Zim Independent
Dumisani Muleya
RESERVE Bank
governor Gideon Gono's hard-hitting monetary policy
statement this week and
growing suspicions that he is now angling for the
presidency have provoked a
storm of anger in the ruling Zanu PF party and
government
circles.
The fury against Gono, mostly by party officials
associated with
the faction led by retired army commander General Solomon
Mujuru, has
created a powder keg situation in the party and state
bureaucracy. This has
set the stage for a dramatic endgame in the race to
succeed President
Mugabe, due to complete his current term of office in 20
months' time.
Sources said Mugabe's succession fight had
become a fierce power
and money struggle involving gangland-style rivalry,
plotting and intrigue.
Condemnation of Gono at private
political meetings by his rivals
reached alarming levels this
week.
A group of angry ministers was heard at a local
restaurant in
the Avenues during lunch on Wednesday, warning: "Gono has gone
too far and
must be stopped now!"
Politicians and
businessmen expressed fears that Gono's strategy
to knock off three zeros
from the old bearer's cheques to be phased out on
August 21 was calculated
to liquidate their trillions as part of a wider
power
struggle.
"Gono is going after certain people who are
pursuing him as
well. It's a dogfight," a source said.
The sources said ministers were enraged because as members of
cabinet they
were not aware new bearer's cheques were being introduced on
Tuesday - the
same day that cabinet meets. When Gono announced the issue
ministers
appeared shocked. Some did not clap their hands as they had done
during the
initial part of his speech.
"Ministers were not aware of it
and that really incensed them.
The only people who knew were President
Mugabe and his deputies, the state
security agents and army generals, as
well as senior staff from the RBZ,
Fidelity Printers and those contracted to
do adverts for the new bearer's
cheques," a source said.
The sources said this was seen by Zanu PF members as an
indication that Gono
had become embedded with Mugabe and the state security
and army - widely
seen in ruling party ranks as the building blocks to
power.
Vice-President Joice Mujuru is widely seen as the
frontrunner,
although there are fears her plan could be torpedoed by rivals.
Zanu PF
political heavyweight Emmerson Mnangagwa and now Gono are seen as
her
rivals.
Mujuru is now said to view Gono - the only
high profile figure
able to bring together people of different political
persuasions, including
opposition MPs who attended his address but boycotted
Mugabe's - as a key
potential challenger for Mugabe's
seat.
Mujuru and Gono's perceived rivalry was fuelled by
Mujuru's
failure on Monday to attend Gono's monetary policy occasion,
targeted at
"currency stashers", although she was said to have been in a
meeting with
Mugabe.
Gono's own failure to attend
Mujuru's address at the CZI
congress in Bulawayo on Wednesday made matters
worse.
Speculation about Gono's ambitions was cranked up by
state
television video footage on Tuesday which showed him during a
walk-around in
Harare, with people cheering him on.
"Gono
is beginning to have power ambitions and the clearest
indication of this
were events on Tuesday when he obviously hired ZBC staff
and a rented crowd
to give the impression of popularity," a senior Zanu PF
official
said.
Mugabe last week raised the political temperature when
he said
there were people plotting to kill Gono because he was seen as
sabotaging
their businesses.
Gono is fighting with
Finance minister Herbert Murerwa over
policy issues. Mugabe has rallied
behind Gono.
Members of the Mujuru faction have complained
that Gono has been
attacking their business interests by closing banks and
companies.
Zanu PF members who belong to the Mujuru faction
said yesterday
they were riled by what they described as "Gono's antics"
during his
monetary policy statement and tour around
Harare.
They said Gono, who was also expected to tour
Bulawayo, Gweru
and Kwekwe until yesterday, was now abusing his office to
push a political
agenda.
"The motive of his monetary
policy and Mugabe's remarks show
there is something he is up to. But if he
wants to become president, it's a
big non-starter," another Zanu PF official
said.
Zim Independent
A NEW groundbreaking initiative - similar to
Kenya's National
Rainbow Coalition which brought President Mwai Kibaki to
power in 2002 - is
on the cards on a mission to end President Robert
Mugabe's 28-year rule in
2008.
Informed sources said the
unification plan was being discussed
by the main opposition figures,
including leaders of the split Movement for
Democratic Change (MDC) - Morgan
Tsvangirai and Arthur Mutambara.
The plan to form a broad
united front - to be named the New
Patriotic Front (NPF) - against Mugabe is
also circulating in the civil
society and diplomatic
circles.
A founding Memorandum of Understanding for the
arrangement is
expected to be signed by September 30. The NPF, which will
include political
parties, civil organisations, trade unions, consumer
groups, ex-combatants,
women, churches, students and individuals, is
expected to hold its inaugural
convention in December after Zanu PF's annual
conference, to prepare for the
2008 presidential poll if it comes. Mugabe is
said to be planning to
postpone the election to 2010 to either give himself
two more years in power
or to allow his successor - if ever one is found now
- to consolidate
his/her position.
The move to form the
NPF follows a meeting of opposition parties
and their leaders in Harare last
weekend during a convention organised by
church leaders.
Tsvangirai and Mutambara met for the first time since the latter
seized
leadership of one of the two MDC factions in February. Sources said
the NPF
would be formed around Tsvangirai who is expected to be backed by
Mutambara
and others such as United People's Party president Daniel Shumba,
Zapu
Federal Party president Paul Siwela and Wurayayi Zembe of the
Democratic
Party.
Mutambara has said he is prepared to work with anybody
who will
restore the MDC's founding values of upholding the constitution and
the
politics of non-violence.
The Mutambara faction's
secretary-general Welshman Ncube however
said this week the meeting must not
be interpreted to mean his leader wants
to join Tsvangirai's camp. Ncube has
also said he will work with anyone who
respects the MDC principles of the
respect for the constitution and the rule
of law.
Sources
said the NPF would have its own constitution which would
enshrine commitment
to fundamental values of democracy, the rule of law,
human rights,
non-violence, and political and civil liberties.
"The NPF
should view such things as sovereignty and patriotism
to mean and encompass
democracy, human rights, transparent and accountable
governance, respect for
private and community property rights, and the rule
of law under a
constitutional democracy," the sources close to the plan
said.
They said there were proposals for regular meetings
under the
banner of the Informal Brainstorming Group where founding values
and
strategy would be discussed.
A group called the
Informal Working Party would be formed to
generate policy ideas to ensure
the alliance is not founded on the basis of
only removing Mugabe from power
but also on what to do next.
"What is needed to make this
succeed is serious work behind the
scenes to ensure that a well-thoughtout
and carefully planned project is
delivered," a source
said.
"This means everybody has to put national and the
people's
interests above their political ambitions. We have got to learn and
understand as a country and people politics from a broad picture perspective
rather than a from a narrow, self-aggrandisement standpoint."
Zim Independent
Augustine Mukaro/ Loughty
Dube
THE Reserve Bank of Zimbabwe will spend an estimated
$1 trillion
in a military-style operation to harvest old bearer cheques from
all corners
of the country and to arraign those trying to repatriate huge
amounts of
cash into the country.
The Zimbabwe
Independent has established that the central bank
is paying $40 million in
transport and subsistence allowances to each of the
600 Zanu PF militia
recruited to take part in the exercise as enforcers.
The
Independent also heard that the RBZ was paying its senior
officials in
charge of distributing the new bearer cheques across the
country and
bringing back old notes a daily allowance of $45 million. The
senior
officials have been issued with new Isuzu trucks to carry out the
exercise
while more vehicles are being mobilised.
CMED (Pvt) Ltd, a
parastatal, has been tasked with sourcing
vehicles for hire to complement
government and central bank fleets.
Yesterday the CMED put up an
advertisement in the press inviting vehicle
owners to hire them to the
parastatal.
Officials at the CMED said owners of hired
vehicles would be
paid a fixed rate of about $20 million per day for a
vehicle and provided
with fuel and all other lubricants needed to run a
vehicle. All mileage
travelled past the 100 kilometres/day would earn an
extra $150 000 per
kilometre. The vehicles are needed to transport new money
from Harare to
different parts of the country.
The
campaign is expected to last 30 days plus.
Gono's blitz has
reportedly caused problems in the countryside
as people are having their
money confiscated at roadblocks on the way to the
banks.
Rural business owners are the most affected as they cannot
produce tax
clearance certificates and company registrations to authenticate
the sources
of their funds. No receipts are issued at roadblocks as proof
that their
money had been seized by state agents.
A businessman who runs
an art gallery in the Mvurwi area said he
had lost about $300 million 500
metres from his bank where he wanted to
deposit it. "I cannot speak for
everybody everywhere, but I can tell you all
the rural people are doomed,"
the businessman said. "Most rural traders keep
their cash at home for
everyday stock," he said.
The central bank has also embarked
on a massive publicity
campaign in both the electronic and print media to
educate the public on the
new notes. It has also contracted a Harare company
to erect billboards
around the country's urban centres to advertise the new
currency reforms. A
billboard costs at least $1,5 billion to
erect.
This week youth militia were being dispatched to
different parts
of the country from the Zanu PF headquarters in Harare in
hired Zupco buses.
Zanu PF sources said the youths came from the country's
10 provinces. The
youths could be seen milling around the party headquarters
courtyard this
week. They were transported by Zupco buses in the
evenings.
Inside sources said a prerequisite for recruitment
was a
certificate from the National Youth Training Service coupled with a
Zanu PF
card.
"The youths were promised $40 million on
deployment," sources
from the RBZ said. "Their other remunerations will be
given on government
rates since they have been recruited through the
Ministry of Youth."
Besides the militia, the RBZ has taken on
board retired police
officers to handle weapons and beef up
security.
Reports from border posts revealed that militia in
their green
fatigues were carrying out body and luggage searches after
travellers were
cleared by immigration officials.
Presenting his mid-year monetary policy on Monday, Reserve Bank
of Zimbabwe
governor, Gideon Gono, introduced a new currency and gave people
21 days to
bank the old currency.
He set restrictions on daily amounts
that can be deposited by
individuals and companies.
Maximum daily deposits for individuals have been set at $100
million while
companies are limited to $5 billion.
He said youths would be
deployed at the country's points of
entry to work together with the police
and exchange control officials to
apprehend travellers smuggling cash back
into the country.
Gono revealed that of the $43 trillion in
circulation, the RBZ
could account for only between $10 and $15
trillion.
The rest "is doing some work outside the country", said
a
visibly
exasperated Gono.
On Wednesday
Gono told CZI congress delegates in Bulawayo that
by Tuesday law enforcement
agents had intercepted $100 billion being brought
back into the
country.
He said a total of $75 billion was seized at
Beitbridge and
Plumtree border posts while $15 billion was intercepted at
Victoria Falls
and Chirundu border posts with the rest coming from Forbes
Border post in
Mutare.
The cash was seized from mostly
truck drivers.
Gono said the youths were reinforcing law
enforcement agents at
roadblocks and border posts to stamp out
corruption.
Zim Independent
ZIMBABWE Lawyers for human Rights (ZLHR) has accused
youth
militia and law enforcement agents of stripping women naked and making
indecent searches in an "illegal operation" to recover money allegedly
stashed at homes.
The lawyers also said the Reserve
Bank's operation, authorised
by President Robert Mugabe through emergency
powers, was unlawful.
"Fighting corruption and economic crime
outside the rule of law
entrenches rather than removes corruption. Let us
frown at such fragrant
disregard of the rule of law," ZLHR executive
director, Arnold Tsunga, said
yesterday.
"The resultant
dehumanising of Zimbabweans at roadblocks by Zanu
PF youths who have no
policing authority, CIOs and the police where people
are being arbitrarily
detained, searched, stripped naked and their assets
(mainly money) looted
from them with impunity must stop immediately."
Tsunga said
the operation amounted to looting people's
hard-earned cash and assets by
state-sponsored criminals.
"Looting in this country has gone
on for too long, is not
permissible and must stop forthwith even if it is
carried out under the
guise of enforcing an overzealous policy of a largely
clueless Reserve Bank
governor," he said.
"The ouster of
the jurisdiction of the courts to offer remedies
for violations arising from
the usual overzealous implementation of the
Gideon Gono monetary policy
causes some severe discomfort."
Tsunga said the search and
seize crackdown was reinforcing the
usurpation of judiciary
powers.
"The persistent ouster of the authority of courts
under the
guise of economic empowerment has reached sickening proportions
and needs us
to react appropriately," he said.
"I still
insist that it is not possible to fight corruption and
economic crime or
restore economic stability outside the rule of law and
adherence to basic
human rights standards and norms.
"The privatisation of the
public policy formulation process and
its efficient ruthless and wanton
implementation has resulted in chaos in
our country and serious human rights
violations with impunity."
Tsunga said the illegal grabbing
of people's money by corrupt
state agents was similar in its ferocity and
ruthlessness to Operation
Murambatsvina.
"Ordinary men,
women and children of Zimbabwe still live without
dignity after Operation
Murambatsvina was unleashed on them in similar
fashion just over a year
ago," he said. "Such contempt for humanity in
Zimbabwe must stop." - Staff
Writers.
Zim Independent
Reagan Mashavave
A
COMMITTEE hearing into the suspension of Harare town clerk
Nomutsa Chideya
later this month has the potential to expose Sekesai
Makwavarara's
profligacy and incompetence. It could also prove the Achilles
heel for the
former MDC deputy mayoress turned Zanu PF's fair lady at Town
House, the
Zimbabwe Independent learnt this week.
The hearing, which was
supposed to be held on July 18, was
postponed after the council failed to
compile an outline of its case
alongside minutes and documents to buttress
the charges.
Among the documents to be presented at the
hearing is a copy of
an audit report done by the audit manager of the city
council on March 23
which exposes alleged misuse of council vehicles and
labour by Makwavarara
at her Raffingora farm on more than four
occasions.
According to the audit report, a lorry,
registration number AAE
5076, was used to ferry 400 bags of fertiliser to
Makwavarara's farm in
Raffingora on four occasions during working hours, at
an estimated cost of
$30 million to council at the time.
Another vehicle, registration number 586-270V, was used to empty
a septic
tank on two occasions estimated to have cost council another $30
million.
Another audit report of February 23 shows that
Makwavarara spent
$175 million purchasing "consumables and alcohol" meant
for her official
mansion in Gunhill between June last year and February this
year. The report
says there was no evidence that Makwavarara was entitled to
such
expenditure.
It also shows that of the $175 million,
$110 million was spent
in less than five days. On January 6, using cheque
number 72123, Makwavarara
bought groceries worth $53 381 400 and on January
10 she spent $57 188 600
using cheque number 72131.
Chideya's lawyer, Sternford Moyo of Scanlen and Holderness, said
the inquiry
team failed to prepare a charge sheet, as there was no outline
of the
council's case when the hearing was supposed to begin.
Moyo
has highlighted a number of irregularities that need to be
resolved before
the hearing begins.
The irregularities include the legality
of the inquiry team
appointed by the Minister of Local Government, Ignatious
Chombo.
He alleges that Chombo acted outside his mandate by
appointing
an inquiry committee to investigate a council
employee.
"Clearly, in terms of the Urban Councils Act, for
the committee
to have powers of this nature, it ought to be a committee
appointed by the
council and not by the minister," said
Moyo.
"The minister can appoint a committee to investigate
council. He
cannot appoint a committee to investigate employees of the
council," Moyo
said.
He also stressed that there should
be resolution and evidence
that council appointed the inquiry
body.
Moyo has requested that the committee provides him with
a raft
of documents and council minutes when the hearing begins on August
21. The
documents include:
* Expenses incurred by Cosmos
Shitto, Makwavarara's spouse from
2003 to date;
* The
repairs done to Mawavarara's Highlands home and proof that
Makwavarara was
actual resident at the house prior to purchasing it;
* The
withdrawal of fuel from council depot by Shitto;
* The
proposed purchase of curtains for the mayoral mansion for
$35
billion;
* Expenses debited to council by
Makwavarara;
* The use of Wild Geese as temporary or
overnight accommodation
by Makwavarara;
* The
installation of a satellite dish at the mayoral mansion
together with
authorisation for such installation and;
* The heads of
departments on suspension.
Zim Independent
Clemence Manyukwe
NATIONAL
Security, Land Reform and Resettlement minister Didymus
Mutasa faces charges
of violence and intimidation of magistrates while
Justice minister Patrick
Chinamasa is expected back in court next week for
resumption of his trial
that collapsed on Tuesday after magistrates refused
to
preside.
Charges of attempting to defeat the course of
justice levelled
against Chinamasa were dropped on Tuesday when magistrates
in Manicaland
refused to preside over the case citing threats by Mutasa who
allegedly
accused them of harbouring MDC sympathies.
Rusape magistrate Loice Mukunyadzi on Tuesday described Mutasa's
conduct as
"unruly behaviour". The magistrates recused themselves from
Chinamasa's
trial because he was their "boss", they said.
Manicaland area
prosecutor Levison Chikafu is however determined
to see Mutasa's wings
clipped.
It emerged yesterday that a retired magistrate,
Phenias
Chipopoteke, would now preside over the case that has been sat down
for next
week.
The two ministers' troubles stem from a
political violence case
that resulted in 16 of Mutasa's supporters,
including Zanu PF's chairman in
his Makoni North constituency, Albert
Nyakuedzwa, being jailed for three
years each for attacking James Kaunye,
who sought to challenge the minister
in the ruling party's primary
election.
Chinamasa and five others, including head of the
CIO in
Manicaland, Innocent Chibaya, head of intelligence in Makoni North,
Denford
Masiya and Simbarashe Muzariri, a CIO operative based in Rusape, are
accused
of trying to coerce state witnesses to withdraw testimonies against
Nyakuedzwa and others.
Leading the state's case against
the intelligence officers on
Tuesday, Chikafu said Mutasa had subverted the
laws of the country and
promised that justice would be done. He said there
were no sacred cows.
He said other high ranking government
officials would soon be
arraigned for various offences and Mutasa was no
exception.
"Didymus Mutasa tampered with the justice system.
What he did
was unlawful. The fact that he has not been brought for trial
does not mean
that he is not coming," said the
prosecutor.
A fearless prosecutor in the pursuit of justice
who has led
several cases considered as hot potatoes such as the Mutare arms
cache,
Chikafu stunned a courtroom filled with ruling party sympathisers
when he
remarked: "Mutasa is a powerful person; his wings must be clipped to
the
greatest extent."
He said because of prosecution of
lawbreakers, Zanu PF factions
and members of the MDC were now living in
harmony in Mutasa's constituency,
a development he said should be
maintained.
"Even the Zimbabwe Independent and the Fingaz
that had been
banned in some places (in Rusape) are now in circulation,"
Chikafu added.
During Chibaya's trial, Kaunye, Zimbabwe
National War Veterans
Association's national secretary for information,
alleged the CIO had
intended to kill him to save Mutasa's supporters from
prosecution.
Chibaya and the others are denying the
charges.
Zim Independent
DELEGATES attending a Confederation of Zimbabwe
Industries (CZI)
congress in Bulawayo on Wednesday took to task the Minister
of Finance,
Herbert Murerwa and Reserve Bank of Zimbabwe governor, Gideon
Gono, saying
their addresses were "too polite and peripheral" to resolve the
country's
mounting economic problems.
Delegates who spoke
after Gono and Murerwa's keynote addresses
said the two had skirted around
vital issues.
Bulawayo businesswoman, Ruth Labode, challenged
Murerwa and Gono
to implement viable policies and avoid skirting around
issues and cited Air
Zimbabwe which she said carried a few people to China
instead of cancelling
the route altogether.
"It is
crystal clear that there is no business to China," she
said. "Why doesn't
the government just cancel the flight? There are always
one or two
passengers on the plane and they are usually government ministers
going to
China to sign one or two memorandum of understandings," Labode
said.
Zimind P/L chief executive officer, Raphael
Khumalo, also said
Gono and Murerwa should tackle key issues affecting the
economy to get the
country out its crisis.
"What this
country needs is international engagement," said
Khumalo.
"We cannot stand here when we have zilch in terms of foreign
currency and
say we can do it by ourselves," Khumalo told the congress.
"There is no rule of law in the country and the government needs
to address
that issue. Arresting people for keeping $20 billion shows that
the
leadership does not understand the fundamental issues. There is more
need
for consistent policy than to arrest people for things that are legal
like
keeping money."
Another delegate challenged those attending
to justify their
presence at the conference by asking pertinent questions
instead of praising
Gono for doing his job.
"People
should not be afraid to ask questions and what most
people have been asking
is not critical to the situation in the country,"
said the
delegate.
Gono accused private businesses of becoming havens
for money
laundering and vowed to continue a clampdown on those hoarding
large sums of
cash for black market activity.
"Enough is
enough for some of you who are continuously
increasing prices unjustifiably.
The monetary authorities urge you to stick
to the prescribed rules before we
take action," Gono warned.
Gono said out of $43 trillion that
was supposed to be
circulating in the country $15 trillion was not accounted
for, meaning it
was doing business outside the country.
"Your membership must avoid accepting the role of sanctuaries of
crime. The
private sector must stop being a fertile ground for money
laundering," Gono
said. - Staff Writer.
Zim Independent
Tendai Mukandi
SOUTH Africa's
efforts to control the influx of Zimbabweans
through deportations instead of
addressing the root cause of the crisis has
badly "misfired", says the
Zimbabwe Exiles Forum (ZEF), an organisation
dealing with the rights of
exiled Zimbabweans in South Africa.
ZEF accuses President
Thabo Mbeki's government of acting "in
complicity" with President Robert
Mugabe in the face of a spiralling
economic and political crisis in
Zimbabwe.
Gabriel Shumba, the Zimbabwean executive director
of ZEF, said
South Africa was failing to cope with the number of illegal
immigrants
because it had chosen to ignore the root cause of the
problem.
He was reacting to recent media reports in South
Africa that
Pretoria had deported at least 51 000 "illegal Zimbabwean
immigrants"
between January and June this year.
"Whilst
we sympathise with the South African government over its
escalating
immigration control costs, we observe that its efforts to control
the tide
through deportations instead of stemming the root of the Zimbabwean
crisis
have misfired," said Shumba in a statement.
"It is dismaying
that Pretoria folds its arms and sometimes
seems to abet the unrelenting
political, social and economic decay in
Zimbabwe on one hand and cry foul
about the overwhelming refuge crisis it is
facing," he
said.
ZEF accused Mbeki of failing to deal more decisively
with Mugabe
over his disastrous policies, preferring instead his
much-maligned "quiet
diplomacy" while an economic meltdown continues in
Zimbabwe.
A South African newspaper, the Sunday Times,
reported recently
that the Home Affairs department had deported 51000
illegal Zimbabwean
immigrants from January to June. This represented an
average of 265 people
each day, it said.
ZEF said it was
concerned that the deportees included women and
children who had nowhere to
go and were often abused on both sides of the
Limpopo
River.
"This is especially worrying in circumstances where
scores of
children being dumped at Beitbridge have become defenseless
victims of this
catastrophe."
ZEF said the immediate
return of the women and children to
Zimbabwe where social security
structures and psychological trauma
counselling facilities had collapsed,
constituted a "grave and potentially
serious threat to the human rights of
the deportees and regional peace and
security".
Zimbabwe's socio-economic and political climate has deteriorated
over the
past six years since government embarked on the land reform
programme that
has ruined the country's commercial agriculture and spawned
mass
poverty.
Most of the country's economic refugees have run
away to South
Africa where they take up menial jobs on the
farms.
Most of them enter the country illegal and are often
reported to
the authorities once they demand pay for their
labour.
The country has experienced acute foreign currency
shortages, a
high inflation rate, and shortages of medicines, fuel and other
basic
commodities. Employment has remained high at over 75% despite
government's
purported empowerment initiatives. This has forced thousands of
people to
illegally cross the border into South Africa and Botswana each
week where
they are rounded up and detained in transit camps before
deportation.
Many people, including civil servants, have
resorted to
cross-border trading to supplement their
salaries.
In 2004 at least 72 112 illegal Zimbabweans
immigrants were
deported from South Africa, with the figure rising to 97 433
in 2005.
Efforts to get comments from the South African embassy were
fruitless this
week.
Meanwhile the Minister of Safety and
Security in South Africa,
Charles Nqakula, last week said the biggest
population of foreign nationals
involved in crime was from Zimbabwe and
Botswana.
Two weeks ago four Zimbabweans were shot dead in
Botswana after
they allegedly attempted to intercept a van transporting over
35 000 pula to
a bank in Gaborone.
Zim Independent
GWANDA magistrate, Douglas Zvenyika, on Tuesday adjourned the
joint trial of
Insiza MP Andrew Langa, Donnie Dlamini and Spare Sithole who
are accused of
insulting and assaulting opposition MDC candidate, Siyabonga
Ncube, during
the hotly contested 2005 election.
The trial, which began on
Tuesday, is set to continue on
September 13 after the complainant, Ncube
took the stand the whole day
testifying against the
three.
The prosecutor, Tavengwa Sangster, told the court that
on
January 22, 2005 the accused had insulted and assaulted
Ncube.
Langa, who is also Environment and Tourism deputy
minister, is
accused of contravening Section 3(2) of the Miscellaneous
Offences Act by
making use of threatening language in a public place. Langa
found Ncube
checking for his name on the voter's roll at Avoka primary
school and was
incensed by his presence.
Langa then
allegedly threatened to shoot Ncube, boasting that
Zanu PF would protect
him.
At the same place, Dlamini who is charged together with
Langa,
is alleged to have also insulted Ncube. He is alleged to have
insinuated
that Ncube was a front for white people.
The
court also heard that Sithole, who is a Zanu PF member,
assaulted Ncube when
the two met at Avoka business centre. Sithole, who is
facing charges of
common assault, is said to have poked Ncube in the face
before assaulting
him.
Thomson Mabhikwa of Mabhikwa, Likhwa and Nyathi,
representing
the accused, argued that they did not act in that manner as
there were
police officers present.
Mabhikwa alleged that
his clients were irked by the fact that
members of the commission where a
report was made of the assault were
putting on MDC regalia. - Staff
Writer.
Zim Independent
Shakeman Mugari
A FRESH crisis gripped the banking sector
this week following
the re-denomination of local notes under currency reform
measures announced
by the central bank on Monday, businessdigest has
established.
The banks were this week battling to reconfigure
their systems
to switch to a new family of bearer cheques introduced by
Reserve Bank of
Zimbabwe governor Gideon Gono.
Sources
said bankers had made representation to Gono over the
ominous crisis which
they say might precipitate a disintegration of the
banking system amid fears
that some banks might fail to meet the deadline to
switch to the new
currency.
Gono, however, rejected their appeals, insisting
financial
institutions had to embrace his new measures by August 21 or risk
closure.
Gono's new currency reforms to deal principally with
speculators
whom he said were hoarding large sums of bearer cheques "to take
advantage
of rent-seeking opportunities".
As part of the
measures, Gono has instructed the confiscation of
cash in cases where people
try to deposit amounts higher than his prescribed
limits. People bringing a
certain threshold of Zimbabwe dollars from outside
the country also risk
prosecution under exchange control measures.
Businessdigest
understands that banking institutions could now
fork out close to US$3
million, about $750 billion at the ruling official
exchange rate and close
to $1,8 trillion at the parallel market rate, to
make their systems
compliant with new currency denominations.
"It will cost a
bank at least £100 000 (US$186 400) to
reconfigure its system. That cost
does not include travel and other expenses
for the experts likely to be
flown into the country to solve the problem," a
financial sector IT systems
expert told businessdigest. "In fact,other banks
are already working on ways
of getting around the problem because they
cannot afford the
costs."
Sources said the adjustments had to be made to the
banking,
accounting and human resources systems so that they could have the
same unit
of measurements to create functioning systems.
As it were, the sources said, banks had terminated connections
allowing
depositors to withdraw cash from automated teller machines (ATMs)
at
financial institutions apart from their own banks because of the
disaster.
Financial institutions were also trying to change balances in
depositors'
accounts, loans and the interest payments to replace the
unexpected change
in currency denominations.
It is understood that banks were
likely to be forced to bring it
foreign companies who had authored the
systems for an evaluation of the
reconfigurations.
Many
banks are said to have written for quotations from their
software authors to
the get the cost of the reconfiguration excise.
businessdigest understands
that at least two big banks had been informed
that the reconfiguration
process might take at least five weeks, meaning the
problem should be solved
long after August 21.
Zim Independent
Dumisani Ndlela
GOVERNMENT and
the National Social Security Authority (NSSA)
could fail to inject fresh
capital into Zimbabwe Financial Holdings Ltd
(Finhold) under a planned
trillion dollar rights issue that could become the
biggest cash-raising
exercise on the local bourse, businessdigest
established this
week.
Government's inability to raise cash for the financial
group,
together with threats of bank failures due to high statutory reserve
ratios,
might have prompted a spate of concessions to the banking sector by
Reserve
Bank of Zimbabwe governor Gideon Gono.
Although
one source said there were still "high level
discussions" on Finhold's
planned rights issue, another source indicated
that government and NSSA,
both major shareholders in Finhold, had turned
down a request for cash
injections meant to increase capital levels for
subsidiary institutions to
levels prescribed by the RBZ earlier this year.
Although
businessdigest could not establish how much Finhold
intended to raise under
the programme, reports have suggested the group
wanted to mobilise $3
trillion from shareholders for fresh capital.
Both government
and NSSA, a compulsory national pension scheme
considered a bottomless cash
pit, are said to be strapped for cash and
therefore unable to commit funds
towards recapitalisation of the group.
NSSA, sources
indicated, was committing huge sums of money in
government-sanctioned
projects and could not raise the amount required by
Finhold even after
recently increasing thresholds for pension contributions
and in the process
guaranteeing a monthly inflow of over $1 trillion.
NSSA, the
largest shareholder in Finhold, holds 46% of the group's
issued share
capital, with government holding 29% as the second largest
shareholder.
NSSA would pump out $1,38 trillion for its
stake if Finhold
undertakes a $3 trillion rights issue, while government,
projected to suffer
a $253 trillion budget deficit this year, would inject
$870 billion.
Finhold's subsidiaries are Zimbabwe Banking
Corporation Ltd,
whose operational divisions are commercial bank Zimbank and
Syfrets
Corporate and Merchant Bank, and ZB Holdings, whose operational
divisions
include Syfam, an asset management firm, and Continental Capital,
a venture
capital company.
Finhold chief executive
officer, Elisha Mushayakarara, was not
available for comment as he was said
to be in meetings.
Group spokesman, Joseph Muzulu, said he
had not yet been
informed about any failure by government or NSSA to
participate in the
rights issue. "It's coming, but I'm not sure when," said
Muzulu about the
rights issue.
NSSA general manager Amod
Takawira could not be contacted for
comment as he was reportedly busy in
meetings.
Gono announced during his monetary policy statement
on Monday
that financial institutions still had to match capital levels
equivalent to
US$10 million by September 30 but at the old exchange rate of
$101 000 to
the US dollar.
Gono told bankers at a meeting
two weeks ago that they were no
longer compelled to adjust their capital
levels with every devaluation of
the local currency, suggesting a shift in
the January policy announcement.
Zim Independent
AFTER waiting with bated breath for the three most
important
official announcements, investors can be forgiven for a feeling of
deja-vu.
Economic commentators will also lament the chance that has gone
begging not
to turn the economy around but to at least stabilise
it.
After President Robert Mugabe had laid down the gauntlet
with
his address to the nation on the occasion of the opening of parliament,
it
was the Minister of Finance who set the ball rolling last Thursday with
the
presentation of the fiscal review for the first six months of 2006
before
the governor of the Reserve Bank took to the lectern this
Monday.
One thread that ran through all three addresses was
their
congruence, in terms of whom, how and what is to blame for the
quagmire that
the economy finds itself in. The Minister of Finance cited
"indiscipline,
accountability, ethics and corruption" as the main culprits,
in addition,
obviously, to sanctions. The governor called them "the four
vices", again
mentioning "indiscipline, corruption, bureaucratic inertia and
speculation".
Another common feature of the last two
pronouncements is that
they started off with a lot of promise such that one
could not escape
feeling encouraged. The Minister of Finance in his opening
paragraph clearly
articulated that the "major policy imperatives and
priorities in dealing
with our challenges remain, credibility and
consistency of policies and
their timeous
implementation".
He also listed the country's challenges -
read problems - as on
pole position; corruption, followed by the usual
candidates; rising
inflation, declining savings and investment, inadequate
foreign exchange,
erratic fuel supplies and interruptions to electricity
supply.
With such a reading of the situation on the ground
one would
have expected a comprehensive solution package to address these
problems. As
one goes through the statement - especially as analysts are
fond of doing -
matching the problems with the proposed prescriptions,
disappointment sets
in.
For the first six months,
government revenue inflows amounted to
$76 trillion against a target of
$58,2 trillion mainly on account of
inflation being substantially higher
than initially envisaged. During the
same period a total of $90,8 trillion
was spent, against a corresponding
target of $74,3
trillion.
The gap between inflows and outflows from the above
is $14,8
trillion, but according to the statement, the deficit for the same
period
was $17,8 trillion. This was said to have been financed through
borrowing
from the local market through 91day treasury bills amounting
approximately
to $17 trillion excluding interest.
For the
remaining six months of 2006, an additional $140
trillion is expected to be
collected, against an expenditure target of
$327,2 trillion. In other words,
the government will spend 2,3 times more
than is in its purse. This means
that the budget deficit for this period
will be $187,2
trillion.
The contradiction resulting in the ballooning
budget deficit
which if one solves an equation derived from the different
pieces of
information in the statement comes to 24% of GDP for 2006 is the
fact that
the economy is now roughly 50% of what it was eight years ago, yet
the
government, in terms of size, is twice what it was then. No country in
the
world runs a budget deficit as big as ours and expects to have single
digit
inflation.
The monetary policy statement, we regret
to say, also flattered
to deceive. First the venue was changed from the
traditional Reserve Bank
auditorium to the Harare International Conference
Centre. Secondly, the
event was moved from its traditional slot of 2:30pm to
10:00am and invited
company executives were allowed to bring along members
of their executive
management.
The idea, we surmise, was
to give as many people as possible a
chance to experience the new beginning
as it were. The monetary policy
statement pack, in addition to the main
statement, included close to 10
supplements (most in full-colour gloss),
among them an entirely humorous
cartoon booklet of the various ills
afflicting the economy.
It is rather difficult for one to
sufficiently and
comprehensively comment on the monetary policy statement
because not only is
it too voluminous to go through in four days but, unlike
the fiscal policy,
it is highly personalised such that one cannot comment
upon it without fear
that the opinions then expressed would be taken as an
attack on the person
of the monetary authority itself.
In
fact, the governor, at point 9.13 on Page 17 of the main
statement, had this
to say: "It is also clear to me that venomous
outpourings by some of our
armchair critics and boardroom analysts seeking
to convince the most
gullible amongst us, in their eloquent technical
jargon, and retrogressive
never-see-good forecasts which seek to lay blame
for all our evils on one
institution, one person, or one stakeholder
constituency, are nothing more
than what one writer, described during the
Rhodesian era as 'pseudo-economic
intellectualism feeding from reckless
dishonesty.'"
However, what the monetary policy statement did manage to do was
to create a
lot of pandemonium both within and without the country. The
dropping of the
three zeros and the withdrawal of the family of the now old
bearer cheques
with the attendant limits has seen a lot of people running
around.
The informal market both for goods and currency
which deals
mainly on a cash basis will have its operations hamstrung, until
such time
as things have stabilised. At this juncture, however, our little
knowledge
tells us that the dropping of the zeros only goes as far as
providing
convenience, nothing else.
The governor also
announced the reduction of the accommodation
rate from 850% to 300% per
annum, which had been preceded by the fall in the
yield on the 91-day
treasury bills from 510% to 200% per annum. Hard on the
heels of a 2,5
percentage points reduction in the statutory reserves a week
earlier a
further five percentage-point reduction was granted.
The
bankers are concomitantly expected to reduce their minimum
lending rates. In
terms of negative real interest rates we have now gone
full circle and are
back to 2003 again. The more things change the more they
stay the
same.
In response, the stock market has since the day of the
announcement gained 48,5 percentage points to reach an all-time high of 137
266, 79 points (new currency) this Wednesday. On a year to date basis, the
industrial index is showing gains of 642,4% which probably puts it way ahead
of the compounded monthly inflation rate and slightly ahead of the currency
devaluation on the parallel market of approximately 550%, using the rate of
$650:US$1.
The movement of both these market indicators
seems to confirm
our view that the authorities, besides, the rhetoric, did
not show much
resolve in fighting inflation, at least through the orthodox
and textbook
economics' means.
Zim Independent
Paul Nyakazeya
THE cost of
living has shot up 23,5 percentage points to $75,4
million for July, from
$61 million the previous month, figures from the
Consumer Council of
Zimbabwe revealed yesterday.
The increase in the cost of
living comes a week after Finance
minister Herbert Murerwa increased with
effect from September the tax-free
threshold for pay as you earn tax to $20
million, a figure analysts said was
likely to be overtaken by the escalating
cost of living when it comes into
effect.
The consumer
watchdog, whose cost of living monthly basket is
for a family of six, said
the price for washing powder accounted for the
biggest leap during the month
at 138,1%, followed by flour whose prices rose
by 73,5%. Roller meal,
clothing and footwear and meat surged 67,7%, 46,7%
and 40% respectively
during the month of July, the CCZ said.
The price of bread
rose 39,6% while the cost of transport, rice
and vegetables increased by
36,4%, 29,9% and 28,3% respectively.
"Transport operators
have continued to increase fares,
negatively impacting on consumers'
budgets. June transport costs increased
by 46,7% whilst July fares rose by
an average of 36,4%" said the CCZ.
Zim Independent
THE lopping of zeros from the country's currency
does not
signify a transformation of economic fundamentals, says Imara
Securities'
investment analyst Fungai Tarirah (FT). Below is an interview he
gave to
South Africa's Moneyweb on the issue.
MONEYWEB:
Fungai, the decision by the Governor of the Reserve
Bank of Zimbabwe, Gideon
Gono, to lop three zeros from the value of the
Zimbabwean currency, and in
that way to fight inflation, seems a little
strange. You're on the ground
there in Harare. How exactly is it being
interpreted by the
people?
FT: One of the biggest things is we've seen a lot
of confusion
given the amount of notice that has been given to people on the
implementation of this new currency. So I think two things
there.
In the ensuing chaos we've seen a lot of prices being
hiked
literally overnight - not only by the retailers but also on the stock
market.
We've also seen a lot of banks trying to cope
with their systems
in trying to make sure that they keep abreast with
changes coming through.
So a bit of chaos has been witnessed, but I think
that will quieten down as
we go further in the month towards the 21st, which
is the deadline for
conversion to the new currency
base.
MONEYWEB: For those who don't know what's going to
happen, just
take us through the steps.
FT:
Basically, what he's done is; we are still using Zimbabwean
dollars. The
only difference is we're taking out three noughts and we're
going to have to
round it back to cents. What were billions are now millions
and so on and so
on. So it's a paradigm shift for lots of people in terms of
the prices that
we experience.
I think one of the biggest things is looking
at some of the
share prices. Something that used to cost $300 now costs 30c.
So obviously
that makes for a very big difference, and we've seen the
various markets
respond to that.
MONEYWEB: But how is
this going to fight inflation?
FT: Inflation will only
ever change if the Reserve Bank
concomitantly puts in place various policies
that fight the growth in
government spending; that increase incentives to
the various exporters to
bring in more foreign
currency.
MONEYWEB: No, I understand that. But how is
what Gono has done,
how is that going to fight inflation, because he
maintains that that's the
reason why it's being done?
FT: Well, it's psychological. People think prices are cheaper,
the cost of
goods is cheaper, simply because you've lopped three zeros.
But economically nothing has changed. If something cost $85 000,
now it
costs $85. And I've only got $85 instead of $85 000. It doesn't make
much of
a difference. And I think a lot of people are cottoning on to that
fact
quite quickly.
It comes back to the accompanying policies
that are implemented.
If they are not there, then it's cosmetic, nothing
really changes.
MONEYWEB: That's exactly it. Fungai,
people are not stupid. It
sounds like they're just rearranging the deck
chairs on the Zimbabwe Titanic
here.
FT: I think
that's one part. The other part is putting in place
those policies. So if
you listen to the policies they announced, or the
(indistinct) they
announced, they did highlight a number of policies which,
if they do
actually implement, will be very helpful in making the change in
the zeros
actually take effect. If those policies are not implemented,
however, we'll
be back to square one and those zeros will come back quicker
than you
think.
MONEYWEB: Reading the statement of Gono, he blames
to a large
degree speculation and hoarding of Zimbabwe dollars. Now I don't
understand
the logic. If you have a high inflation rate it doesn't seem to
make a whole
lot of sense to hoard bank notes. Is this what is
happening?
FT: I tend to agree with that. I think the
biggest problem as
inflation turns to hyper-inflation is that ticket prices
for a lot of things
become astronomical.
Where I used to
need $200 000, I probably now need $200 million
or $2 billion. So I need
that cash. And obviously people's outlooks become
more and more (indistinct)
so they don't trust the banking system as much as
they used to in the past
because the banking system takes time to enact
payments.
It moves to a cash-based society and I think that is the biggest
reason why
a lot of people were actually holding on to large amounts of
cash - no fault
of their own.
I think it's symptomatic of what's happening in
the economy. The
trick, however, is to make sure that they're not holding
inordinate
amounts - and I think it's a very difficult card to call, to say
this is
inordinate as it is in line with what is happening within the
economy. One
has to really judge the levels that have been set by the
Reserve Bank.
MONEYWEB: Is this a step in the right
direction, at least?
FT: I think there has been
speculation that has caused problems.
It sorts that out. But I don't think
that's the biggest cause of the
problems that we have in the
environment.
Zim Independent
By Farai Dyirakumunda
THE
local financial markets have responded decisively to the
latest monetary
policy announcement highlighting that several of the new
initiatives have a
direct bearing on the outlook and performance of
different
markets.
The direction of interest rates has been the subject
of
uncertainty and from the latest policy announcement, the tone has been
set
by the Reserve Bank governor for the interest rates to remain low for
the
remainder of the year. This tallies with the remarks made by the
Minister of
Finance about the unsustainability of the high rates quoted for
treasury
bills (TBs).
Credit to government has
underpinned excessive broad money
supply growth, which has been on an upward
trend, increasing from 528,2% in
February to 669,9% in May 2006. High money
supply growth in a declining
economy has been proved to have inflationary
consequences and Zimbabwe has
not been an exception. A correlation exists
between the two and the recent
upsurge in inflation is partly attributed to
money supply.
The overall expansion in domestic credit as at
May 2006 is
weighed more toward credit to government (mainly through TBs)
and this has
grown by 927,5% compared to credit to the private sector (made
up of loans
and advances from the banking sector) which grew 455% in the
same period.
Reducing TB rates is therefore an apparent attempt towards
slowing down the
rate at which domestic credit grows for the remainder of
the year.
With 91-day TB rates down to 200% from recent
levels around
510%, fixed deposit rates have correspondingly declined. This
also coincides
with significant TB maturities of up to $52 trillion for the
whole month
(using the old currency).
Against such
background there is little room for the
appreciation of the money market
rates in the near future. A continual
depression of deposit rates is
therefore inevitable. Indicative investment
rates for fixed deposits on the
money market are therefore within the range
of 50%-190% for investments
within the seven-day to 90-day tenor. The
effective annual rate for a 90-day
investment at 200% is now 406% and this
is notably lower than an effective
rate of 2 400% at a nominal rate of 500%.
The Reserve Bank
governor reduced accommodation interest rates
from 850% to 300% for secured
lending and 900% to 350% for unsecured
lending. The immediate implication is
that lending rates from banks will be
revised downwards given that the
lending rates tend to be aligned to
accommodation rates.
In theory, the lower lending rates are supposed to stimulate
borrowing for
productive purposes and give an upward supply side response. A
number of
corporates are however reluctant to increase their borrowings
given that
interest rate inconsistencies from the past have resulted in a
number of
casualties.
Export-oriented companies will likely rely more
on offshore
structures with more predictable rates while domestic companies
will
probably limit their borrowings to critical working capital
requirements.
Funding long-term commitments such as capex
using debt may be
suicidal should there be an unexpected swing in interest
rate policy.
Individuals on the other hand may increase their borrowings for
consumptive
expenditure but not for the acquisition of higher-value
assets.
Overall, while a reduction in lending rates will be
welcome for
borrowed entities, banks will probably remain cautious in their
lending.
The outlook for banks and financial institutions has
been
upgraded following the abolishment of the mandatory two-year paper on
institutions with long positions. The two-year paper had an effect of
punishing the bigger players for enjoying strong deposit market share
following the flight to quality by depositors.
The banks
have then agreed in principle to operate a
non-segmented inter-bank money
market. In the immediate outlook interest
margins and profitability for most
banks will be improved and the reduced
accommodation rate will also ease the
interest burden on institutions that
utilise the accommodation window on a
particular day.
Another noteworthy development for financial
institutions is a
further reduction in statutory reserve requirements to 40%
on demand and
call deposits from a previous high of 60% and 30% on savings
and time
deposits from 45% prior to the recent
adjustments.
The overall implications of the above policy
initiatives on
banks is an improvement in liquidity and liquidity management
during the
second half of the financial year. Improved profitability will
therefore
make the September 30 capitalisation deadline attainable and there
is
additional reprieve regarding compliance to US dollar-linked capital
requirements.
Banks should however not bask in the
reprieve but instead work
toward buttressing their capitalisation ahead of
any further reviews. A
certain degree of investor fatigue may be anticipated
if in the future,
banks have to call on shareholders to recapitalise their
institutions.
The stock market has yielded huge windfalls for
investors in the
aftermath of the monetary policy. The industrial index has
been powered by
huge gains in large cap counters such as PPC, Old Mutual,
Meikles and Econet
in addition to broad-based buying across the
market.
The first positive response emanates from an inverse
relationship between the direction of interest rates and the equities
market. When there is a sustained reduction in deposit rates investors will
shift their asset allocations towards shares and the trading patterns over
the past few days give credence to that observation.
Additional positive responses are also arising from hard
currency generating
companies that will benefit from a devaluation as well
as an increase in
forex retention.
The slashing of three zeros on the local
currency also had an
unexpected effect of creating an illusion that some
share prices were cheap.
This has particularly been felt on penny stocks or
stocks that have low
nominal values such as Willdale, Medtech, Pelhams and
CFX which all
experienced a huge uplift in apparent response to their meagre
nominal
values.
In the immediate outlook investors will
maintain a higher
weighting towards equities relative to the money market
but some correction
is forthcoming on counters that are overheated. The
market will also
inevitably experience profit-taking in the near term but
beyond that the
primary trends point towards further significant upside in
shares.
* Farai Dyirakumunda is an analyst at Interfin
Securities.
Zim Independent
By Phoebe Goremusandu,
RESERVE Bank of Zimbabwe (RBZ) governor Gideon Gono's monetary
policy
statement issued this week rebased the Zimbabwe dollar, reviewed the
exchange rate and interest rates and introduced more pronouncements for the
real sectors of the economy.
Our view is that the
monetary policy measures introduced will
need a long time before real
improvements are evident in the economy.
Slashing
zeros
In addition to bringing convenience to the transacting
public,
the experience of other countries has been that rebasing the
currency can
have the effect of fuelling more inflation, especially in the
absence of
other initiatives to tame inflation.
A rebased
currency can create an illusion of lower prices hence
a tendency to increase
prices even higher. This could see inflation
increasing to levels beyond
current expectations.
Therefore it is important that there be
initiatives to address
inflation at the fundamental level. While there is a
risk that some monetary
values may be lost especially for bearer cheques
that had been exported to
other countries, the amount that will be forfeited
in our view will not
significantly affect the amount of notes and coins in
circulation.
The planned introduction of a new currency under
phase two is
welcome but the macroeconomic fundamentals in our view have to
be corrected
if the introduction is to be a permanent
solution.
The currency conversion is expected to generate
uncertainty in
that the transacting public has been given little time to
adjust to the new
system. It is also not certain at what point a new
currency will be
introduced as the market may also be caught
unaware.
The strategy of the governor seems to be to to
ensure that notes
and coins in circulation are kept within the formal
banking sector and we
acknowledge that this is the correct way to steer the
economy.
Exchange rate
On the exchange
rate front, on this basis, we believe that the
governor moved the exchange
rate in the correct direction, although this is
clearly not far enough.
Importantly, however, we are looking with keen
interest at the announcement
of the formation of the currency board.
The experience in
other economies is that an independent
currency board can be an effective
and key entity in determining a "clean
fair value" for the
currency.
It is however not sufficient for the central bank
to adjust the
currency at six-month intervals as it makes it difficult to
plan ahead,
therefore the sector needs a clear and transparent exchange rate
adjustment
system.
The scrapping of the gold support
price is also positive, as
gold miners will get the international gold price
translated at the ruling
exchange rate. Apart from boosting earnings in the
gold sector, this also
reduces the central bank's support to the productive
sectors through
quasi-fiscal activities.
The extension of
the foreign currency retention period for
exporters is positive as it makes
it possible for exporters who may need to
utilise their foreign currency
beyond the 30 days that had been set
previously.
This
mechanism enables exporters to maintain the real value of
their exports and
has the potential to stimulate output in the export
sector. While the
tobacco sector is still accessing support from the central
bank, the move
should be towards a situation whereby the market price
adequately
compensates the farmer so that we move away support frameworks,
which result
in money creation.
The reduction in accommodation rates is
expected to see lending
rates softening and this should benefit the
productive sectors of the
economy. While this is favourable for borrowers
deposit rates are expected
to ease and in real terms returns on the money
market are likely to become
negative in real terms.
On
the productive side it is also important to complement the
reduction in
interest rates with increased foreign currency inflows in order
to boost
production. Monetary policy was loosened significantly with the
reduction in
statutory reserves and while the banking sector has been
encouraged to
direct loans to the productive sectors, in our view, with
lending rates
expected to ease, domestic credit to the private sector is
expected to
expand significantly with most of the loans directed towards
non-productive
borrowing. All this will result in money supply accelerating
and this
ultimately feeds into inflation.
Overall
Overall, the illusion of lower prices created by the currency
rebasing
together with the soft lending rates expected to result from the
lower
accommodation rates will add to inflationary pressures. At the same
time,
money market investors and depositors to banking institutions are
likely to
experience reduced investment returns.
In the absence of
enough stimulation of the supply side of the
economy, we are of the view
that sustained improvements in output and the
economy are still a long way
away. The foreign currency management framework
remains unclear thus making
it difficult for long-term planning. Money
market investors will be the
hardest hit as returns are expected to be
significantly
negative.
* Phoebe Goremusandu, is a senior markets
analyst with Old
Mutual Asset Managers, Zimbabwe.
Zim Independent
Eric Chiriga
A NEW foreign currency retention facility introduced by the
Reserve Bank of
Zimbabwe (RBZ) this week is expected to inject fresh life
into ailing gold
mining operations and exporting companies that had been on
the brink of
collapse, analysts and industry players have said.
Analysts
said the increase in foreign currency retention levels
to 70% would mean
more resources for exporting companies which would be
bolstered by the
devaluation of the local currency undertaken by the central
bank on
Monday.
Basilio Sandamu, the CEO of the Horticultural
Promotion Council,
said: "It's a positive development but it takes time for
the impact to be
felt."
Chamber of Mines CEO, David
Murangari, said the review of the
foreign currency retention policy would
help revive the mining sector,
particularly gold
producers.
"This means more resources for projects," said
Murangari.
"We expect the development to translate into
increased
productivity," he added.
He said the major
problem affecting the mining sector was the
shortage of foreign currency to
import inputs and equipment.
RBZ governor Gideon Gono said on
Monday exporters would retain
70% of all their foreign currency proceeds in
foreign currency accounts.
Previously, exporters retained 70%
for 30 days before disposing
it on the official market. Gold producers only
retained 40% of their
receipts in foreign currency
accounts.
Gono also devalued the Zimbabwe dollar from
US$1:$101 195 to
US$1:$250 000.
The rate had been stuck
at US$1:$101 195 since January this
year.
However, the
greenback is currently trading at around US$1:$620
000 on the parallel
market.
Economic consultant John Robertson said the
devaluation was a
positive development but indicated that this remained far
lower than that on
the parallel market.
He said the
disparity between the official exchange rate and the
parallel market was
huge and the premium on the parallel market would force
those with foreign
currency to offload receipts on that market to increase
margins.
"The gap between the official and parallel
exchange rates is too
wide," said Robertson.
He said
miners who had the opportunity to smuggle gold outside
the country were
likely to continue doing so in order to sell their foreign
cash on the
parallel market.
However, Robertson admitted that the new
foreign currency
retention policy would boost productivity in the
short-term, ensuring that
exporting firms would survive the tumultuous
operating environment.
"Retaining 75% for miners and 70% for
exporters will enable them
to increase output and realise higher revenues,"
he said.
Murangari said besides restoring capacity and lost
confidence,
the decision to review the foreign currency retention levels
would also make
planning easier for miners.
The future of
the country's mining sector had become uncertain
due to the poor exchange
rate system coupled with the poor foreign currency
retention
policy.
Asked if the disparity between the official and
parallel market
rates would result in smuggling, Murangari said he was not
aware of any
formal producer who was involved in smuggling
activities.
"The smugglers are not our members," he
said.
Murangari said although the official exchange rates
still
significantly lagged behind the parallel market exchange rates, both
exporters and miners were cushioned by the increased retention
level.
Zim Independent
Shakeman Mugari
RESERVE Bank
of Zimbabwe (RBZ) governor Gideon Gono's currency
reforms, which came
against the background of an accelerating economic
decline, was a clear
admission of economic failure by government, analysts
have
said.
The reforms should have been undertaken once measures
to
stabilise the economy had succeeded.
Gono's major
policy proposal slashing zeros from the local
currency was widely seen as
confirmation that government was unable to deal
decisively with
inflation.
The cosmetic changes to the currency, made by
dropping three
zeros, was, according to Gono, aimed at bringing stability
and convenience
to monetary transactions.
While indeed
the removal of the zeros would bring convenience to
the public, the
abruptness of the decision indicated a poor execution
strategy, analysts
said.
There was chaos in banks, shops and electricity and
telephone
bill payment halls this week as people and companies tried to
adjust their
payments systems to accommodate payments in the new
currency.
The problem was compounded by the fact that old
bearer cheques
remained in circulation, creating a dual payment system. In
an attempt to
reassure a sceptical public Gono this week visited banking
halls and retail
shops.
CFX economist Blessing Sakupwanya
said currency reforms required
a stable economy. "The removal of zeros is a
mechanical process that we will
have to do again if inflation remains at
current levels," Sakupwanya said.
"Given the current problems
in the economy, it doesn't seem like
a currency reform will work,"
Sakupwanya said.
A number of countries that had successfully
undertaken currency
reforms had succeeded only after stabilising their
economies, commentators
said.
Peru dismally failed to
reform its currency in the early 80s
because of high
inflation.
Independent economic consultant John Robertson
said as long as
inflation remained above 1 000%, Zimbabwe would be forced to
cut more zeros
periodically.
"We might soon need to go
back and do the whole process again.
The problem is that we have high
inflation," Robertson said.
Finance minister Herbert Murerwa
last week said inflation would
end the year at between 950% and 1 000%, a
revision of his earlier forecast
putting inflation rate at 250% by
year-end.
"We can only reduce inflation if we revive the
agricultural
sector that we destroyed, stop corruption, protect property
rights and get
foreign aid," Robertson said.
Zim Independent
By Arthur Mutambara
THE
statement by Reserve bank of Zimbabwe (RBZ) governor Gideon
Gono is a
welcome document of imaginative and innovative monetary
initiatives. We
congratulate the central bank team for their hard work and
creativity.
However, the context and environment in which
these ideas are
raised is poisoned and dysfunctional, rendering them
ineffective.
Furthermore, the statement addressed symptoms
and not causes of
the Zimbabwean economic crisis. The macro-economic
fundamentals were
essentially not addressed.
In addition,
the remedies offered were neither long-term nor
sustainable.
The Zimbabwean economic meltdown is rooted
in a crisis of
political governance and legitimacy. The crisis has led to
the total
collapse of the organisation and management of our national
economy which
has led to the acute inability to deliver basic public and
social services.
In addition, Zimbabwe has become a globally
isolated pariah and
failed state with a debilitating impact on the
performance of business
enterprises and public institutions. Any
macroeconomic initiative that does
not address the totality of these
foundational issues is meaningless and
irresponsible. Thus the RBZ missed an
opportunity to begin a national debate
on the causes of the Zimbabwean
economic crisis.
The RBZ governor's obsession with sanctions
as a cause of our
economic challenges should be rejected with the contempt
that it deserves.
The biggest imposer of sanctions on Zimbabwe is the Zanu
PF government -
through misrule, dictatorship, inept economic policies,
misguided foreign
policy, corruption and sheer incompetence. These sanctions
must be lifted
first before we ask other nations to lift measures that they
have imposed on
us.
The statement should have clearly
identified government
incompetence, mismanagement, lack of economic vision
and capacity as major
causes of the economic crisis. Instead it dwelt on
secondary and symptomatic
issues, while shielding the
regime.
A major flaw of the monetary policy is a
single-variable
approach to economic analysis. Inflation is separately
identified as enemy
number one, corruption as the second one. Other cancers
are disjointedly
identified as currency devaluation, exchange rate
instability, poor agrarian
productivity and lack of investment. Monetary
policy frameworks are then
developed separately for each
area.
This is completely unsound and ineffective. These
economic
variables are interconnected and interdependent. What is required
is a
multi-variable economic analysis and policy formulation that takes into
account the inter-connectedness of these different
issues.
While we appreciate the objective of removing the
three zeros in
the currency, to celebrate this policy as a "zero to hero"
project is in
extreme bad taste. There is nothing to
celebrate.
Zimbabwe is a failed state, and this policy seeks
to tinker with
the periphery of a national disaster. We reject any attempts
to create false
hope, and buy more time for the Zimbabwean
dictatorship.
While we appreciate the efforts to protect the
value of the
Zimbabwean currency, we are apprehensive about the use of Zanu
PF youths to
guard Zimbabwean borders. Illegitimate tools of repression
cannot be used in
pursuit of any positive national
effort.
Even the extensive use of our police and armed forces
in all
these initiatives smacks of the militarisation of our society that
has
become the hallmark of this Zanu PF dictatorship. There has to be
another
way.
Zimbabweans should not be hoodwinked into
believing that the RBZ
statement represents any hope and salvation. At best
it buys the corrupt and
incompetent Zanu PF government some
reprieve.
However, the revolution is coming. The people of
Zimbabwe will
not accept anything short of total political and economic
liberation.
The way forward for Zimbabwe requires more
players than the RBZ.
In fact, an inclusive, all-stakeholder approach is
required. Zimbabweans
must address the foundational issues of institution
building, and deepening
of democratic values and principles in all sectors
of our society.
We need to develop and live a new democratic
culture. This will
create the basis for sustainable change that has both
form and substance. A
new, people-driven democratic constitution is a
critical pre-requisite to
set the national terms of reference. The process
of making that constitution
must give confidence to all Zimbabweans that the
outcome will reflect their
will. A contested document is no foundation for
stable governance.
Key elements of this constitution should
include: effective and
functional separation of powers, executive
accountability to the
legislature, entrenched independence of the judiciary,
a fair and
transparent electoral framework, strong and effective protection
of
fundamental freedoms, liberties and human rights, ensuring institutional
capacity for such protection.
We need to stop the
economic decline and the suffering of
millions of families in our country.
The starting point is developing an
economic recovery and a stabilisation
programme. A holistic approach that
involves all stakeholders and takes into
account all economic factors must
be the basis of a multi-variable economic
model for Zimbabwe's survival.
There is also need for
economic structural reform, underpinned
by economic transformation that
involves integration and coordination of the
informal and formal sectors.
There is also need for effective macro-economic
policy coordination that
systemically links monetary and fiscal policies.
The National
Economic Development Priority Programme is
completely inadequate,
ill-conceived and does not present a meaningful
starting
point.
Honest assessment of our current predicament and
taking
ownership of our challenges will be the starting point. The Zanu PF
regime
is in self-denial and does not appreciate the extent of our
problems.
There is need to develop a medium-term economic
stabilisation
strategy which will focus on fiscal discipline, poverty
alleviation, viable
social security programmes such as housing, healthcare,
education, job
creation, infrastructural rehabilitation, and local
authorities capacity
building.
Zimbabwe needs a national
economic vision and a national
economic strategy. Where do we want the
Zimbabwe economy to be in 20 years?
What are we going to do to take Zimbabwe
to this destination economy?
Beyond recovery and survival we
need to develop long-term
strategic initiatives, with sector-specific
programmes that enable Zimbabwe
to emerge as an industrialised,
technology-driven, competitive nation, fully
integrated into the global
economy. We should use the existing capacity of
Zimbabweans and their
natural resources to compete through the design and
construction of new and
innovative products on the world market.
While building upon
our national core competencies such as
agriculture, mining and tourism,
emphasis should be on focused manufacturing
and leveraging new technologies.
Some of these new technology platforms are
cheaper and lend themselves
better to countries with poor infrastructure
than advanced
countries.
Hence there is a unique opportunity for Zimbabwe
to run where
others walked. We can thus leapfrog from the current economic
crisis into
the globally competitive and knowledge-based economy. Zimbabwe
needs an
effective science and technology strategy, rooted in regional
integration
and linked to forces of globalisation.
There
is need to implement investor confidence-building measures
in order to
increase trade and investment. Of paramount importance is the
respect for
property rights, rule of law, predictability and certainty of
laws, and
consistency in the application of regulations.
The economic
strategy should then be driven by extensive
domestic investment (local and
diaspora), foreign direct investment,
processed exports, value-adding
economic activities, business growth and
economic
empowerment.
There is need to engage our strategic partners
in Africa,
Europe, Asia and the Americas for investment, partnerships and
global
outsourcing opportunities. Under globalisation there is no country
that can
thrive without dealing with the international community including
the
multilateral institutions such as the International Monetary Fund (IMF)
and
the World Bank.
We know that, historically, these two
specific institutions have
espoused anti-African and anti-poor people
policies. What is critical is to
engage these institutions with the view to
extract favourable arrangements
for our country.
In the
current global economy, the IMF is ostensibly a
gatekeeper. If it is not
involved with your country, there is no investment
and trade that will occur
there. We cannot go it alone.
We need to engage everyone in
the world community of nations.
This misguided and bankrupt Look East policy
must be rejected with the
contempt that it deserves.
How
can we look east when the east is looking west? The Chinese,
Singaporean,
Malaysian and Japanese economies are heavily dependent on, and
linked to,
the USA and European economies.
Zimbabwe needs strategic
thinkers who look everywhere for
opportunities, not unimaginative despots
typical of failed and pariah states
that seek economic opportunities from
one geographical location, out of
desperation and lack of
choice.
Zimbabwe's resource base and human capital (local and
diaspora)
must be mobilised and leveraged to benefit Zimbabweans. With a
deliberate
strategy of beneficiation (value-adding economic activities) we
should build
new factories, create economic opportunities and attract
investors for
further development.
All our minerals must
be processed locally and exported as
refined products. For example, we need
to build refinery plants and
secondary industries for our platinum, gold and
copper.
In most developing economies, remittances from and
economic
involvement of the diaspora have become key strategic initiatives.
We should
seek to ensure that our fellow citizens in the diaspora have a
meaningful
role to play in the development of their country by leveraging
their
remittances, expertise and networks.
However, there
is no taxation without representation. We must
allow people in the diaspora
to vote in all national elections.
Our country is uniquely
endowed with natural wonders such as the
awesome Victoria Falls and the
majestic Great Zimbabwe. As we return to the
international fold there is
need to drive, optimise and leverage the tourism
sector.
We should make our currency valuable again, reduce the cost of
living for
the suffering families and stop corruption and misuse of money.
We need
radical transformation to good governance with able and efficient
government
at all levels in both the private and public sectors. We should
bring
stability and prosperity to our country, which has been lost in the
years of
decline and economic collapse.
We should ensure a fair,
secure and effective use of land with
new strategies that will make the land
green again. What is required is a
democratic and participatory framework
that seeks to achieve equitable,
transparent, just, and economically
efficient distribution and use of land.
This must have emphasis on
productivity, food security and self-sufficiency.
Collateral
value of land must be guaranteed by establishing
security of tenure through
the provision of title or 99-year leases. Land
should never be used as an
instrument of political patronage. With an
effective land revolution in
Zimbabwe landowners should be motivated towards
beneficiation where emphasis
is placed on secondary agriculture.
Under this philosophy, we
should encourage exporting processed
agricultural products and not raw
materials. For example, export clothes not
cotton, tinned vegetables not raw
vegetables, flour not wheat, and furniture
not timber.
Instead of selling raw materials we should sell value-added or
finished
products. This will facilitate entrepreneurship, job creation, and
thus
ensure income for Zimbabwean families and guarantee prosperity and food
security for all.
In all these economic strategic
initiatives, the underpinning
and central organising values should be fiscal
discipline, productivity,
efficiency, innovation, creativity, beneficiation
and excellence.
This Zimbabwean economic mandate requires
generational
intervention. History will never forgive us if we do not step
up to the
plate and rise to the challenge. We must reclaim our rights, be
masters of
our own destiny, and be the change we seek in our
country.
* Professor Arthur Mutambara leads one of the
two MDC factions.
Zim Independent
Eric Chiriga
THE reduction in
the building societies' statutory reserves
ratios will not resuscitate the
mortgage lending business which is under
pressure from rising inflation and
high interest rates, market players said
this week.
Central bank governor, Gideon Gono, in his mid-term monetary
policy review,
slashed the building societies' statutory reserve ratios by
five percentage
points to 30%.
"The reduction in the statutory reserve
requirements will not be
immediately translated into increased mortgages
because of the prohibitive
conditions," said CB Richard Ellis managing
director Abraham Sadomba.
Sadomba said the reduction meant
more funds for mortgages, but
lending rates were still prohibitively high to
attract prospective property
owners.
"At least 90% of the
working population in Zimbabwe will find it
difficult to borrow a $1 billion
loan," he said.
Local building societies have been facing
problems in the
mortgage lending business due to high inflation which has
significantly
eroded disposable incomes.
The institutions
said high inflation, currently at 1 184% and
the erosion of disposable
incomes have made mortgages unaffordable for many
people.
Building societies said they could not cut the rates as this
would
significantly reduce margins.
"The mortgage lending business
is performing badly in that
potential clients are unable to borrow owing to
economic challenges," said
Kevin Terry, managing director of Central Africa
Building Society (Cabs).
Terry said high lending rates,
together with the escalating
property prices, had made it impossible for
individuals to match mortgage
repayments from salaries.
"In terms of our current lending rate of 250%, a person earning
$500 million
would only be entitled to borrow $600 million because his
repayment per
month should not exceed a quarter of his salary," Terry said a
few days
before Gono's policy announcement.
Terry said the mortgage
lending business could be profitable
only if the lending rates were pegged
at levels that were commensurate with
fundamentals on the
market.
An official with one building society said they were
only
lending to corporate clients trying to avoid penal rates on commercial
bank
loans.
"We are lending more to corporates than
individual mortgage
borrowers," the official said.
A
mortgage officer from Beverly said it had become difficult for
mortgage
loans to keep track with property prices.
The Association of
Building Societies says that 5,5% of
residential accounts remained in
arrears on a month-on-month basis since
2005, highlighting the risk of
mortgage defaults under current economic
conditions.
Zim Independent
THE currency reforms undertaken by the central bank are
unlikely
to fool the market, says Trevor Ncube (TN), publisher and executive
chairman
of the Zimbabwe Independent and the Standard as well as chairman
and CEO of
South Africa's Mail & Guardian. Below we reproduce an
interview he held with
Moneyweb (SA) CEO Alec Hogg.
MONEYWEB: Well, Trevor Ncube, it does look - certainly from what
Fungai
Tarirah (Imara Securities' investment analyst) has been saying and
reading
through Dr Gideon Gono's logic in the reasons for lopping the three
zeros on
the end of the Zimbabwe currency - that it really is semantics they're
playing with here.
TN: It is semantics, Alec, and it
is, like you are saying,
rearranging the chairs on the Titanic, as it were.
It addresses the
symptoms, it doesn't address the fundamentals. I think the
fundamentals are
very clear to everybody. It's prudent management of the
economy. But above
that, it's attending to the political question that
Zimbabwe currently
faces. Perhaps more than that it is also creating an
environment which
attracts foreign investment and an environment that
inspires the
international community to have confidence to come in and
invest in
Zimbabwe.
What Gideon Gono did on Monday
unfortunately does not address
those issues, and what that means is that
inflation is going to come back in
a big way. I mean, you heard from the
analysts in Harare, for instance, that
there has been a revaluation of
prices already. Before this was done, for
instance, to give you an example,
Old Mutual was priced at $1,7 million. As
soon as that announcement was
made, Old Mutual jumped to $2,9 million, which
now is $2 900. So a lot of
people are already jumping in and speculating.
And just before I came here,
the people on the street were rushing to the
shops to buy commodities
because they have no confidence any more in the
currency. They would rather
keep commodities - rather than hold on to the
currency.
MONEYWEB: But what was he thinking when he
made this statement -
that perhaps people would be naïve and believe we now
have inflation under
control, because what was $1 000 previously is now
$1?
TN: I think it's shot-gun economics. This is very
punitive
economics, and the surprise with which this thing was sprung on
everybody
else. There is a sub-text running here, Alec, and you get that
sub-text when
you listen to his comments, when you listen to the president's
comment. The
reason being given is that we want to tackle inflation. But
clearly you and
I realise that this doesn't tackle inflation. There is a
sense that there
have been some people that the governor is aware of, that
the president is
aware of, who have been hoarding money, using that money to
trade in gold,
to buy gold on the black market, using gold panners, to buy
fuel and get the
money out of Zimbabwe, bring it, somehow wash that money
offshore, something
like that, take some of the money outside. So it's a
punitive thing,
targeted at people that the governor himself
knows.
He has talked about a handful of people that are doing
this. But
does that justify inflicting this damage onto the whole economy? I
don't
think so. Granted, the many zeros were causing a huge problem to a lot
of
people. Let me just relate to you a very quick story. I went to buy
vegetables when I was in Harare a fortnight ago. And those vegetables,
potatoes and stuff, cost me $5 million. I handed the $5 million to the lady
across .
MONEYWEB: How many bank
notes?
TN: A big pile of Zimbabwean dollars. And she
counted it and,
surprise, surprise, she had a scale in front of her. She
threw the bundle of
money I gave to her and weighed it. I have never seen
this in my entire
life. I said to her, why are you doing that? She said,
well, we know that if
it's five million Zimbabwean dollars, and it's dirty,
as the currency is
that you've given me now, it's going to weigh 104 grams.
If it's fresh from
the bank, it weighs something like 102 grams. If it's
very dirty, it weighs
106 grams. That's the kind of economy that Gono has
reduced Zimbabweans to.
But does this solve the problem? It
doesn't. But another
fascinating thing, Alec, which I must share with you:
Zimbabweans are
fascinating in their humour. Having lopped three zeros on
Monday, a lot of
Zimbabweans are saying, he has decided to remove three
zeros from his name.
He's got three zeros in his name. Take those zeros from
his name,
fascinating thing, and they say he's changed his name into
Chinese.
MONEYWEB: Well, at least they keep their sense
of humour. Isn't
it interesting to note how sophisticated people in the
street are - and you
take the example of the lady selling vegetables to you?
She might not have a
university education, but she certainly knows when it
comes to money. So
this almost appears to be a bit of a gamble, to lop those
three zeros off,
but the population is saying, hang on, we don't buy
this.
TN: Alec, it comes back to one fundamental thing.
You can never
fool the market. It doesn't matter whether it's women selling
vegetables,
whether it's the stock market, gold panners or whatever. You can
never fool
the market.
The market knows the right value
of things and the market will
always find its own level. So I think what
Gono has done is going to buy him
a bit of time because one reason why he's
done this is that banks are coming
to him and saying, we cannot cope with
the zeros any more. The accounting
packages that we bought from South
Africa, from the UK, can't accommodate
the zeros any more. We need to get
rid of the zeros.
But when they went to the software
suppliers to say, can you
help us get rid of the zeros or adjust the
accounting packages so that we
accommodate the zeros, the banks were given a
huge bill. They took the bill
to the governor to say, for us to adjust this,
to accommodate the lopping of
the zeros, this is what it's going to cost us.
That's one reason that has
forced the governor to do this kind of thing. But
I think the basis of it,
Alec, is that this inflation is going to come back
in a huge way. These
zeros are not going to come back as three zeros.
They're going to be six
zeros because the market has an idea of where it
ought to be and how it
ought to move. And this is going to come back and
haunt Zimbabwe.
MONEYWEB: Trevor, I was talking to a very
smart gentleman who
shall remain nameless because we were talking off the
record, and he said to
me that he thinks now is the time to seriously start
looking at Zimbabwean
investments - property investments, other
opportunities, because rock bottom
is not too far away. And pretty much in
life in countries in many areas,
once you hit rock bottom, things do turn up
again. Do you think he's being
optimistic?
TN: Alec,
I've been saying that now for nine months, if not
more - that if you are a
serious investor and you want to buy assets on the
cheap, this is the right
time to get to Zimbabwe. Some people have said I'm
being opportunistic that
we need to wait for the economic situation to be
addressed.
But speaking as a pragmatic businessman, this
is the right time
to go into Zimbabwe if you've got currency, if you've got
hard currency, you
get assets on the cheap. I believe that we are around
about the bottom, as
it were, that the time for the turn is around the
corner, because clearly,
like Bill Clinton said, the economy is stupid, and
unless and until the
president, Robert Mugabe and Gono are able to fix that,
then that whole
edifice is going to come crumbling down. Nobody has a way
and a solution, as
clearly shown on Monday by what Gono has
done.
I think for me the fundamental thing coming out of
here, Alec,
is that this is the clearest admission by the Robert Mugabe
regime that the
situation is out of control. Desperate situations require
desperate
measures. But desperate measures have never been known to cure a
long-term
illness such as this for a long time.
MONEYWEB: And congratulations Trevor, to Ferial Haffajee, your
editor of
M&G, for Women in Media of the Year, MTN's award for the year. And
very,
very well-deserved for Ferial and to you Trevor, for always keeping us
up-to-date on not only issues like Zimbabwe, but we do hope that your
country does come right in the not-too-distant future.
Zim Independent
Dumisani Ndlela
RESERVE Bank of
Zimbabwe governor Gideon Gono this week drew
fury from opposition
politicians and analysts who said his unorthodox
monetary policy approach
was not the panacea to an economy ruined by
corruption and speculative
tendencies. They said Gono should deal decisively
with protected members of
President Robert Mugabe's inner circle.
"We reject any
attempts to create false hope, and buy more time
for the Zimbabwean
dictatorship," said Arthur Mutambara, leader of an
opposition MDC faction,
about Gono's monetary policy review on Monday.
"The statement
should have clearly identified government
incompetence, mismanagement, lack
of economic vision and capacity as major
causes of the economic crisis,"
Mutambara said.
Critics said Gono's declared war against
corruption should start
with ruling party and government bigwigs, largely
believed to be the
significant factor responsible for the six-year economic
crisis.
"He's making the right noises but the problem is that
he still
tackles the edges," said Daniel Ndlela, an economic consultant, of
Gono.
"Corruption is now part of the system. It is
institutionalised
within Zanu PF and dealing with black market dealers on
the streets will not
help," Ndlela said, suggesting that sincere measures
dealing with the
scourge would start by investigating the super-rich members
of the Zanu PF
politburo and central committee, as well as those in Mugabe's
cabinet and
government.
Gono, delivering a
no-holds-barred mid-term monetary policy
review on Monday, whose discourse
many viewed as more political than
economic, promised to cause pain to
"speculators, underground market dealers
and their
associates".
He singled out indiscipline, corruption and
speculation as "the
three vices.which have weighed us
down".
His tough remarks against corruption echo similar ones
the
previous week by President Mugabe and Finance minister Herbert Murerwa
at
the opening of parliament and fiscal policy review
respectively.
Mugabe's government has rarely acted on
information implicating
members of his government and party in corrupt
activities, but has lately
spoken critically against corruption by top
members of his party.
Cynics say Mugabe relishes ensuring
that his lieutenants know
that he is aware of their corrupt activities and
other misdemeanours to
retain their absolute loyalty.
Gono has previously said he has names of top ruling party and
government
officials involved in shady deals but has refused to name
them.
He asked for spiritual protection so that his team
avoids
becoming "physical, intellectual and emotional victims of the
ruthless
behaviours and tendencies of these speculators as they begin to
taste
medicine from hell and start burning from the inevitably necessary
policies
we are going to implement henceforth".
Gono said
gold was being pillaged, undermining the country's
efforts to earn foreign
currency. Zanu PF chiefs continued to grab farms,
disrupting agricultural
production.
Mugabe said during a recent Zanu PF central
committee meeting
that he was aware that ministers were involved in illicit
gold-smuggling
activities. He has also spoken about corruption and
incompetence by members
of his cabinet.
Mugabe, who
threatened to "cleanse" his party of corrupt
members, told the central
committee meeting last month: "Cases of members
wanting to enrich themselves
are increasing in number.some people are just
being crookish in their
activities."
Gono has previously alleged that ruling party
bigwigs and their
cronies have abused an agricultural facility under which
they received
subsidised fuel by selling it at inflated prices on a thriving
parallel
market.
On Monday, he repeated his accusations
against "highly connected
people" and top politicians, saying they were
undermining efforts for an
economic turn-around.
While
promising to take stern action against them, Gono's
measures were expected
to skirt around the ruling party elite, targeting
instead individuals
playing a peripheral part in "underworld markets" to
survive the hardships
afflicting the economy.
Gono said measures to deal with
corrupt elements in society
would begin with the much-heralded currency
reforms, under which government
security agents and Zanu PF "youth" militia
have started raiding shops and
making house-to-house searches for cash
believed to be stashed for
speculative purposes.
Under
the currency reforms, the central bank introduced, with
effect from Tuesday,
August 1, a new set of bearer cheques to replace the
family of bearer
cheques currently in circulation. The old bearer cheques
will be phased out
during a 21-day period ending on August 21, by which day
all current bearer
cheques and other forms of old currency will become
obsolete and
valueless.
The new family of bearer cheques will see three
zeros from the
old bearer cheques being taken off.
"The
21-days of change-over are the beginning of far-reaching
transformations for
our economy and beginning of trouble for economic
saboteurs who have caused
havoc to this economy through speculative and cash
hoarding tendencies,"
said Gono.
During the change-over period, individuals and
corporates can
only deposit a prescribed amount of old bearer cheques a day,
beyond which
they are compelled to produce proof of source of funds as well
as Zimbabwe
Revenue Authority (Zimra) clearance certification for tax
payment on the
transaction underpinning the cash.
The
cash deposit thresholds have been set at $100 million for
individuals, and
$5 billion for corporate institutions.
Where the holder of
cash cannot prove legitimate source of
funds, the cash will be deposited
into anti-money laundering bonds for a
minimum of two years at no
interest.
The owner of the cash will hold the bonds pending
investigation
and or clearance with Zimra, at which point the bonds will be
redeemed at
face value.
Where legitimacy is established
after funds have been locked up
in the bonds, interest at ruling treasury
bill rates will be credited to the
principal and redemption
given.
Gono said there was $45 trillion in circulation, but
only $10
trillion could be accounted for by the formal banking
sector.
The remainder was in the market doing speculative
business. Of
that, $15 trillion was doing business in neighbouring
countries, he said.
Zim Independent
By Jonathan Moyo
WILL the
nation leave Gideon Gono, the governor of the Reserve
Bank,
alone?
When President Robert Mugabe last week publicly made a
call for
people to "leave Gono alone" many besides those who know themselves
to be
the guilty were left wondering what he meant. But after Gono's
wide-ranging
and far-reaching mid-term monetary policy statement this week,
one need not
guess he meant that the Zanu PF government, including Mugabe
himself, should
"leave everything to Gono".
That is why
Gono's monetary statement dealt with everything and
everyone in concrete
ways. The national breadth, depth and consequences of
Gono's monetary
statement stand in sharp contrast to the dire poverty of
Mugabe's speech at
the opening of the second session of the sixth parliament
last
week.
The speech was full of propaganda platitudes and bereft
of
policy responses to the economic meltdown that is ravaging the country.
In
fact, so empty was Mugabe's address that nobody remembers what he
said.
The same goes for Finance minister Herbert Murerwa's
fiscal
policy statement that ended up being a boring presentation of a
scandalous
$327, 2 trillion (now $327, 2 billion) supplementary budget whose
catastrophic impact in the present hyperinflationary environment is
self-evident.
Where Mugabe failed to outline the
necessary vision and
political direction for the nation in his speech,
Murerwa failed to proffer
the necessary policy blueprint to deal with the
economic meltdown. The two
statements did not have a common
thread.
In effect the policy poverty of the parliamentary
addresses by
Mugabe and Murerwa last week demonstrated that the Zanu PF
leadership is now
brain dead, hence its policy delinquency. For example,
Mugabe claimed, as
part of his new propaganda line, that the economic
suffering in the country
is being caused by so-called illegal economic
sanctions imposed by the
European Union, the United States and some white
members of the
Commonwealth.
But to show that this claim
is just propaganda, Murerwa's fiscal
policy statement did not address the
so-called illegal sanctions at all.
This is odd. When, as the head of state,
Mugabe identifies a particular
issue as the cause of the country's economic
woes, it stands to reason that
his Finance minister should prioritise and
systematically address that
issue.
Given that Murerwa did
not tackle the so-called illegal
sanctions as a priority of economic policy
in his fiscal statement last
week, this means one of two possibilities
applies. Either Mugabe's claim
that the economic meltdown has been caused by
those sanctions is false and
therefore mere propaganda or Murerwa is
incompetent and thus not up to the
task at hand.
Yet on
this one Murerwa at least has appreciated that the
so-called illegal
sanctions are not the real reason behind inflation and
corruption which have
been cited by the government as the country's top two
enemies. Also, Murerwa
seems to appreciate that the economic sanctions in
question, however
unpalatable or unacceptable they may be, cannot be said to
be
illegal.
This is because he should know that sovereign
countries have a
right to take policy measures and enact laws such as those
contained in the
sanctions targeted at some individuals in this country
including this
writer, as long as those measures are lawful in the countries
imposing them.
The same would apply to the provisions of the
objectionable
so-called Zimbabwe Democracy and Economic Recovery Act in the
United States
that require US representatives to multilateral financial
institutions such
as the World Bank, the International Monetary Fund and
even the African
Development Bank, to oppose any assistance to Zimbabwe.
Those provisions are
objectionable indeed but they cannot be said to be
illegal either in terms
of United States law or international
law.
If there was any illegality in terms of international
law, the
government of Zimbabwe would have by now taken the matter up with
the
appropriate international bodies with the relevant jurisdiction. The
fact
that no such a thing has happened or will happen shows that the mumbo
jumbo
from the Zanu PF government about the so-called illegal sanctions is
cheap
propaganda.
Ironically, when Mugabe and his
propagandists claim that the
economic meltdown and the resultant suffering
are caused by illegal economic
sanctions, they unwittingly remind many of
the fact that the strong
Rhodesian economy inherited in 1980 and now
destroyed was built on the back
of international sanctions backed by the
United Nations and virtually all
other key financial multilateral
organisations. Yes, those sanctions were
breached by some countries such as
apartheid South Africa and even Britain
but they were there and very
effective indeed.
The Rhodesian lesson is that an economy
under sanctions can
develop through a range of policy initiatives including
viable import
substitution. In Zimbabwe's case, the targeted sanctions
should be less
effective given that, unlike in Rhodesian days, the same
sanctions are not
supported by any of the neighboring countries and in view
of the "Look East"
policy which is focused on some of the world's leading
emerging economies
such as China and India.
Otherwise,
despite spirited attempts to attribute the present
economic turmoil to the
so-called illegal sanctions, all available
indications suggest that the
sanctions issue is indeed nothing but
propaganda. That is why there is no
response to it either in the fiscal or
monetary policy. Since Mugabe has
called on truthfulness in government
policy, this matter needs to be
corrected and put in its proper perspective.
Parenthetically,
propaganda is also to be found in the countries
that have imposed the
so-called targeted sanctions on Zimbabwe for purposes
of appeasing some
voting and media constituencies. This point was not lost
to the Zimbabwean
government which initially reacted to these sanctions by
dismissing them as
irrelevant and ineffectual Western propaganda in so far
as they were aimed
at individuals and in so far as they involved actions of
imperialist
financial institutions such as the IMF whose support is not
wanted.
The propaganda tune has now changed from
dismissing the
sanctions to claiming that they are causing the suffering of
ordinary
people. That is why observers have been wondering how sanctions
which were
initially described as useless and irrelevant can now be said to
be
responsible for causing the suffering of ordinary
people.
Yet Mugabe and Murerwa understand that the sanctions
talk is
pure Zanu PF propaganda for mobilising political support from the
masses by
seeking to make them believe that their suffering is due to
economic
sanctions imposed by imperialist foreigners and not a result of the
failure
of their government.
But because neither Mugabe
nor Murerwa has any practical policy
to deal with the economic meltdown, and
because they do not want to pay any
political price for this, they have very
conveniently but scandalously
decided to literally leave everything to
Gono.
During his fiscal policy statement in parliament
Murerwa, who
apparently seemed to have forgotten his widely publicised
complaints earlier
this year that the Reserve Bank had improperly taken on
quasi-fiscal
responsibilities from his ministry, specifically deferred to
Gono a raft of
policy measures on many occasions during his
presentation.
Meanwhile Gono has taken on the challenge like
a possessed man
determined to perform miracles in an assignment in which he
risks being
damned by some Zanu PF politicians if he succeeds and damned by
the same
politicians if he fails.
The RBZ governor is now
facing this fate, in which he is now
between a rock and a hard place,
because the political leadership through
Mugabe and policymakers through
Murerwa have abdicated their responsibility
and they have left everything to
Gono whom Mugabe says must be left alone.
But surely, while
the would-be Zanu PF assassins should indeed
leave Gono alone, it is utter
political nonsense to expect that the nation
should or will leave alone the
one person who is visibly doing everything
affecting everyone everywhere in
the country when those who should take
primary responsibility are playing
truant through cheap propaganda such as
the sanctions
talk.
The notion that Gono alone should make heroes from
zeros through
bearer cheques, and that this will constitute a new sunrise,
is a hard sell
and in fact a non-starter. Gono desperately needs real help
from Mugabe and
Murerwa in the political and policy arenas because the
fundamental problem
facing Zimbabwe is not just economic stupid but also
fundamentally
leadership stupid.
* Professor Jonathan
Moyo is former Information minister and
independent MP for Tsholotsho.
Zim Independent
By Thayer Watkins
UNDER Tito,
Yugoslavia ran a budget deficit that was financed by
printing money. This
led to a rate of inflation of 15 to 25% per year. After
Tito, the Communist
Party pursued progressively more irrational economic
policies.
These policies and the breakup of Yugoslavia
(Yugoslavia now
consists of only Serbia and Montenegro) led to heavier
reliance upon
printing or otherwise creating money to finance the operation
of the
government and the socialist economy. This created the
hyperinflation.
By the early 1990s the government used up all
of its own hard
currency reserves and proceded to loot the hard currency
savings of private
citizens. It did this by imposing more and more difficult
restrictions on
private citizens' access to their hard currency savings in
government banks.
The government operated a network of stores
at which goods were
supposed to be available at artificially low prices. In
practice these
stores seldom had anything to sell and goods were only
available at free
markets where the prices were far above the official
prices that goods were
supposed to sell at in government
stores.
All of the government fuel stations eventually were
closed and
petrol was available only from roadside dealers whose operation
consisted of
a car parked with a plastic can of petrol sitting on the hood.
The market
price was the equivalent of US$8 per gallon.
Most car owners gave up driving and relied upon public
transportation. But
the Belgrade transit authority (GSP) did not have the
funds necessary for
keeping its fleet of 1 200 buses operating. Instead it
ran fewer than 500
buses. These buses were overcrowded and the ticket
collectors could not get
aboard to collect fares. Thus GSP could not collect
fares even though it was
desperately short of funds.
Delivery trucks, ambulances, fire
trucks and garbage trucks were
also short of fuel. The government announced
that fuel would not be sold to
farmers for fall harvests and
planting.
Despite the government's desperate printing of
money it still
did not have the funds to keep the infrastructure in
operation. Potholes
developed in the streets, elevators stopped functioning,
and construction
projects were closed down. The unemployment rate exceeded
30%.
The government tried to counter the inflation by
imposing price
controls. But when inflation continued, the government price
controls made
the price producers were getting so ridiculously low that they
simply
stopped producing.
In October of 1993 the bakers
stopped making bread and Belgrade
was without bread for a week. The
slaughter houses refused to sell meat to
the state stores and this meant
meat became unavailable for many sectors of
the population. Other stores
closed down for inventory rather than sell
their goods at the government
mandated prices.
When farmers refused to sell to the
government at the
artificially low prices the government dictated,
government irrationally
used hard currency to buy food from foreign sources
rather than remove the
price controls. The Ministry of Agriculture also
risked creating a famine by
selling farmers only 30% of the fuel they needed
for planting and
harvesting.
Later the government tried
to curb inflation by requiring stores
to file paperwork every time they
raised a price. This meant that many store
employees had to devote their
time to filling out these government forms.
Instead of curbing inflation
this policy actually increased inflation
because the stores tended to
increase prices by larger increments so they
would not have file forms for
another price increase so soon.
In October of 1993 they
created a new currency unit. One new
dinar was worth one million of the
"old" dinars. In effect, the government
simply removed six zeros from the
paper money. This, of course, did not stop
the inflation.
In November of 1993 the government postponed turning on the heat
in the
state apartment buildings in which most of the population lived. The
residents reacted to this by using electrical space heaters which were
inefficient and overloaded the electrical system. The government power
company then had to order blackouts to conserve
electricity.
In a large psychiatric hospital 87 patients died
in November of
1994. The hospital had no heat, there was no food or medicine
and the
patients were wandering around naked.
Between
October 1 1993 and January 24 1995 prices increased by
five quadrillion
percent. This number is a five with 15 zeros after it. The
social structure
began to collapse. Thieves robbed hospitals and clinics of
scarce
pharmaceuticals and then sold them in front of the same places they
robbed.
The railway workers went on strike and closed down Yugoslavia's rail
system.
The government set the level of pensions. The
pensions were to
be paid at the post office but the government did not give
the post offices
enough funds to pay these pensions. The pensioners lined up
in long lines
outside the post office.
When the post
office ran out of state funds to pay the pensions
the employees would pay
the next pensioner in line whatever money they
received when someone came in
to mail a letter or package. With inflation
being what it was, the value of
the pension would decrease drastically if
the pensioners went home and came
back the next day. So they waited in line
knowing that the value of their
pension payment was decreasing with each
minute they had to
wait.
Many Yugoslav businesses refused to take the Yugoslav
currency,
and the German deutsche mark effectively became the currency of
Yugoslavia.
But government organisations, government employees and
pensioners still got
paid in Yugoslav dinars so there was still an active
exchange in dinars.
On November 12 1993 the exchange rate was
1 DM: 1 million new
dinars. Thirteen days later the exchange rate was 1 DM:
6,5 million new
dinars and by the end of November it was 1 DM: 37 million
new dinars.
At the beginning of December the bus workers went
on strike
because their pay for two weeks was equivalent to only 4 DM when
it cost a
family of four 230 DM per month to live. By December 11 the
exchange rate
was 1 DM: 800 million and on December 15 it was 1 DM: 3,7
billion new
dinars.
The average daily rate of inflation
was nearly 100%. When
farmers selling in the free markets refused to sell
food for Yugoslav dinars
the government closed down the free markets. On
December 29 the exchange
rate was 1 DM: 950 billion new
dinars.
About this time there occurred a tragic incident. As
usual,
pensioners were waiting in line. Someone passed by the line carrying
bags of
groceries from the free market. Two pensioners got so upset at their
situation and the sight of someone else with groceries that they had heart
attacks and died right there.
At the end of December the
exchange rate was 1 DM: 3 trillion
dinars and on January 4 1994 it was 1 DM:
6 trillion dinars. On January 6
the government declared that the German
deutsche was an official currency of
Yugoslavia.
About
this time the government announced a new "new" dinar which
was equal to one
billion of the old "new" dinars. This meant that the
exchange rate was 1 DM:
6 000 new new dinars. By January 11 the exchange
rate had reached a level of
1 DM: 80 000 new new dinars. On January 13 the
rate was 1 DM: 700 000 new
new dinars and six days later it was 1 DM: 10
million new new
dinars.
The telephone bills for the government operated phone
system
were collected by the postmen. People postponed paying these bills as
much
as possible and inflation reduced their real value to next to nothing.
One
postman found that after trying to collect on 780 phone bills he got
nothing
so the next day he stayed home and paid all of the phone bills
himself for
the equivalent of a few American pennies.
Here is another illustration of the irrationality of the
government's
policies: James Lyon, a journalist, made 20 hours of
international telephone
calls from Belgrade in December 1993. The bill for
these calls was 1 000 new
new dinars and it arrived on January 11.
At the exchange rate
for January 11 of 1 DM: 150 000 dinars it
would have cost less than one
German pfennig to pay the bill. But the bill
was not due until January 17
and by that time the exchange rate reached 1
DM: 30 million dinars. Yet the
free market value of those 20 hours of
international telephone calls was
about US$5 000.
So despite being strapped for hard currency,
the government gave
Lyon US$5 000 worth of phone calls essentially for
nothing.
It was against the law to refuse to accept personal
cheques.
Some people wrote personal cheques knowing that in the few days it
took for
the cheques to clear, inflation would wipe out as much as 90% of
the cost of
covering those cheques.
On January 24 1994
the government introduced the "super" dinar
equal to 10 million of the new
new dinars. The Yugoslav government's
official position was that the
hyperinflation occurred "because of the
unjustly implemented sanctions
against the Serbian people and state".
* Thayer Watkins, PhD,
is an instructor and graduate adviser in
the economics department of San
Jose State University.
Zim Independent
By Tanonoka Joseph Whande
TWO
articles that appeared in two papers from the Southern
Africa Development
Community recently caught my attention.
Botswana's Sunday
Standard (July 23-29 2006) proclaimed, in its
front-page headline, that
Botswana's Communications minister, Pelonomi
Venson, is "losing the Zim
propaganda war".
The Sunday Times of South Africa (July 23
2006) screamed "Zim
exodus overwhelms SA: deportations soar as thousands
fleeing economic
meltdown pour south".
What both these
two newspaper lamentations showed is the
impotence and cowardice of regional
governments in dealing with Zimbabwe.
The Sunday Times
offered depressing statistics. In 2004, South
Africa deported 72 112
Zimbabweans compared to a staggering 97 433
Zimbabweans in 2005. But this
year, between January and May alone, police
had already recorded 35 000
deportees.
South Africa is now spending a whopping R75 per
day per illegal
immigrant and the country is reported to have spent a total
of R218 million
on immigration control last year.
Now
deporting more than 265 Zimbabweans a day, the South African
government is
considering building a second detention centre in Limpopo "to
cope with the
dramatic increase in illegal immigration from Zimbabwe". What
a
solution!
Botswana shares an "unpatrollable" border with
Zimbabwe that's
far more than double the length between Zimbabwe and South
Africa.
Zimbabweans from as far north as Victoria Falls to as far down south
as
Beitbridge can simply walk into Botswana.
Twice a
week, every Tuesday and Thursday, Gaborone and its
environs alone dispatch a
minimum of four truckloads of illegal immigrants
to the Francistown Centre
for Illegal Immigrants (FCII). These four weekly
trips translate to about
300 deportees a week, excluding those who are
caught daily in other areas
such as Francistown, Lobatse, Maun, Phikwe and
Kasane and are transported to
FCII separately.
Since reports indicate that conditions at
the Francistown centre
are by far better than those at South Africa's
notorious Lindela detention
centre, it is safe to assume that Botswana is
spending far more than the
equivalent of R75 per deportee per
day.
Overwhelmed by the influx of illegal immigrants,
Botswana
started building a second, bigger holding centre in Molepolole,
just outside
Gaborone, more than a year ago. What a
solution!
Botswana complains about crimes committed by the
illegal
immigrants. Last week I listened as Chief Michael "Spokes" Gaborone
told an
audience of the Botswana Civil Society Solidarity Coalition for
Zimbabwe
that Zimbabweans were terrorising the residents of his Tlokweng
area.
Chief Gaborone suggested that maybe the government
should
consider turning Dukwi into a sort of concentration camp to hold
Zimbabwean
illegals. What a solution!
"The other thing
that the figures possibly indicate is that
there are new people from
Zimbabwe coming that never came before," says Dr
Sally Peberdy, projects
manager of the Southern African Migration Project at
Wits University.
Clearly, the solution is not in locking them up!
But what is
the problem here? It is about "thousands fleeing the
economic meltdown" in
Zimbabwe.
The employment of illegals is done by locals: the
Batswana and
South Africans themselves. If they stopped, there wouldn't be
any illegal
immigrants. Because of their hard work, in addition to their
education,
superior experience and, more importantly, their desperation,
employers in
South Africa and Botswana have a tendency to prefer Zimbabwean
illegals to
the locals. And this has caused a backlash against the
Zimbabweans, legal or
otherwise.
Meanwhile, in Botswana,
the Sunday Standard reported that "in an
attempt to offset a diplomatic
spurt with Zimbabwe", Venson and Foreign
Affairs minister Mmpati Merafhe
"held a number of meetings with the American
ambassador in Gaborone to
complain about the anti-Zimbabwe transmission by
the Voice of
America".
This does not augur well for Botswana's claim and
pride on being
Africa's best democracy.
Why should
democratic Botswana take a lead and campaign among
free nations for the
silencing of citizens and journalists who strive for
their Zimbabwe to reach
the kind of tolerance that Botswana claims it has?
Could Botswana actually
be so naïve as to believe that it can enjoy its
"democracy" while a
neighbour doesn't?
But why are governments, diplomats, chiefs
and the rest skirting
the issue? Why are Zimbabweans flocking out of their
beloved country to be
exploited, arrested, jailed, chased on the streets
and, at times, given
strokes on their bums?
Why are
Botswana and South Africa building more detention
centres in their
countries? Are they not aware of what the root cause of
these illegal
immigrants is? Why deal with the effects and not the causes?
The Sunday Times reported that while South Africa's Department
of Home
Affairs had no plan to curb the influx, more Zimbabweans are
flocking to
South Africa than those being deported. It's the same in
Botswana.
This shows that the solution to this regional
embarrassment does
not lie in preventing illegals from crossing the borders
or in deporting
them. If things were well, there wouldn't be any illegal
immigrants coming
into Botswana or crossing into South
Africa.
Because of their good economies, which they jealously
police
together, Botswana, Namibia and South Africa have no problem with
influxes
of illegal immigrants from each other's country.
But let us be hopeful that Botswana remains a true democracy.
Let's be wary
that the pula does not keep shrinking till it's a fraction of
the rand. If
that happens, then Botswana will experience something new,
painful and
unfortunate.
The heart of the matter is that Botswana's
democracy cannot
survive while surrounded by dictatorships or while it
cavorts with leaders
who abuse citizens while denying them human rights.
Instead of warning other
nations to back off and give way to a wayward,
murderous leader, Botswana
should be protecting its democracy by championing
democracy around it.
Robert Mugabe and Robert Mugabe alone
causes the movement of
such great numbers of illegal immigrants. Regional
governments must stand up
and deal with the Zimbabwean issue and the
Zimbabwean issue is the
intransigence and brutality of Robert
Mugabe.
The problem is not the illegal immigrants seen on the
streets of
Gaborone or Johannesburg. The problem is Mugabe and I cannot
understand why
regional leaders do not acknowledge this and act. Mugabe is a
regional
economic saboteur, a disgrace to the region.
Why
do regional leaders like Festus Mogae, Thabo Mbeki and
others just do not
condemn Mugabe outright and take steps to right the
situation?
The economies of Botswana, South Africa and
indeed the whole
region are suffering because of Mugabe's policies and
behaviour. I think it
is most unfair to the Batswana and South African
citizens to have their
living standards lowered and interfered with by a
foreign dictator whose
"sell by" date is long past.
By
the same token, it is also fair for Botswana and South Africa
to at least
appreciate those Zimbabweans who are in their countries legally
and who are
helping in the development of these countries.
Botswana must
not be allowed to become just another African
country. Botswana must avoid
protecting a behaviour that it cannot tolerate
at home. Is it democracy for
Botswana to protect dictators who fight against
all that Botswana stands
for?
Venson must remember that not long ago, two of her
reporters
were arrested in Zimbabwe, detained and charged with committing
frivolous
journalistic "crimes" that do not even appear in Botswana law
books, let
alone in the law books of any truly democratic
nation.
A good democracy remains a democracy at home and
abroad.
* Tanonoka Joseph Whande is a Zimbabwean writer.
Zim Independent
By RES Cook
WE are
constantly being told about the various "challenges"
facing Zimbabwe's
economy.
These, we are told, include inflation, corruption,
negative
publicity about the country, supposed "illegal" sanctions,
under-utilisation
of productive capacity, and power supply interruptions,
among others.
The simple fact is that there is only one
fundamental challenge
facing this country: that of removing the regime that
has destroyed the
lives and aspirations of so many
Zimbabweans.
Anyone who thinks that the removal of three
zeros will affect
anything other than the weight of the money we have to
carry around is
living in dreamland.
Reserve Bank
governor Gideon Gono continues to tell us that
"failure is not an
option".
However, I would suggest that as long as this
corrupt,
incompetent regime remains in power, a more appropriate and
accurate phrase
would be "success is not an option".
I
desperately want to see an economic turnaround for Zimbabwe
but that will
not happen until the fundamental "challenge" is understood and
steps taken
to "walk it".
No amount of populist posturing by Gono can
overcome all the
economic destruction wrought by his political
bosses.
* RES Cook writes from Harare.
Zim Independent
By EM Hoza
ALL Zimbabweans are
grappling with the meaning of "zero". My
little nephew will not carry his
lunch box to school because he sees no need
for packed
lunch.
His meagre pocket money has suddenly become a
windfall.
He reckons whereas he could buy one hot dog for
$160 000, he now
can buy 10 of them because the Reserve Bank has removed
three zeros from the
local "currency".
I don't know what
will be more hurtful to him: the mathematical
error or the deceit on which
the error is based.
The Reserve Bank governor proclaims with
vivid prose that this
is the birth of a new era - the sunrise of currency
reform - the advent of
good news.
The official advert
puts a lovely brown loaf of bread with the
caption: "Was $85 000, Now ONLY
$85!" No wonder both children and adults are
drunk on this verbiage. Zero
has become a big issue.
The newspapers sold out because of
zero as Zimbabweans pondered
upon its significance.
Lest
we get carried away, two ways of defining "zero" will
suffice:
lA quantity of no importance and a mathematical
element that
when added to another number yields the same number. Oh
Zero!
We should not forget the versatile use of zero. It is a
flexible
quantity which achieves significance against the run of reason and
common
sense.
The biggest users of the significance of
the insignificant zero
are fraudsters and politicians - both two sides of
the same coin!
Fraudsters add more zeros to stolen cheques
while bankrupt
politicians remove zeros from useless
currencies.
The effect is the same: losses everywhere. Beyond
bankrupt
monetary "policies", politicians add zeros to situations to inflate
the
effect.
Mussolini, the originator of government by
propaganda, added
many zeros to the Italian airforce and navy. Many an
Italian were impressed.
Zero is powerful. But we know who the real zeros are
- and we are very
afraid of removing them because they are certainly not
three!
* EM Hoza writes from Harare.
Zim Independent
Editor's Memo
By Vincent Kahiya
MEN have
always had a fascination with football. The sport does
not only raise
testosterone levels in both players and spectators, it also
brings out the
best or the worst out of stakeholders.
The allure of the game
has driven men to name children after
their footballing idols. Fanatical
adults have adopted footballers' names or
nicknames to raise self-esteem and
make heads turn when their pet names are
called in
public.
There is one banker friend who is trying to
rechristen himself
Zidane after that bald-headed star, whose
butt-like-a-ram-on-rut earned him
a red card in the last World Cup final.
(Can we ever stop talking about that
incident?)
To some
Zidane remains a hero notwithstanding the assault on
Marco Materazzi and to
those stuck in the dogma of discipline, a villain
reduced to naught by the
red card.
The attraction of the game no doubt influenced the
RBZ to come
up with its "send them 000ff" advert to drum up support for the
slashing of
zeros from the local currency.
The advert
starts off by saying "our goal is to play as one
team" and the team needs
"great players". The performance of this team is
being affected because
players "are all over the field fighting for the
ball, not scoring goals,
just getting penalties and shooting in the wrong
direction". Three unruly
players who are eventually sent off by the referee,
the advert suggests, are
causing all this.
There is something wrong with this team. It
is not disputed that
the coach had in the first place selected the unruly
players in the team.
Their thrashing all over the pitch and fighting each
other for the ball also
reflect badly on the coach. Where did he get these
hooligans?
The referee though has had enough and is kicking
them out. This
is a cause for celebration for the coach! He now has eight
players at his
disposal. Is he going to win the match because the team is
now lighter and
stronger?
The RBZ advert is however just
on the zeros. They were an
impediment to business transaction and therefore
had to go. Whether by
design or otherwise, the advert appropriately captures
what needs to be done
in the current government.
Even RBZ
governor Gideon Gono acknowledges that there are bad
players in the
government team like the three or four he said gather in the
evening to
determine the foreign currency black market price.
There are
those in government who continue to cause disruptions
on the farms and those
who diverted concessional financing into
non-productive
uses.
Gono appears to have the inventory of the infidels who
really
need to be shown the red card but the coach, who is well aware of the
shortcomings in his team, would rather keep the lot even when they are
"fighting all over the field, not scoring goals, just getting
penalties".
The team is hurting big time together with its
multitude of
supporters who have been told that there is no crisis in the
team. The coach
knows there are players in his team who were mere zeros at
Independence but
have morphed into heroes, courtesy of the opportunities the
coach has given
them to continue playing even when they are not clear which
way they should
be scoring.
When the brief to the team
has been to desist from causing
disruptions on the farms, one player last
month, soon after team talk, was
in the Lowveld telling producers that they
were not required. He is still in
the team!
Gono on
Monday identified three hazards that have stood in the
way of national
progress: indiscipline, corruption and speculation.
He merely
mentions them without putting human names to the
vices.
The players not only need to see red, they must be booted out of
the club
even if the coach is waiting for the referee to give them the red
card.
When RBZ billboards advertising the new notes
spring up
throughout the country, let's remember to "send them 000ff"
especially those
who miraculously rose from "zero to hero"!
Zim Independent
Muckraker
IT is hard to imagine how any serious
diplomat could have
managed to respond with such calmness to Caesar Zvayi's
insulting and
tendentious so-called questions as did British ambassador to
Zimbabwe,
Andrew Pocock. Who is Zvayi to define the job of a foreign
ambassador and
under what protocol? At what level should Pocock be seeking
to "engage
President Mugabe in an open forum" so that Zvayi "can judge who
is right and
who is wrong"?
That was the subject of
Zvayi's "Conversation" this week.
In the event, we found
Pocock's response not only diplomatic but
also enlightening to those seeking
the same. He stated for Zvayi's
information that the EU had no sanctions
against Zimbabwe. Instead it only
had a ban on arms sales, a travel ban and
assets freeze on 126 members of
Mugabe's regime.
He
didn't prevaricate on the issue of governance and human
rights. "It is for
Zimbabweans themselves, no one else, freely to determine
who should govern
them, and how they want to be governed," he said. Anything
else would have
been interpreted as interference in Zimbabwe's affairs,
wouldn't it
Zvayi?
It is only the most obtuse pretender who can argue
that the Tony
Blair government was responsible for the havoc called
Operation
Murambatsvina and the foolish destruction of commercial
agriculture in the
name of land reform.
Ambassador Pocock
ignored Zvayi's provocation and merely stated
the facts for those in need of
information. That should include Zvayi.
Does anybody
still recall government's "Health for all by the
year 2000" slogan? It was a
policy adopted by government soon after
Independence to spread health
delivery to every corner of the country.
We were reminded of
that lofty ambition by a story in the Herald
this week about central
hospitals working towards ISO certification. This
would be done through
regular "clinical audits" to ensure patient care and
service
delivery.
Our understanding is that such a certification
requires rigorous
maintenance of records, documents and information. It is a
major requirement
for companies wishing to export their products. For a
health institution the
basics would be a certain staffing level for doctors,
nurses, lab
technicians and their assistants.
The story
acknowledges that virtually all hospitals in the
country have been hit by a
brain drain of doctors and nurses. The few
remaining junior doctors are
striking over poor working conditions and low
salaries - issues that
government is failing to address. How does an
institution without standard
requirements like doctors, nurses and drugs
qualify to be a
hospital?
We applaud the ambition but believing they can
attain an ISO
certification is a leap of faith.
Bravo
to the young DJ on SFM on the night of July 25. He
evidently loves Thomas
Mapfumo's music and had a number of songs in his
kitty on that night. At
around 1:30am he played a hit from the early 1980s,
Pemberai (Celebrate)
composed in the euphoria of Independence, about the
time Matabeleland and
the Midlands were burning under Mugabe's scorched
earth policy to rid the
country of PF-Zapu vermin.
It was played "to the last note",
as Tinashe Chikuse is wont to
say. At exactly 1:55am he was back with
another Mapfumo hit done almost 20
years later in 2000. This was the song
from Disaster album titled Mamvemve
(Tatters), a track we suspect got the
album blacklisted. In the song Mapfumo
laments the ruin of the Zimbabwe we
all yearned for during the liberation
struggle - now a veritable
disaster.
It was played for no more than 15 seconds before
the station
went dead. It was soon replaced by a song by Mechanic Manyeruke,
something
about Moses meeting a snake in the wilderness. Lyrically sweet but
spiritually poisonous. Back to the DJ. He was replaced by the voice of a
woman.
We hope he wasn't ordered to lug his bags and
leave immediately
in the dead of night. We need more such brave young
men.
Japan's new ambassador to Zimbabwe, Takeo Yoshikawa,
had news
that government loves to hear when he met Zanu PF chairman John
Nkomo last
week. He said Zimbabwe had the "potential" to become an economic
powerhouse
in the region because of its abundant human and natural
resources.
"Your country should be a leading country in the
sub-Saharan
region," said Yoshikawa, to which Nkomo responded by saying the
Japanese
should not be "fooled" by those who claimed there was a lot of
insecurity in
the country.
A member of the Japanese
delegation, Yoshinori Ohno, must have
nodded politely at this diversionary
tactic but was clearly not fooled. He
told his host what was needed for
Zimbabwe to realise its potential: "We
need to share the same values of
freedom, democracy and a market economy."
As for potential,
it's likely to remain just that so long as
government pursues anti-people
policies.
By the way the Daily Mirror which carried the
remarks, would do
well to update its information. Tsiuneshege Iiyama, the
former Japanese
ambassador whom it claimed met Nkomo, is far away in
Slovania. One would
expect CIO operatives interested in media business to
know better.
Chiefs are not interested in the succession
debate, head of the
Chiefs Council Fortune Charumbira assured President
Mugabe at the Kariba
retreat last week. He said it was ministers, politburo
and central committee
members who wanted Mugabe's
position.
It would have been interesting if he had named one
or two people
known to be interested in the hot seat. Instead he said they
were waiting to
hear from Mugabe when he was ready to
retire.
We can all understand this grovelling. Being a chief
has become
almost formal employment with monthly allowances of up to $20
million and
vehicles and electrified homes. Who would not be grateful to
Mugabe for his
inventiveness? Now he can be assured of a permanently captive
rural
constituency under the heel of suborned Zanu PF
chiefs.
We were interested to hear a Newsnet report in
which Zanu PF was
investigating its MP for Hurungwe for improper
association. Zanu PF
provincial chairman for Mashonaland West, John Mafa,
said: "There were
complaints from members in Hurungwe that the MP, Cecilia
Gwachiwa's
boyfriend was a member of the MDC. Further allegations are that
Gwachiwa
benefited financially from the MDC and that her boyfriend has guns
that he
got from a former white farmer he used to work
for."
Mafa said as the disciplinary committee in the
province, they
were investigating whether Gwachiwa's boyfriend was indeed an
MDC member,
whether he has many guns and whether the MP benefited
financially from the
MDC.
We know there is no love lost
between the two parties but we
were not aware things had gotten so bad as to
affect personal relationships.
Sleeping with the enemy, somebody called it.
Isn't it also time to
investigate Sekesai Makwavarara's relationship with
the MDC?
We must thank Zvayi for reminding us of Zanu
PF's long forgotten
Leadership Code.
For all its
exhortation against lying, immorality, malfeasance,
theft, personal
aggrandisement, nepotism, tribalism and corruption in
general, only one has
been strictly adhered to, and that by only one person.
It is about dressing
properly and it says a senior member of the party shall
not be "repeatedly
dressed in a slovenly or inappropriate manner thereby
failing to maintain
personal neatness and cleanliness".
The trophy for snappy
dresser - since 1996 - goes to President
Mugabe.
There was an interesting story in the Saturday Herald saying
Harare has a
lot to learn from Lusaka. It was about the way the local
authority had
designed its major bus terminus, the Inter City Bus Terminus,
to
avoid the confusion and chaos that we have come to associate
with Mbare
Musika. The story was done by Michael Padera.
Two things
caught our attention. Why should the Herald visit
Zambia "to study the
operations of its bus terminuses"? We thought that
would be a task for
Ignatious Chombo's girl at Town House! Or is the Herald
doing consultancy
work for Sekesai Makwavarara's commission.
Secondly, we were
just curious to know if Padera had registered
with Zambia's own Tafataona
Mahoso before taking the pictures of luxury
buses and the Lusaka City Market
and his interview with Lusaka's director of
public health and social
services, Bornwell Luanga. We ask this advisedly
because recently some two
or three foreign journalists were arrested near
Norton for "practising
journalism without accreditation" after they were
caught taking pictures of
people queuing to vote. As you read this, two
Batswana journalists are
standing trial before a Plumtree magistrate for the
same criminal
offence.
Why should we be happy to walk and work freely in
other
countries but treat their citizens as criminals when they visit? Or
did
Padera have to lie that he was a tourist working for the city of Harare?
Talk of blatant hypocrisy.
A colleague has noted however
disproportionate favouritism at
Herald House in that while Victoria Ruzvidzo
was given an air ticket to fly
to Dubai to shop for trinkets, Padera was
shoved into a bus on a similar
mission to Zambia. We know it's all malicious
gossip.
Cyclone Gono hit Zimbabwe with the ferocity of an
Asian tsunami
this week. Inevitably, many people were caught off guard,
perhaps parking
their vehicles full of bearer cheques at Roadport bus
terminus where
Zimbabwe's well-heeled money changers conduct their illicit
trade.
We wish Gideon Gono all the success in the fight
against all
forms of illegality that have put every new economic policy
initiative out
of kilter and turned every honest worker into a pauper. Our
reservation is
that in most cases only the small fish get caught in the net.
We doubt that
the leaders of the foreign currency syndicates will ever feel
the pinch.
As analysts have already indicated, there is
likely to be a bout
of price increases as barons of the black market seek to
dispose of their
hoardings on groceries, real estate and other properties.
Again it is the
small fry who gets burnt while the real felons plot fresh
mischief. It's
likely going to be a very gory and long battle before people
regain their
senses and accept once more that it is possible to lead an
honest life and
still prosper.
There was of course
the inevitable confusion caused by the
decision to slash the three zeros and
devalue the currency at the same time.
The first victim was the Herald. We
were told on Tuesday that the NEDPP had
raised $2 500 000 ($2,5 million).
This was converted to US$2,5 billion. How
did the Zimbabwe dollar regain
such incredible value over night after a 60%
devaluation the previous day to
$250?
Is this one of the miracles Gono was talking about we
wonder?
Zim Independent
By Eric
Bloch
WITH the never-ending distress of the Zimbabwean
economy,
enduring and worsening for the greater part of the last nine years,
few had
any strong expectations that last week's mid-term fiscal policy
review would
contain anything substantive to reverse the economic
decline.
Nevertheless, hope allegedly never dies and despite
the
generally pessimistic lack of expectations, many still harboured some
slight
hope that the review would credibly herald some positive
developments. That
hope was not to be fulfilled.
At the
outset of the 2006 mid-term fiscal policy review
statement of the Minister
of Finance, Dr Herbert Murerwa, to parliament on
July 27, hopes and
expectations were reinforced by a succinct, realistic
recognition of the
immense challenges confronting Zimbabwe and its economy.
The
minister noted that the challenges included corruption,
rising inflation,
declining savings and investment, inadequate foreign
exchange (affecting
import capacity), erratic fuel supplies and
interruptions to electricity
supply.
In particular, he emphasised: "Inflation remains our
biggest
challenge - affecting savings and investment, undermining day-to-day
business activity, as well as creating price instability in the conduct of
ordinary transactions.
It has also eroded the purchasing
power of our domestic
currency, adversely affecting the livelihood of the
ordinary household as
standards of living fall and basic social services
become unaffordable.
Furthermore, high inflation is also affecting our
export competitiveness and
hence undermining our capacity to generate the
much-needed foreign
currency."
Inevitably, the minister
could not tabulate each and every
challenge and some of the notable
omissions from his recounting of the
threats and constraints confronting the
economy were the accelerating
collapse of the infrastructure as a whole (he
making reference only to the
electricity supply impediments), the
pronounced, almost nationwide poverty,
the ongoing "brain drain" and
consequential intensifying lack of skills
availability, unsustainability of
national debt, continued strained
relationships with most of the
international community and an almost total
inability of the government that
he serves to recognise and acknowledge
unpalatable realities. (As evidenced,
for example, only two days previously,
by the president's yet again
contentions that Zimbabwe is the victim of
"illegal sanctions" imposed by
the European Union and the USA. As recorded,
ad nauseum, the sanctions
imposed are not economic in nature and not in
breach of any law and,
therefore, are not illegal!)
Although Murerwa was wholly
correct insofar as the challenges
that he did identify were concerned, it
was nevertheless disturbing that he
had clearly been provided some wholly
outdated data, and it is impossible to
formulate constructive policies if
they are founded upon disinformation.
He tried to suggest
that government was finally achieving
substantial recovery in the
agricultural sector. He projects growth of 23%
in 2006 and, in part, founded
his projection upon an expectation of an
increase in production of maize
from 750 000 tonnes in 2005 to 1,7 million
tonnes in
2006.
Admittedly, that was the wishful thinking that emanated
six
months ago from the Minister of Agriculture, but within the agricultural
sector it is well-known that there is not the remotest possibility of
attaining that forecast.
In fact, even the Ministry of
Agriculture has revised its
projection, the recent estimates flowing from it
and the Grain Marketing
Board being in the range of 1,35 million
tonnes.
Various international monitors concerned with the
pre-empting
crises of famine have projected that the commercial maize crop
of 2006 will
not exceed 1,05 million tonnes.
In light of
the revised Ministry of Agriculture projections, a
Ministry of Finance
estimate of 1,75 million tonnes can only be a source of
future embarrassment
to that ministry.
In like context, Murerwa stated that the
2006 winter wheat crop
is expected to yield about 220 000 tonnes against 135
000 tonnes in 2005.
But only three weeks ago the Ministry of
Agriculture stated that
in consequence of belated receipt of inputs, the
crop was unlikely to exceed
165 000 tonnes, which is little more than a
third of the national need!
The minister did note correctly
the marked continuing decline in
tobacco production but stated that "efforts
to improve the preparations for
this year's tobacco crop have therefore been
made".
However, one essential issue has not been addressed.
That is the
ongoing instability within the agricultural
sector.
When the president opened parliament last week, he
stated:
"Government will not hesitate to deal firmly with all cases of
indiscipline
on the farms" but, as yet, farm invasions
continue.
The president also referred to "99-year leases to
be issued in
due course" and Murerwa spoke forcefully on this critical
issue.
He said: "Farmers make meaningful investment where
security of
tenure is guaranteed. To further facilitate the participation of
financial
and other institutions in the funding of agriculture, government
will
shortly issue transferable 99-year leases."
However,
like statements have been made by numerous government
spokesmen over the
last two years without anything yet occurring. Moreover,
drafts of 99-year
leases that have come forth from government contain
provisions enabling the
state to peremptorily revoke leases.
If such provisions are
contained in the leases, then the
incorporation of transferability clauses
will have no effect in providing
collateral security to lenders, or in
motivating investment by the farmers,
for they will in practice have no
security of tenure. In such event, all the
expectation of agricultural
upturn will prove naught but a mirage.
Thus, although the
minister must be commended for unhesitatingly
identifying some of the very
many, major challenges which obstruct the path
towards economic well-being,
those challenges cannot be successfully
overcome unless the other challenges
are also realistically recognised and
addressed - not only by the minister,
but by the government as a whole.
As the track record of such
recognition and action is abysmal,
the mid-term fiscal policy review did not
instil any confidence that that
will now occur, and also could not, and did
not, fuel any sense of
reassurance that hopes of recovery will be fulfilled.
In this respect, the
review proved to be the expected damp
squib.
But it was also a damp squid insofar as the proposed
fiscal
measures are concerned. It was inevitable that with the rampant
hyperinflation that has prevailed in Zimbabwe since the 2006 budget was
formulated in October/November 2005, actual expenditure will have exceeded
budget, and a supplementary budget would be required to allow for not only
that expenditure excess, but also increased expenditure during the remainder
of 2006.
None can justifiably blame the minister for
that. However, two
factors of the mid-term fiscal proposal can only be
considered to be highly
disappointing.
The first is that
the individual's income tax threshold is
raised from $7 million per month to
only $20 million per month. With the
poverty datum line (PDL), for a family
of five at the end of July being at,
or above $70 million, it would have
been not only reasonable to assume, but
also compassionate of government to
have set the threshold at no less than
$35 million (which assumes two equal
income earners in each family).
The second is that although
very obviously and unavoidably the
minister has to generate additional
revenue inflows, he is doing so in ways
which will fuel
inflation.
His fiscal measures include, from September 1, an
increase in
the Noczim Debt Redemption Levy from $110 per litre on diesel
and petrol to
$25 000 per litre.
At the same time the
level of carbon tax will rise from $1 000
to $5 000 per
litre.
These measures will have a sharply adverse impact upon
inflation, for fuel is a cost component of every facet of economic activity.
All enterprises will yet again have to increase prices to recover the added
fuel costs whilst commuters will be faced once again with fare
increases.
The alternatives to greater revenue generation by
direct and
indirect taxation include enhanced revenues as a result of more
vibrant
economic activity, but that requires constructive efforts by
government, oft
promised but yet to be seen, or the determined reduction of
expenditures
which this government is clearly unwilling to pursue, no matter
how the
Minister of Finance may commend such actions to his colleagues and
the
president.
The bottom line of the 2006 mid-term
fiscal policy review is
that it can in no manner aid economic recovery or
alleviate the hardships of
an impoverished populace.
Zim Independent
RESERVE Bank
governor Gideon Gono this week went to war - not
for the first time in his
role as central bank governor - to fight an epic
battle he knows very well
he can lose.
Half way through his tenure as governor, Gono
has come out
second best in previous offensives in which he has lost the
battles against
inflation and the foreign currency black
market.
To drive home the point that he was intent on winning
his latest
campaign, he sought and got the presidential seal of approval
through a
decree pronounced this week to introduce the new currency and to
give him
sweeping powers to deal with those caught with large sums of
money.
He has paraded the zeros he lopped from the currency
as his
trophies but the enemy on the other side of the line can only be
bigger than
the zeros, as all things are.
As in previous
fights, Gono has employed basically the same
strategy - the element of
surprise accompanied by shock therapy and storming
perceived enemy
strongholds with security agents and thought police. There
is even greater
determination in his military-style stratagem to fight the
three evils he
identified as speculation, corruption and indiscipline.
He
has enlisted the services of the discredited Zanu PF youth
militia, the
police, central intelligence spooks and the army to carry out
the operation
to recover the old currency from private holdings and to bring
to book those
caught on the wrong side of the law.
The campaign is coming
at a huge cost as shown in a story we
carry elsewhere in this paper. A day
after he pronounced his monetary policy
statement, suburban police stations
were teeming with "economic saboteurs"
as he walked across the streets of
Harare like a medieval army general
rallying his troops to the
front.
Gono, together with government, appeared to have
already
identified their targets in this military campaign. In Bulawayo he
indicated
that the central bank was contemplating reducing the 21-day period
for the
remission of old notes to 10 days. He is zeroing in on his target or
is he?
Gono has defended his guerilla tactics in enforcing
his new
measures on currency reform because he does not want to show
criminal
elements too much of his strategy lest they conspire to outdo him.
He has
thus elected to make policies on the hoof.
The
look of awe and horror on faces of several government
ministers as Gono was
delivering his policy statement denoted that they had
not been consulted. He
caught them off-guard. After his tour of the city
centre on Tuesday, he
announced another policy directive: that all purchases
above $100 million
should not be done by cash but through bank transfers.
There
will be more pronouncements designed to catch opponents
off-guard, we can
bet. The strategy has all the hallmarks of last year's
Operation
Murambatsvina which even caught Zanu PF stalwarts off-guard. The
element of
surprise presupposes that the enemy will be defeated
expeditiously and
decisively. This could be true with political enemies of
the incumbent and
undesirables in Zanu PF but not in reviving this
ramshackle
economy.
What Gono is lacking in this blitzkrieg is critical
mass. He has
in the past failed to recruit the country into his corner to
fight against
corruption, inflation and the foreign currency black market.
The nation has
stood aloof as he tries to fight the battle without seeking
popular support.
The result was obvious; the people fought back by
discrediting his policies
and engineering new methods of rendering his plans
ineffectual. Popular
opinion was that illegality should be allowed in the
name of survival.
His new fight is also lacking that
essential ingredient
requisite to win guerilla warfare. He has still not
managed to pitch the
fight as a struggle against the three evils. It remains
a fight against the
people if there is scant information on his
plans.
But a worse predicament is that he has positioned
himself as a
messiah who wants to rescue government instead of seeking to be
carried by
the state for his plans to succeed. We have seen his spectacular
failure in
the past, but because he has climbed even higher on the pedestal
of
influence and demagoguery, his fall could be even more spectacular unless
he
gets a popular buy-in for his policies.
A central
plank of Zimbabwe's economic revival is the
restoration of agricultural
productivity. Gono has spoken on several
occasions on this important issue,
whereupon he has been ignored by
ministers in charge of land reform and
agriculture.
If he is really sincere, Gono should not miss
this chance to
make his point clear. It is on the farms, and not at border
posts and
airports, that he needs to deploy the army and the Border Gezi
youth
graduands to execute another Operation Murambatsvina.
Zim Independent
Candid Comment
By Joram
Nyathi
REMOVING the zeros was the easiest part for both the
Reserve
Bank and members of the public. The monetary policy statement was
presented
with the customary gusto underpinned by the "failure is not an
option"
jingoism. The policy measures were to be implemented with immediate
effect.
RBZ governor Gideon Gono announced the deployment of
army
personnel, the police and members of the youth brigade to the country's
highways and border posts to ensure compliance with the country's laws - to
ensure that people take their money to the banks instead of keeping it in
their trunks for use in speculative deals or to buy foreign currency or
gold. It was indeed a military operation in its swiftness and ferocity. The
commander-in-chief duly gave executive authority.
Gono
also deployed a cavalcade of vehicles full of his infantry
across the
country to spread the word about the new currency and to alert
villagers not
to be duped by people offloading billions of dollars in old
bearer cheques
in the name of buying cattle or other assets. The element of
surprise must
have overwhelmed many. And there ends the good news.
The
planning was not meticulous in detail. In fact a key element
of the project
- the education campaign - was executed in reverse, more or
less as an
afterthought when the foot soldiers were already in the trenches.
I fully
appreciate Gono's strategy not to forearm his quarry by indulging in
too
much publicity. But that has been the cause of the greatest pain to the
majority of innocent Zimbabweans.
There is confusion
about what figures to write on cheques for
instance. Which bearer cheques do
you use to settle your $12 million bill to
Zesa? Do you add an explanatory
note if it's going to be cleared in new
bearers? How are accountants and
accounting systems supposed to compute the
figures for the old and new
bearer cheques?
In one supermarket they were forced to
re-enter the missing
zeros.
As Gono later discovered in
his street campaign on Tuesday, some
retail shops were not just lopping
zeros from the old prices, it was also an
opportunity to hike prices. The
consumer was made to pay more on the smaller
figure for bread from $130 000
to $200.
There is no standard price for goods and services
and so there
is no way consumers can expose malpractices as suggested by
Gono. The
educational campaign that should have preceded the blitz is being
carried
out in reverse.
The biggest abnormality in
Zimbabwe's economy is of course that
there is no equitable relationship
between interest on deposits and bank
charges because of high inflation.
This is especially so for the ordinary
man who hasn't much leverage about
investment alternatives. This has had a
huge psychological impact about
keeping money in banks. You lose.
Beneath the surface, the
crisis has bred among Zimbabweans a
fatalistic, masochistic cynicism towards
any and every effort to change the
way things are going. Gono's every missed
target is taken as a sign of
personal failure. More than that, it is
celebrated even as the criminals
undermining that effort devise new tricks
to circumvent the legal system for
quick personal
self-enrichment.
If Gono's painful but necessary surgical
operation could cure
that mental attitude, he shall have succeeded more than
if he brought
inflation down to 10%.
I am here reminded
of Karl Marx's dictum that the philosophers
have interpreted the world in
various ways, what is left is to change it.
Every economist, every
politician, every crook and everybody in Zimbabwe
will glibly tell you the
problems and what needs to be done. But nobody
wants to walk the
talk.
Gono is not seen as part of or seeking a solution, but
as a
collaborationist with a rotten establishment even as there is evidence
of
paralysis in the opposition on how to end our problems. Hence Gono's plea
against "casting blame".
Sadly, there are more
collaborators on the highway to hell than
those seeking a solution, for
everybody says "who is not corrupt? Who doesn't
hoard foreign currency?" Or
"why should I waste time and risk a loss on the
farm when I can immediately
transmute the money I have into my dream car or
mansion? After all things
can only get worse!"
It is this negativity that the nation is
up against more than
any visible manifestations of the crisis such as power
and fuel shortages
and anti-social behaviour that needs to be changed before
we can move
forward. Gono should not expect a swift military victory in the
war on
corruption. It is more psychological than physical, more like the
Americans
are facing in Iraq, minus the collectivity. In Zimbabwe we are
fighting
against our own interest.
This is at the
pedestrian level of the "ignorant" man fighting
to survive today, the man on
the street "without a vision", hopping from one
sub-crisis to another like
fuel, school fees, rent, sugar or a little
foreign currency. It is a
hopeless case of schizophrenia. He imagines that
in being part of the
corruption he can beat it. He is abetting a cause that
is beyond his
comprehension.
Behind the crisis are contending political
power blocs on all
sides feeding the illusion of an intractable problem,
hoping that when the
final implosion occurs it will yield them political
office. This is the nub
of Zimbabwe's economic malaise.
Those who precipitated the crisis can no longer resolve it
because it has
assumed a life of its own. That is why Gono, for all his good
intentions,
still misses the point when he appeals for "economic
patriotism". It's way
beyond that.
The redeeming thing is that his is a crime of
ignorance and lack
of savvy, not of intent. Can he get the real corruption
barons? Otherwise
soon we will witness the return of the biblical seven evil
spirits of zeros.