change. We do not need to waste time
defining our goals since at this juncture the government has simplified that
for us. The goal is simply to get the government to treat us like human
beings. We are living in troubled times and cannot entrust our fate into the
hands of political opportunists. Children of Zimbabwe, I ask you to
come together and confront this evil in our society - the evil perpetrated
by individuals bent on destroying our country.
Saboteurs A CERTAIN patriotic Zimbo
asked CZ to please ask on his behalf if the government cannot do something
about saboteurs who have virtually stopped trading at the Zimbabwe Stock
Exchange since the minister of (No) Finance introduced this funny
tax.
The patriotic fellow is adamant that the government should do
something. He suggested that for starters, since our government is very good
at the use of the jack-boot, why can't it deploy its CIO, the riot police,
the Police Support Unit, war veterans and their Green Bomber younger
brothers to deal with the situation on the ZSE. They have done it in the
past, against white commercial farmers, opposition supporters, the private
media, and NGOs. What should stop them this time from moving in to deal with
saboteurs at the ZSE. They can round up those brokers, then look for sellers
and buyers somewhere in the streets of Harare and force these parties to
make transactions of some sort. Surely our government cannot throw in the
towel on this one. Never, ever! Otherwise public transport operators who
were slapped with an equally funny tax may also try the same stunt.
And in the meantime (In)Justice minister Patrick Chinamasa can draw up a new
law to deal with such cases in the future . . . if possible, the law can be
applied in retrospect! Birth rate falls? CZ is sad that the
country's birth rate is dropping when The Party needs more and more people
to defend the country's ever-endangered sovereignty and territorial
integrity . . . when the party needs more and more youths to recruit as
Green Bombers for training and graduation into war veterans . . . when the
party needs more and more crowds to rent for its rallies, victory
celebrations, etc . . . when it needs more and more people to take up land
cleared of the white commercial nuisance . . . when it needs people
most! What could the cause of this catastrophe be? The British and
their American cousins could be up to some mischief! But it looks
like we ain't seen nothing yet. The rate could fall even much further since
Operation Murambatsvina. The operation dealt a killer blow to our birth rate
. . . most active members of our society no longer have any bases to operate
from . . . they used to do it in those tuckshops at night, in those backyard
cottages, in all those structures that were ruled illegal and razed to the
ground. So how are they going to procreate? Besides most of them no
longer have that sense of social security and the resultant self-esteem . .
. which is extremely important for maximum activity. So until and
unless the threatened results of Operation Garikai become available for all
and sundry to see, this country may skip a whole generation! It is pertinent
- to borrow from the Honourable Undenge - at this point in time to observe
that even Madam Anna Tibaijuka missed this point in her otherwise good
report. She mentioned all other rights being violated but did not mention
anything about the right to procreate. Did she want people to tell her in
her face that because of Murambatsvina they were now starved of a basic
human need granted to them by the Creator at the beginning of time?
And by the way, it is interesting to note that the patriotic Herald has
started serialising the government's response to Madam Tibaijuka's report .
. . but in the interest of those readers who did not have access to the
report, would it not be more sensible to serialise the Madam's report before
the government's response? Criminal police WITH all the
brouhaha about the need to fight this pervasive socio-economic cancer called
corruption, CZ would like to please ask Cdes Kembo Mohadi, Augustine
Chihuri, Webster Shamu, Paul Mangwana and others whose portfolios might
remotely have something to do with the operations of our thoroughly corrupt
police force why the fight against corruption should not start with the
enforcement of force number badges on police details. Is this not the first
step towards genuinely fighting corruption? Or we should not take this
government seriously anymore, should we? It increases inflation and then
starts fighting it, it sabotages the economy and then tries to turn it
around, it murders agriculture and then start trying to reform it, it
destroy people's houses and starts trying to build them . . . etc
etc Our police officers are corrupt to hell and back and this is the
reason why they don't want to display their force numbers. And because their
superiors know this very well, they encourage them to conceal their identity
from the people whose rights they violate. If the government is
broke, as is always the excuse, we can all donate towards those badges,
because they are very important. We cannot have criminals masquerading as
police details. Its criminal! Please? CZ does not understand
why some journo colleagues with grievances about some unethical goings-on at
their work places choose to approach him instead of going to the Media and
Information Commission. This time it was these young journalists - some of
them not so young but because they have been sitting correspondents almost
all their lives they are considered young - who complained bitterly that
some of their immediate superiors were abusing them. CZ was told of
cases in which some senior journos, some of them even news editors, take
their juniors' stories and sell them to foreign media organisations with the
original authors getting nothing . . . nothing at all for their sweat! What
the seniors do is, during the course of their duties, they get stories from
their hapless juniors and if the stories are good, then they put their
by-lines on them and click the "send" button on their e-mails and Jesu
Kristo! - they have earned their upkeep! Please don't quote CZ, but
this is really happening. It has always been happening but now it is being
done shamelessly! Want names? Lots of them, big ones for that
matter! Agreed! IT seems like most progressive people in the
journalism fraternity are in agreement on one thing. This man . . . you know
him, don't you? This is what veteran journalist Francis Mdlongwa had to
say this week about him: "Indeed, many within and outside Zimbabwe must be
surprised to see those who only yesterday were propping up Robert Mugabe's
dictatorial regime and presided over the brutal demise of the country's
private media being embraced today as champions of democracy. They are given
acres of space in "friendly newspapers" to try to rehabilitate themselves in
the faint hope that long-suffering Zimbabweans will have forgotten all about
their crimes against humanity." You know the person being referred
to. Don't you? Answered! THIS week CZ asked a colleague who
recently resigned from our one and only public broadcaster why he had done
so and this is the response he provoked: "Get away. Why should it be a crime
to leave the one and only broadcaster? I tried a diet of roasted patriotism
and grilled patronage with scrambled affiliation and found myself in
trouble. I kept losing weight as though I had crossed a red robot. Remember
I can't take patriotism home and feed my tribe. Some of us don't have
families but tribes to look after. Tell them about patriotism and
sovereignty and stir a hornet's nest. The place taught us how to go without
anything. Given literary licence, I would call myself a seasoned sufferer.
Maybe state certified sufferer." This is CZ's Notebook.
The current trading week has largely been a
repositioning phase in the financial markets.
The dramatic rise
in the year on year inflation figure for July 2005 by 90% to 254.8% and the
anticipation of higher inflation figures in the next months, has seen money
market investors adopting a cautious approach to investments exceeding a
tenor of 30 days. Instead investors are opting to go for monthly
investments so that they can be able to realign their investment returns
with inflation outturns on a monthly basis. As a result of this
short-term outlook by investors, the 91-day Treasury bill tenders have of
late been receiving low support levels despite the fact that yields on these
bills had been adjusted upwards to average 267% per annum. The RBZ
response to this behavioral change in response to the inflationary outlook
resulted in the introduction of 30 days Treasury bill tenders on Wednesday.
The first 30 day treasury bill tender was held on Wednesday August 24, 2005
and this tender attracted bids worth $103.4 billion with yields offered
ranging from 200% to 275% per annum. However, the average rate settled
at 221.02% per annum. In the second 30-day tender, bills worth $59 billion
were allotted out of total bids amounting to $91 billion. The average
weighted rate edged up to 223.9% per annum. In the third tender the average
rate settled at 224.95% with bids amounting to $55 billion being allotted
out of total of $61 billion. This new development in the financial
markets points to concerted efforts by the central bank to maintain the
money market in deficit. This position was espoused by the Governor in his
last monetary policy review and is consistent with a tight monetary policy
approach. The Central Bank has made it clear that it will not hesitate
to mop any excess liquidity likely to spurn inflationary fires.
This initiative coincides with the large market inflation outlook, as the
bills will mature around the period that the August inflation figures will
come out. Should the inflation rate for August be higher, these assets are a
sure hedge against interest rate fluctuation. In the secondary market,
the 7 to 14 day investment rates improved to levels of around 120% per annum
and the 30-day investments are now attracting rates in the range of 140% to
150% per annum. The 60-day investments are now fetching around 170% per
annum, and for the 90-day horizon rates have firmed to around 200% per
annum. In the event that the Central Bank maintains the new tenor on
treasury bills, then rates above 30 days will have to be realigned to the
30-day paper, as there will be no assets to match this period. The
new paper should find a lot of takers in the coming days as most players sat
out the first tenders so as to gauge the desirable yield. Investors have
expressed satisfaction with the yield obtaining on this paper as it is in
line with inflation. However, the Central Bank has not indicated
whether it will continue issuing 91-day paper concurrent with the shorter
paper or whether this is an interventionist move meant just to mop up
liquidity.
THIS is an introductory part to a
four-part series.
THE proposed South African loan to Zimbabwe has
generated a lot of interest in diplomatic and other circles and has again
re-activated the debate on South African and regional policy towards
Zimbabwe. However, from my discussions with colleagues in the democratic
movement and the media fraternity, there appears to be a lack of depth of
understanding of the dynamics at play in the whole loan debacle, which lack
of depth has resulted in improper and apolitical strategies and tactics by
the opposition civil society, the international community and, worse still,
bald reportage by the media. The South African government's stance on the
Zimbabwean question and in particular the March polls and its present
generosity has begged more questions than answers, and if anything, South
Africa's double standards in respect of Zimba-bwe seem to be compounding our
problems as South Africa, for its own selfish reasons, seems to be abetting
and aiding an unpopular regime thereby exacerbating internal conflict in the
country. A policy of so-called quite diplomacy has been adopted and a lot
has been said and written about it. However, right now there is speculation
that SA will depart from its discredited quite diplomacy and adopt a more
robust diplomatic approach. The proposed loan to Zimba-bwe is seen as giving
SA considerable latitude and leverage to whip the Zimbabwe government into
line through stringent conditionalities, which include talks between the
ruling party, the opposition and the broader civil society on the need for a
new constitution. The Zimba-bwean President, in characteristic fashion, has
already shot down the possibility of talks and is understood to be pushing
for the relaxation of political conditions tied to the South African loan to
the extent that the whole loan issue has now generated tension between the
two countries, whose Presi-dents are now engaged in a high-stakes diplomatic
poker game. To understand these issues we need to revisit and consult
history, if history is the study of the past and the present in order to
interpret our contemporary reality and to predict the future. This series of
articles seeks to cast Zimbabwe and South Africa's relations in a historical
political context with the hope that such an endeavor will avail critical
information to the political leadership, both in government and the
opposition, civil society, the media, the broader international community
among others, so as to facilitate progressive intellectual political
discourse and, better still, to guide political action for the good of
Zimbabwe. The present analysis is done in the context of the political
economy of the region and the historical strategic turf for regional
hegemony between Zimbabwe and South Africa. There has always been a
love-hate relationship and a strategic struggle for regional hegemony
be-tween Zimbabwe and SA since the founding of Rhodesia in 1890, whether the
successive governments in both countries have been black or white, colonial
or post-colonial. Historically, Zimbabwe is South Africa's overgrown child,
with an impulse to assert her independence and often reluctant to take
advice from South Africa. As a modern nation-state, Zimbabwe was born from
South Africa, fathered by Cecil John Rhodes, himself a South African
politician of English descent. Zimba-bwe's beginning was much the result of
Rhodes' commercial appetite as of the conflict between the English-speaking
and Dutch (Afrikaans)-speaking white tribes chasing one another all over
South Africa, and whose relationship has shaped the development of South
African and Southern African regional politics to date. Contemporary
Zimba-bwean politics are a curse or a blessing in disguise, of the
historical evolution of regional politics. This being the case, it is
necessary for us to interpret and define correctly the attitude that a
post-Apartheid, post-Mandela and future South Africa adopts towards the
region, particularly towards Zimbabwe. Southern Africa has always been
dominated by South Africa at all times and this trend is likely to continue.
As in the past, there will always be attempts to resist this dominance,
spearheaded by Zimbabwe as is currently happening, but this too, as in the
past, is likely to be futile. Basically, nothing has changed in the politics
of Southern Africa in terms of nation-states being haunted by the big
brother image of SA, notwithstanding Zimbabwe's open defiance of S.A,
firstly on the tactical differences on the Democratic Republic of the Congo
(DRC) war in 1997. Secondly, in subsequent politico-economic developments in
the country, in particular the democracy, governance and human rights
concerns that have been seen as a threat to the very essence of NEPAD, a
project inseparably associated with and heavily promoted by President Mbeki.
Thirdly, on the low level quarrel we witnessed between the two countries a
few years ago over control of the SADC Organ on Politics and Defence. And
now there are again tactical differences on the best deal for Africa as
regards reform of the United Nations Security Council. Rhodesia behaved in a
similar manner only to come back crawling to South Africa at the hour of
reckoning. South Africa's basic objectives in the region are economic,
political and security hegemony. The three interlock and are mutually
reinforcing, even if they may conflict in any one particular case. Regional
economic predominance is perceived by the current South African regime (as
it was by its Afrikaner republic and British colony predecessors) as far too
important to leave to market forces. This economic predominance is the
result of systematic, selective state and enterprise policies in transport,
fiscal matters, enterprise structuring, investment, and provision of
knowledge and personnel. Present South African state and enterprise regional
policy is in large measure directed towards consolidating, protecting and
expanding that pattern of economic predominance and dependence. To date, the
major underlying contradictions in South Africa itself and between it and
the Southern African region is basically economic. These contradictions are
fundamental and often quite antagonistic. Clearly not all South African
goals and tactics are, at least in any narrow sense, economic. Indeed some
have significant economic costs to South Africa. Be that as it may, the
separation of SA politico-economic goals, strategies and tactics from those
more narrowly related to security and power, is somewhat superficial, even
at an analytical level. South African regional policy is predicated on a
multi-pronged and multi-layered approach, a "total strategy" so to speak,
aimed at safeguarding, leveraging and expanding South Africa's overall
interests in the region. The political economy of regional hegemony has
always been, and continues to be, operated pragmatically, responding to
perceptions of attainable targets based on changes in the domestic and
regional, national and international contexts, and adjusted in light of the
results. While a coherent regional policy has emerged from the consistency
of objectives, the interests of South African individuals, sub-classes and
institutions are not always homogenous, nor are their perceptions of the
most effective ways of pursuing them always congruent. The fore-runner of
the SADC (Southern African Development Community), SADCC (Southern African
Development Co-ordination Conference) was born out of the politics of
liberation in pursuit of a non-racial and democratic S.A. SADCC is a symbol
and tangible embodiment of the political economy of Southern African
liberation. It was a politico-economic project of the independent states of
the region _ Angola, Botswana, Lesotho, Malawi, Mozambique, Swaziland,
Tanzania, Zambia and Zimbabwe. This loose grouping sought greater economic
independence from South Africa, a policy diametrically opposed to the
sub-continental hegemony Pretoria perceived as its role. Launched in Lusaka
on 1 April 1980, 17 days before Zimbabwe's independence celebrations, SADCC
was spearheaded by Zimbabwe, then the only "superpower" in the region! The
first stated goal of SADCC was to reduce dependence on apartheid South
Africa and to increase economic development through regional co-ordination.
SADCC as a co-ordination conference was given impetus by SA's improper and
unethical politics on racial separation; it was not necessarily conceived
from an economic argument that made sense on its own, whether the politics
in South Africa were right or wrong. SADCC was conceived mainly as a
political strategy to bring political change in SA. In the process of
co-ordination or consciousness raising the SADCC member states further
realised the overall nature of apartheid South Africa's politico-economic
hegemony in the region, as well as the different national abilities to bear
costs and assume risks to overcome that dominance. SADCC was explicitly
political, not in the sense of any overall domestic ideological congruity_
that could be counter-productive even to try_ but in declaring that economic
links are not made in a vacuum. It never deluded SADCC that total
disengagement from the SA economy was a near impossible feat, more for some
member states than for others and so the focus was on reducing as opposed to
eliminating dependence. SADCC members included Botswana, Lesotho and
Swaziland whose economies can be fairly described as captive of South
Africa, and Malawi whose government under Hastings Kamuzu Banda opted to
build monumental projects with apartheid SA capital and technology. The
economic ability and political will to reduce dependence varied and still
continue to vary considerably. This variation is a direct result of
historical economic ties and trade links which are independent of the will
of the current governments in the region. In the 1980s there was increasing
talk about the need to tighten sanctions against apartheid SA as a means of
inducing or coercing changes in its internal system, its occupation of
Namibia and its general destabilization activities in the region. The
paradox was that economic sanctions against SA would impose heavy costs on
its neighbors, and would certainly include the tightening of SA retaliatory
sanctions in the region as well as an intensification of "strike kommando''
strategies. This would cause great difficulty for several SADCC states and
would bring some economies to the verge of near collapse. SA had threatened
to ensure that economic sanctions against itself would be matched by
retaliatory sanctions against its neighbours _ most specifically by
expelling hundreds of thousands of migrant and seasonal workers from
Lesotho, Mozambique, Botswana, Malawi and Swaziland, and by cutting off
flows of petroleum products. SADCC's response to the potential reality of
sanctions against SA had evolved rapidly and they chose to view the
sanctions question in the context of intensified struggle and the
opportunity for advancing the political economy of liberation, not
capitulation and subordinated co-operation in sanctions-busting. Zimbabwe's
geographical and historical ties to SA, including the fact that it inherited
Pretoria as its largest trading partner at independence, particularly left
it vulnerable to economic destabilisation. Joining the SADCC 17 days before
independence was a recognition of this harsh reality. It was also a public
statement that it wanted to do something about it. At the same time, from
the SA perspective, it was an unacceptable statement which, if left
unchecked, threatened to reduce dependence on Pretoria in future. One of the
ironies of Rhodesia's UDI in November 1965 was that, although it temporarily
severed formal ties with Britain, it increasingly reduced the country to an
economic province of SA. The UDI years consolidated SA's domination of
Rhodesia in areas of finance, trade, investment, military and diplomatic
relations. The South Africanisation of the Rhodesian economy was entrenched
in sugar, citrus, timber, paper, food processing, fertilizers, copper,
chromium, nickel, coal, the press and financial institutions. For the Mugabe
government disengagement in the military and diplomatic spheres could be
effected relatively quickly but the other three areas posed serious
difficulties. In any case the new government was able to sever diplomatic
and sporting ties, and to end the relay of SABC broadcasts by the Zimbabwe
Broadcasting Corporation (ZBC). South African shares in the main newspaper
group were purchased by government, as were those in the country's largest
bank which had been owned previously by the Netherlands Bank of South
Africa. However, these and a few other actions barely scratched the surface
of South Africa's economic stake in Zimbabwe. Severing the economic
umbilical cord will take many years. To date South Africa remains our
greatest trading partner although they are now under threat from the
Chinese. It should be realised that at independence in 1980, 19% of
Zimbabwe's total trade was with South Africa and 41% of all Zimbabwean
manufactured exports went to SA. Sixty percent of these were sold under a
preferential trade agreement signed between Rhodesia and South Africa in
1964. This agreement gave Zimbabwean exporters preferential tariffs without
which they would have been priced out of the SA market with little
likelihood of finding new markets elsewhere. Abrogation of that agreement
would have caused an estimated annual loss of Z$50 million a year in foreign
currency and a permanent loss of 6 500 jobs in the manufacturing sector. In
recognition of our country's position, President Mugabe said on the eve of
independence: "we must accept that South Africa is a geographical reality
and, as such, we must have some minimal relationship with it. We would hope
that South Africa would reciprocate, and not resort unduly to hostile acts
against us. We are pledged to peaceful co-existence with it. We are opposed
to the politics of South Africa, but we do not regard the people of South
Africa as our enemies at all." He said later that while his government fully
supported the international community in imposing sanctions against South
Africa, Zimbabwe's geographical reality was it was "not in a position to
implement [them] to the full because of our present dependence on South
Africa" South Africa has historically used several tactics simultaneously or
in sequence to achieve its goals in relation to particular countries or
sectors, and it has traditionally developed multi-purpose tactics suitable
for furthering several strategic elements simultaneously or in sequence, and
some of both these tactics and strategies, and the intended strategic goals
may be recoverable from one power holder to another, regardless of color. A
thesis has been articulated that a post-apartheid South Africa would pursue
a "good neighbour" rather than the "predator" policy that was pursued by
apartheid SA; that post-apartheid SA would act in a brotherly way towards
her neighbours; that she will not be a "bully" but a "caring" and "loving"
brother. So far so good South Africa has not been a bully; but instead; we
have acted bullish. But will this attitude always be maintained in a
post-Mandela, post-Mbeki and future South Africa? Even in the presence of
unruly (if provocative) "young" brothers? Bullying is a function of a
capacity to be bully so to think that a post-apartheid big brother would
permanently lose the impulse to be bully is sentimental nonsense and naïve
indeed. Being in a post-apartheid era is irrelevant to power politics in the
region, for politics among states does not stop because we are in a
post-apartheid era. South Africa's regional objectives are interlocking and
therefore require a strategic approach to achieving them, not an episodic
tackling of one case at a time without regard to the broader picture. SA has
perceived this requirement as it has thus far acted brotherly, sensitive to
the region's sensitivities, while Zimbabwe (not unlike Rhodesia) risks being
perceived as a bully by her allies. It is also a truism that when big
brothers seem to tolerate our unruly and provocative behavior in front of
our cheering peers, often it is a deceptive trap to our peril. It is in this
context that South Africa's quiet diplomacy towards Zimbabwe should be
partly understood. Having said that, the question then arises as to whether
present day South Africa's strategy and tactics on the Zimbabwean question
and, therefore, for regional hegemony form a seamless web of diabolically
clever Machiavellian (or Kissingeresque) cunning; a wandering minstrel show
lurching from one piece of crisis management to another, or a mass of
internal contradictions and insoluble conflicts among South African
objectives. The answer is probably none of the above by itself, but probably
some of each combined. Let's continue the discussion next week. Isaya M.
Sithole is a lawyer, political consultant as well as a human, civil and
political rights activist. He can be contacted on: isithole@yahoo.com
THE question I
keep being asked by investors is: what is going to happen to the market?
Frankly I don't know. But what has been happening to the market so far
causes great concern.
Not only is the lack of activity right now a
reflection of the potential disaster that could un-fold in our economy, it's
also a clear sign that investors can be fickle and policies need to be well
researched before they are implemented. The 10 percent withholding
tax in gross proceeds amounts to double taxation as, in a lot of cases, the
money that would have been invested is from savings. If the amount is taken
on profits then that is more acceptable and perhaps unavoidable given the
current expenditure pre-ssures in our economy. However it must be
pointed out that it is not easy to administer and has a high cost of
collecting. Brokers must now calculate the profit from each disposal. That
also has complications. Given the unfolding events, it's so easy to
forget that just a week ago this market was bustling with activity, as
expectations of good results were high. It has now been reduced to a sellers
market with no buyers in sight. There are several explanations for this
about turn in the market sentiment. First, the days of
institutional investors as we know them are numbered following the
pronouncement that pension funds and insurance companies are to market their
assets when coming up with their prescribed assets ratios. Remember the
Zimba-bwe Stock Exchange is owned mainly by the public through pension
funds, and with the way inflation has been going up, it means that asset
prices have gone way higher than the cost of acquiring them as they try and
keep pace with inflation. My question is: is this necessarily an evil
thing? That is to preserve value for future generations. What insurance
companies and pension funds have tried to do over the years that inflation
has increased to hyper levels is to invest in real assets and in most, the
level of these is easily 90 percent of total assets. On the other
hand prescribed asset prices have been way below inflation, so what
pensioners lost from holding these they attempted to gain in stocks and
property. To now say reduce your real assets by 40-50 percent in a small
market such as ours is to destroy value. In other words, it may not be
best way to preserve value. Let's not forget that there had also been
previous policy announcements to the effect that the PA ratio would be
reduced over time. The second reason is that everyone knows that the
market is crashing and buying now is simply not a good idea. You buy a share
today and tomorrow it will be available at a much lo-wer price. The market
is really bearish and until investors form other expectations then there is
really nothing much to expect for the rest of the year. In other
words, inve-stors are stuck with share certificates they won't be able to do
much with in the short-term. The market simply has no capacity to absorb a
sell-off of this magnitude. Had it been a situation where the market had
some investors who had the capacity then the situation would be different
but as it stands there is no buying at all. Let's say buying does come
back to the market based on the fact that inflation is higher at 255 percent
for July. Before the announcement of the new measures the industrial index
had gained 312 percent, so it was ahead of year-on-year inflation. Thus if
the market goes up it will only be in line with inflation. It will not be
sustainable given the fact that the next 12 months are going to be
tough. This week we saw the release of some good results from BAT,
ZIMNAT and Afdis while Pioneer posted a loss for the six months ended June
2005. BAT and Afdis both recorded some increase in volumes, which is
commendable, 20 percent and 8 percent respectively. Seems like we are
drinking and smoking more! We should therefore expect Delta to report some
volume growth. Over the weekend I got to see how much inflation has
soared first hand. I was doing my groceries and the shelves were packed with
all the products that used to be in short supply. From cooking oil to soap,
you could buy as much as you could. Makes you wonder doesn't it? For now
let's wait and see what will unfold in our market. The stalemate needs to be
resolved quickly before it destroys the stock market for the sake of the
small investor who is trapped.
ZIMBABWE'S galloping
inflation and rising interest rates will deal a body blow to the country's
already debilitated manufacturing industry, further scuttling hopes for
economic revival, analysts have warned.
They said there was now
little hope for the recovery of Zimbabwe's industry, where capacity
utilisation is reported to have fallen below 50 percent due to persistent
foreign currency, power and fuel shortages. Zimbabwe's inflation rate
surged to nearly 255 percent for the month of July, while the central bank
hiked the key accommodation rate to 270 percent last week. Lending rates are
expected to rise in sympathy with the interest rate policy.
Inflation, which has retreated from a record 623 percent in January 2004,
remains the highest in the world. Analysts project the figure to end the
year at around 400 percent. The rise in inflation is also putting
pressure on lending rates to go up, analysts say. "These figures
put us off completely, and heavily geared companies are especially going to
be chopped off . . . they won't survive. There is now pressure on rates to
go up and minimum lending rates are likely to go up to around 340 percent in
tandem with inflation. And this is bad news for industry considering that
most companies were sustained by concessionary funding.They won't survive,"
economist David Mpamhadzi said. Zimbabwe's economy has shrunk by more
than 30 percent during the past six years. Last week the government
lowered growth projections for 2005 to below two percent from earlier
projections of more than three percent, but independent estimates project a
further two percent decline. The country is also grappling with an
acute shortage of foreign currency, a development that has resulted in
manufacturers scaling down production. The analysts said the
government's appetite for unbudgeted funds was fanning inflationary
pressure. "This situation is getting out of hand and we need to restore
confidence in the country so foreign investors and donors can return. The
inflation figure makes it that much more obvious that there is need for a
political solution to Zimbabwe's problems," said economist James
Jowa. Manufacturing has shrunk by 51 percent since 1997 and exports
have fallen by half during the past four years. The Central
Statistical Office says the manufacturing sector grew by 6.6 percent between
1990 and 1998 but been on a downward spiral since then. A market
analyst with Tetrad Securities said producers had not been able to access
foreign currency from the central bank, with only seven percent of being met
since June compared with 27 percent in the previuos month. More
than 750 firms are estimated to have shut down between 2000 and
2003. Apart from the high inflation, companies have been battling
foreign currency shortages, frequent power cuts and loss of offshore lines
of credit. The transport sector, badly affected by fuel shortages,
was last year estimated to have declined by 61.8 percent, while the textile
industry contracted by more than 59 percent. The Confederation of
Zimbabwe Industries (CZI) last year said a steep rise in production costs
had affected the government's stated objectives of fostering export-driven
growth. The CZI says the number of retrenches trebled from 1 187 in
2002 to 3 585 in 2003, with more than 40 companies closing shop, while 25
scaled down operations in 2004. "Political troubles combined with
the abandonment of sensible economic policy closed off most of the aid tap,
scared away most foreign investment and chased much of the talented
workforce out of the country. "While many of these actions appear
economically irrational, they may be explained in a perverse political
logic," said the Centre for Global Development. Analysts say the
dark cloud hanging over Zimbabwe's manufacturing sector is reflected in the
widening disparity between the southern African country's economic
fundamentals and those of its major trading partners in the region.
Gross domestic product for South Africa, Zambia, Malawi and Botswana was
last year projected to grow by 3.5 percent, 4.1 percent and 6.5 percent
respectively.
A LONE laptop
computer playing a dancehall-reggae tune was just about the only action on a
deserted Zimbabwe Stock Exchange (ZSE) trading floor early Friday when The
Financial Gazette called in for a peek into the first major crisis to hit
the bourse in years.
ZSE chief executive officer Emmanuel Munyukwi
was in a meeting with the head of one of Harare's biggest stockbroking
firms, seeking a way out of a crisis that looked to threaten the very
existence of the stock market - this last remaining bastion against the
dreaded "inflation dragon". The tacky ZSE price board did not show it,
but some 42 counters had just knocked their prices down sharply as sellers
sought a way out. But they found no buyers, as brokers protested a set of
damaging new measures introducing a 10 percent withholding tax, raising
stamp duty and compelling pension funds to have 35 percent of the value of
their portfolios in government scrip. The standoff has shocked
many, but other brokers admit the conflict was always coming. Apart from the
foreign currency black market, the ZSE is the only market that has been
giving a real gauge of the economy's sentiment on the direction of
inflation. And repeated boasts by stock market players of massive
inflation-busting earnings were bound to attract the attention a of broke
government. The face-off is the peak of months of accusations and
counter-accusation between two sides unwilling to move from their respective
entrenched positions - snooty stock market barons going toe-to-toe with a
vagrant government ready to shake everybody upside down until the last penny
in their pockets drops out. "It was bound to happen, if you look at
how we have related to the authorities over recent months. We have been
called names, but the stock market has always responded strongly to any kind
of pressure," one senior broker said. "These new taxes have just made our
relationships worse." In mid April, central bank governor Gideon Gono
told bankers that the ZSE was a haven of speculators and some action was on
the way. The market fell on his stern remarks, but rose again over a week
later, investors taking a rebellious stance that there was little he could
do to hurt the ZSE. But on May 19, a 65-percentage point rate hike
hit shares badly. Still, the market rose again - even after being accused of
"irrational exuberance". But perhaps the hardest defiance for
authorities to take was on July 21, when a 20-percentage point rate hike was
met with a scornful 6.5 percent jump by the ZSE the next day. But
four more rate hikes later, the finance ministry has now joined the party -
and relations between investors and government can never sink any lower from
this point. It is understood that weeks ahead of last Tuesday's midterm
budget statement, ZSE officials had reacted with alarm upon learning of the
new measures planned by the finance ministry. A series of formal petitions
made to government by the exchange however failed to convince the ministry
that the new tax would hit the market badly. It is not clear how
ZSE officials hope to play their way out of this fix. But government - which
admits that it has gone bust - is unlikely to let up on a withholding tax
that it thinks will bring in at least $1 billion daily. Previously,
government had been collecting up to $500 million in stamp duty daily - the
prospect of getting four times this much is too sexy a temptation for a
broke government to resist, critics say. "The minister should reduce
the tax rate to levels that approximate commissions charged by stockbrokers
and fund managers, not to gobble all the profits including part of the
capital like this," Kingdom economist Witness Chinyama says in a report,
saying the boycott had come because "no rational investor will entertain
clear losses". Unless ZSE players can produce an alternative plan that
still gives government the billions of easy money it can make from its new
taxes, it is unlikely that relations will mend soon.
WINDMILL, one of the
country's largest producers of fertiliser, is threatened with closure,
raising the spectre of a serious farming input crisis ahead of the 2005/06
agricultural season.
Windmill has been facing an acute shortage of
raw materials - the result of Zimbabwe's foreign currency crunch - and the
company said this week it was only left with two weeks' cover of the
critical imports. Managing director Andy Humphreys told The Financial
Gazette the fertiliser firm would shut down its operations in two weeks'
time because of the shortages. He said the company required more
than US$5.5 million for importation of raw materials to keep its plant
running. Windmill's revelations come at a time Sable Chemicals, the
sole manufacturer and supplier of ammonium nitrate (AN), whose availability
on the market has remained tenuous in recent farming seasons, has said it
will, once again, fail to meet national demand. During the past
season, farmers ended up substituting AN with a much more expensive
nitrogen-rich Super N, a blend of urea and phosphate. Major seed
producers Seed Co and Pannar have also expressed doubt whether they will be
able to supply the 55 000 tonnes of maize hybrid seed which conservative
estimates suggest is the national requirement. Windmill's Humphreys
could not disclose the national fertiliser requirement this coming season
but said the supply situation was "very worrying". He said the national
requirement depended on the availability of rains. Estimates
suggest that the country requires close to a million tonnes of fertiliser
every farming season. "The supply is very worrying. There is very
little foreign currency and we have virtually exhausted our supply of raw
material," Humphreys said. "We are going to produce for another two
weeks and then we will stop production. It is a very serious and sad
situation," Humphreys said. Zimbabwe fertiliser companies have
previously warned of serious shortages of the commodity unless the foreign
currency situation improved. Fertiliser producers have over the past
five years expressed concern over the downturn in business caused by farm
seizures under the government's controversial land reform
programme. Sable Chemicals said its operations were being chocked by
price controls and the unavailability of foreign currency. TA
Holdings, which owns 51 percent of Sable, said achieving its annual target
of 240 000 tonnes depended on foreign currency availability and the lifting
of price controls. TA chairman Shingi Mutasa said imports of ammonia
were being constrained by foreign currency shortages. "Sable
(Chemicals) is still being given a price which does not make it viable,"
Mutasa said. The government has put in place a price monitoring system
for fertiliser producers in a bid to make inputs affordable to the new breed
of farmers. "Industry has been price-controlled until it cannot
survive," Mutasa said. Pannar Seed director Temba Nkatazo said seed
availability in the coming season was being affected by the government's
reluctance to announce the selling price. "The selling price is
still to be announced and this is very worrying because the price we pay our
growers is determined by the selling price," Nkatazo said. Pannar
has undertaken to import 15 000 tonnes of seed from its parent company in
South Africa. Seed Co, another regional seed producer ,says it intends
to import 8 000 tonnes, while Pioneer Seeds will bring in around 2 000
tonnes. About 70 percent of the country's seed requirement was expected
to be met by local production, Nkatazo said. "But we have not yet secured
the foreign currency, though arrangements have been made," he
added. There are mounting fears that local production will not be
enough. Analysts say seed producers have shifted their attention to other
lucrative regional markets where there are fewer trade restrictions.