The ZIMBABWE Situation
An extensive and up-to-date website containing news, views and links related to ZIMBABWE - a country in crisis
Return to INDEX page
Please note: You need to have 'Active content' enabled in your IE browser in order to see the index of articles on this webpage

Tsvangirai under US$1,5m probe

Friday, 05 August 2011 08:48

Dumisani Muleya / Faith Zaba

POLICE are investigating Prime Minister Morgan Tsvangirai in a high-profile
case of alleged fraud involving US$1,5 million in public funds released two
years ago by government to buy a mansion for him in the posh Harare suburb
of Highlands.

Impeccable high-level sources drawn from top government circles, police and
the banking sector said this week the Criminal Investigation Department
(CID) have opened a criminal docket and are intensifying their probe in a
case of alleged fraud which involves Tsvangirai and a close relative, Hebson
Makuvise, Zimbabwe’s ambassador to Germany.

Allegations are that Tsvangirai and Makuvise misappropriated US$1,5 million
which came from the Reserve Bank of Zimbabwe (RBZ) in 2009 to purchase the
house located at No 49 Kew Drive in Highlands. The house, a double storey
mansion, is currently under renovation to ensure it meets standards of
quarters for a premier.

Sources say police are also investigating if Tsvangirai had engaged in
double-dipping by taking money from the RBZ and Treasury for the same
project. They also say besides the US$1,5 million, close to US$1 million
could also have been released from state coffers for the purchase and
development of the same property.

CID chief superintendent Alison Nyamupaguma is leading the investigation
The detectives have been to RBZ, several banks and the courts and trawled
documents in a bid to nail Tsvangirai. Nyamupaguma wrote to the RBZ on July
18 asking for help to gather more information.

Police recently obtained a warrant of seizure from the courts in terms of
the Criminal Procedure and Evidence Act to facilitate their investigations,
particularly to confiscate documents from the banks.

The case is so high-profile that Police Commissioner-General Augustine
Chihuri is also personally involved. Chihuri and his detectives have written
letters to relevant banking authorities mainly last month asking for
information. Police also want to find out if Finance minister Tendai Biti
was aware of how the money was secured and used by Tsvangirai.

Details show that letters have been flying between top police offices,
including that of Chihuri, and the banks as part of the investigations. The
RBZ and four commercial banks, CBZ Bank, ZB Bank, BancABC and Interfin are
involved in the case.

A warrant of seizure dated July 7 targeted at Interfin, one of the banks
involved in handling the US$1,5 million during its various transfers through
the banking system, says the police were looking for “documents and records
which are required as exhibits in a criminal docket”. It says the
information is “necessary for the purpose of investigating or detecting a
case of fraud”.

Police spokesman Wayne Bvudzijena yesterday said he was “not aware” of the
ongoing investigations.
Tsvangirai’s spokesman Luke Tamborinyoka said: “The Prime Minister remains
unshaken about these allegations. If police are investigating the case we
wish them good luck!”

Documents seen by the Zimbabwe Independent show beyond reasonable doubt
police were investigating a case of fraud and have opened a criminal docket.

After the formation of the inclusive government in February 2009, there was
a legitimate expectation on Tsvangirai’s part and the general public that
the new prime minister would move into Zimbabwe House where Mugabe used to
live as premier between 1980 and 1987 and later as president in State House.

The late titular president Canaan Banana lived at State House. Since Mugabe
had moved out of Zimbabwe House to his own privately-owned home in
Borrowdale, Tsvangirai actually had the option to move into State House or
Zimbabwe House.

However, Mugabe apparently blocked Tsvangirai from moving into either of the
two. The premier was reportedly angered by this and when the MDC-T
temporarily withdrew from government in October 2009 this was part of the
issues he raised with Mugabe, apart from the outstanding GPA issues and lack
of communication between him and the president.

Details show that after he was blocked from moving into State House or
Zimbabwe House, Tsvangirai then requested funding from Mugabe to buy a house
to live in. Although Tsvangirai wanted a bigger sum, Mugabe in November 2009
only cleared US$1,5 million for the project.

This came a few days after the MDC-T ended its boycott of cabinet and
government following the Sadc troika summit in Maputo, Mozambique, to deal
with the problem.

Even though Tsvangirai was only given US$1,5 million, it was agreed that if
more funds were needed to buy and renovate the house they would be provided
later. It was not clear at the time how much the house and renovation would

RBZ governor Gideon Gono played a major role in negotiating with Mugabe
before the funds were released to Tsvangirai.
The paper trail of the movement of the $1,5 million through banks shows the
money was transferred from the RBZ in November 2009 into a holding CBZ Bank

After the US$1,5 million was deposited into a CBZ account, Makuvise, who is
close to Tsvangirai, moved the money to a ZB Bank account. While in a ZB
account, US$140 000 was withdrawn and used to buy a residential stand
allegedly for Makuvise.

From ZB Bank, the funds – then US$1,349 million --  were transferred again
to BancABC into Makuvise’s personal account. While there US$99 000 was
withdrawn for unspecified purposes.

Later the money -- reduced to US$1,250 million -- was further transferred
from BancABC to Interfin into an account of a prominent Harare law firm
whose attorneys have represented Tsvangirai.

Police battled with Interfin to secure documents and records. Some of the
international banks involved in the transferring and clearing of the money
included Standard Chartered Bank, New York, and National Westminster Bank,

Documents further show a series of withdrawals were made by Makuvise who
gave his address as 3 Everette Close, Avondale, Harare. The withdrawals
ranged from tens of thousands to a few thousands. For instance in a blitz of
withdrawals, Makuvise last year on February 5 withdrew $10 000, another $10
000 on February 9, $8 000 on February 17, $7 000 two days later on February
19 and $11 000 on February 22. The original sum was drawn down to negligible

ECONET Wireless Zimbabwe Ltd has applied for a High Court interdict to stop
Alpha Media Holdings (AMH), the parent company of the Zimbabwe Independent,
NewsDay and the Standard, from publishing stories on the company which it
deems defamatory.

The mobile phone operator says the Independent ran four articles last month
it feels were defamatory. Econet wants the High Court to bar the Independent
and its sister newspapers from publishing, printing or distributing any
material that casts “aspersions upon their (Econet) competence, integrity or

AMH and its marketing and distribution firm Munn Marketing and the holdings’
printing company Strand Multiprint, website host company Webdev, business
mogul Nick van Hoogstraten and Independent senior business reporter Reginald
Sherekete were listed as respondents.

“Applicant apprehends respondents (AMH) will not stop tarnishing its good
name and will continue to injure their legitimate interests. This is what
has motivated this application,” Econet CEO Douglas Mboweni said in his
founding affidavit that was strangely dated August 25 2011.

Mboweni said the respondents last month acted with “reckless abandon” to
publish material which was defamatory to his company.

“In view of the incessancy of the publications, Applicant reasonably
apprehends the continuance of such publications to their irremediable
prejudice hence the filing of this application,” Mboweni said.  “Much as the
right of the press to throw light remains unquestionable and much as it
remains a basic precondition for civilisation, the same press clearly has no
right to peddle falsehoods, malicious and unfounded allegations calculated
at injuring the good name and standing of Applicant under the thin guise of
freedom of expression.”

Econet said Sherekete acted irresponsibly when he published the articles.
The mobile firm also sought the respondents be interdicted from soliciting
attacks against Econet, interviewing Van Hoogstraten and carrying his views.

“Respondents shall not republish, reprint or re-distribute the material
forming the subject matter of the defamation action instituted by Applicant
or substantially similar matter pending the determination of that action,”
read part of the application.

Econet wants the respondents barred from publishing, printing or
distributing any material which relates to the mobile phone company without
its side of the story.

The order also seeks to compel Webdev to erase all defamatory information on
the Internet concerning Econet.
This High Court application comes just a few days after Econet claimed
US$1,5 million in damages from Alpha Media Holdings, Strand Multi Print,
Munn Marketing, Sherekete and Van Hoogstraten stemming from articles that
appeared  in the Zimbabwe Independent last month. –– Staff Writer.

Click here or ALT-T to return to TOP

Sekeramayi forces CIO boss out of Central Committee

Friday, 05 August 2011 08:56

Paidamoyo Muzulu

CENTRAL Intelligence Organisation deputy director: internal, Elias Kanengoni
has been forced out of the powerful Zanu PF Central Committee by State
Security minister Sydney Sekeramayi.

The move by Sekeramayi to move on Kanengoni gives a hint to the simmering
deep-rooted political tensions brewing in Zanu PF’s Mashonaland Central

Kanengoni will now give up his position as a Mashonaland Central province
representative on Zanu PF’s highest decision-making structure outside
congress and concentrate on his full-time civil service job.

The intelligence supremo confirmed to the Zimbabwe Independent that he had
left Zanu PF following a recent meeting with Sekeramayi to discuss his
untenable position after an “anomaly” was raised in parliament by an MDC-T
MP from Mashonaland Central in November last year.

At that sitting, Mazowe Central MP Shepherd Mushonga asked Sekeramayi to
“explain to the House whether CIO officers are allowed to hold positions in
political parties, as is the case with Kanengoni who was appointed Central
Committee member of Zanu PF”?

Sekeramayi did not immediately respond to Mushonga’s question, but rising
factionalism in the province seems to have forced him to give Kanengoni an
ultimatum to choose between working full-time for the party or the state at
their meeting.

However, in the interview, Kanengoni said the decision to relinquish his
party post and hold onto his position as a senior intelligence operative was
“After meeting Minister Sekeramayi over the matter in question, I decided to
resign from my political position with immediate effect,” said Kanengoni. “I
have since written to the province (Zanu PF Mashonaland Central) advising
them of my decision,” he added.

Kanengoni said he had chosen not to let go of one of his dual roles in the
past because a number of senior civil servants in the current shaky
coalition government also held political office in their parties.

“A number of senior civil servants from the MDC formations also held party
positions and only relinquished them after their recent congresses,”
Kanengoni said.

Although Sekeramayi might argue that he acted in accordance with the Public
Service Regulations which bar civil servants from participating in active
party politics, Kanengoni’s position shows why the country’s security sector
needs immediate reforms to ban serving officials from dabbling in politics,
observers said.

The MDC formations have constantly complained that the security forces have
emerged as the biggest obstacle to democratic reform in Zimbabwe since they
were traditionally loyal to Zanu PF.

They want the security sector to be restructured in such a way that it
prioritises the protection of all Zimbabwean citizens and move away from the
current scenario where service chiefs and some elements of the armed forces,
the police and intelligence community acted as though they were an extension
of Zanu PF’s security department while they drew their pay from taxpayers.

Notorious among senior service personnel is Brigadier-General Douglas
Nyikayaramba who has been accused of brazen interference in politics.
The 3 Infantry Brigade commander has branded Prime Minister Morgan
Tsvangirai a “national security threat rather than a political one” and
called for him and his party to be dealt with by personnel in uniform.

The general also reiterated the service chiefs’ stance that the defence
forces would not accept a leader from outside Zanu PF and called for
President Robert Mugabe to rule Zimbabwe for life.

Meanwhile, Kanengoni revealed that he was still contemplating whether to
contest the Mazowe senatorial seat in the next election.
“I still reserve the right to contest in the next election,”said Kanengoni,
“I haven’t made a decision on that as yet,” he said.

He also reiterated that his daughter, Tabeth, would contest the Zanu PF
primary elections for the right to represent the party in Mazowe Central.
“She will contest the primaries and she is making preparations for the
 race,” said Kanengoni.

“Tabeth has a fair chance of winning the primaries after what she has done
for the community,” he said.
Tabeth would square off with Defence minister Emmerson Mnangagwa’s wife
Auxillia Chinanzvana and local councillor Sydney Chidamba.
Chidamba is reportedly backed by Indigenisation minister Saviour Kasukuwere.

Some Mashonaland Central Zanu PF insiders said Tabeth posed a threat for
Kasukuwere’s faction because she was independent of mind.
“Her perceived independence threatens Kasukuwere who wants to be the
provincial kingmaker,” said a source.

The next general elections are likely to reconfigure Zanu PF’s political
hierarchy in the party’s ever shifting factional sands.
The party had until recently insisted that elections would be held this year
but reality has now dawned on them that the poll can only be held from next
year after a referendum on a constitutional draft.

Click here or ALT-T to return to TOP

Gwaradzimba in contempt of parly

Friday, 05 August 2011 08:55

Paidamoyo Muzulu

SPEAKER of Parliament Lovemore Moyo yesterday ruled that Shabanie and
Mashaba Mines Holdings administrator Afaras Gwaradzimba was in contempt of
parliament but let Justice minister Patrick Chinamasa off the hook on a

Moyo said the Parliamentary Portfolio Committee on Mines and Energy had not
exhausted all channels available to gain access to the SMMH share warrants.
The committee was investigating the status of SMMH since it was placed under
state reconstruction and administration in 2004.

Gwaradzimba was facing charges of undermining and demeaning members of the
committee in an article published in the NewsDay of Friday March 4, 2011.

Chinamasa was facing charges of lying to the committee that he had SMMH
share warrants from T&N (UK) in his possession after the government had
purportedly acquired 100% of SMMH through AMG Global.

“The chair rules that there is a prima facie case against Mr Gwaradzimba
warranting the appointment by the House of a Committee on Privileges to look
into this matter,” Moyo said.

Moyo ruled that the committee had not used summons to cause Chinamasa to
produce the share warrants as required by law. He, however, left the door
open for the committee to pursue the matter at its discretion in accordance
with parliamentary regulations.

“It is the view of the chair that in the interest of efficiently discharging
the oversight function of parliament, the committee has the discretion to
revisit this matter in order to finalise its investigation of this case,”
Moyo ruled.

Committee chairman Edward Chindori-Chininga said they would soon meet to
study the Speaker’s ruling before deciding on the way forward regarding

“We will decide the next course of action against Chinamasa as a committee,”
said Chindori-Chininga. “However, this would be after the committee has
thoroughly studied the Speaker’s ruling,” he said.

If the committee decides to pursue Chinamasa, he would join the ranks of
other high profile parliamentarians to be investigated by the House since

The most recent case involved former MDC-T MP Roy Bennett, who was sentenced
to two years imprisonment for punching and flooring Chinamasa during a
heated debate on land reform in 2004.

Chinamasa had provoked Bennett by insinuating that his ancestors had stolen
land and cattle from indigenous Zimbabweans during the colonial era.
Mines minister Obert Mpofu was fined Z$40 000 in 2007 for giving conflicting
statements about allegations of corruption at the then state-run steel
manufacturing firm Ziscosteel.

Former Rhodesian prime minister Ian Douglas Smith was suspended in 1987 for
making comments praising the apartheid regime of South Africa.
However, the House’s decision was overturned in 1989 by the then Chief
Justice Enoch Dumbutshena who ruled that parliament’s decision violated
Smith’s constitutional right.

Click here or ALT-T to return to TOP

Manyika family suspects Zanu PF cover up

Thursday, 04 August 2011 18:16

Wongai Zhangazha

THE family of the late Zanu PF national commissar Elliot Manyika suspects a
cover up by senior party members over inquiries into his death.
Manyika died in a car accident when his Mercedes Benz is said to have
careered off the road at the 145km peg along the Zvishavane-Mbalabala road
in 2008 while on a Zanu PF restructuring mission.

Police sources said investigations were opened soon after Manyika’s death as
normal procedure, but his relatives approached senior police officers
seeking a special investigation since they suspected foul play.

The family alleged that injuries Manyika sustained and damages to his
vehicle were not consistent with a road accident.
Results of the special investigation would determine if an inquest into
Manyika’s death should be launched.

However, three years after that fatal accident, family members are troubled
by the lack of development in the case.
“There has been no progress and we have never been updated on how far the
investigations have gone unless there are some family members who have been
briefed and chose not to tell the rest of the family,” said a close relative
this week.

“This case has caused a lot of divisions in the family with most saying that
we should just let it go and move on with our lives since we tried to find
out what really happened, but some still have many unanswered questions. We
suspect that there might be a cover up by some members of Zanu PF because we
don’t understand the delay in giving us answers. We actually don’t think
anyone is pursuing the case anymore. The family is now just waiting for his

Police sources said senior detective Crispen Makendenge was in charge of
investigations at one point.
As part of the investigations, a tyre of Manyika’s car was sent to South
Africa for forensic examination.

The police source said the docket on the investigations was yet to be
presented to a magistrate for determination as required by law.
However, Makendenge declined to comment on the matter and referred all
queries to police spokesman Wayne Bvudzijena.

Bvudzijena said he needed time to check on the progress of the
investigations. He said he needed a correct update from those who were
handling the case.
The relative revealed that just before the accident, Manyika had received
death threats from anonymous people.

Click here or ALT-T to return to TOP

Green Fuel project will not be reviewed — Arda

Thursday, 04 August 2011 18:27

Paidamoyo Muzulu

THE ambitious US$600 million 20-year build, operate and transfer Green Fuel
agreement between the Agricultural Rural Development Authority (Arda) and
businessman Billy Rautenbach’s Ratings Investments will not be reviewed.

The Parliamentary Portfolio Committee on Agriculture had called for the
review of the agreement to comply with the country’s indigenisation laws
which state that locals should control at least 51% of all businesses in the

Rautenbach’s company controls 60% of the company while Arda owns the
remainder, according to a memorandum of understanding signed in 2007.
Ratings provided funding and Arda used its land ownership to purchase its

The Green Fuel project is set to create the biggest ethanol plant in
sub-Saharan Africa with an expected output of over 40 million litres a month
when fully operational. Over 5 000 hactares have been put under sugarcane
production for the project in Chisumbanje. More cane will come from 400
contracted out-growers from the surrounding community.

Rautenbach’s company is scheduled to hand over complete operation of the
joint company to government after 20 years. The 20-year period is to allow
Ratings to recoup its capital outlay in the ambitious project.

Arda chairman Basil Nyabadza said although the present agreement was fraught
with inadequacies, it would only be reviewed when the economic environment

“The deal has to be understood from the period it was executed. No one was
willing to invest in the country and the government was only offering land
for its share of equity in the partnership,” said Nyabadza.  “No agreement
is perfect and we will review things as the economic environment improves,”
he said.

Nyabadza added that parliament had not indicated which aspects of the deal
needed to be reviewed, thereby leaving the board confused on what changes to

“Parliament did not tell us which clauses to review. To this day, we are
still waiting to hear which clauses they need reviewed. However, with time,
we will start negotiations with Ratings to increase government’s equity in
the partnership,” Nyabadza said.

The Agriculture Portfolio Committee chairman Moses Jiri told the Zimbabwe
Independent that the House was of the view that the agreement should be

“The agreement is against the indigenisation policy and we hope that Arda
will review it to reflect that policy,” said Jiri. “We intend to call
Agriculture minister Joseph Made before the committee on matters dealing
with this agreement.”

However, Nyabadza feels that Arda was correct on this deal saying: “The
agreement was done in the national interest after the estates were lying
idle for a long time without any investment.”

The Green Fuel project has changed the economic life of Checheche Business
Centre in Chipinge. The growth point has since made representation to Local
Government minister Ignatius Chombo to be upgraded to town status.

The giant ethanol plant will go a long way in saving the country’s resources
by reducing fuel imports. The plant is expected to produce more than 40
million litres of ethanol every month when fully operational.

The Ratings deal, like the Essar/Ziscosteel takeover, proves that the
indigenisation policy is difficult to attain while the country is faced with
a liquidity crunch. Essar recently bought 54% of Ziscosteel.

Ziscosteel had shut down operations and owed over US$240 million to foreign
banks in addition to salary arrears and other outstanding statutory

Click here or ALT-T to return to TOP

Backyard schools: A sign of government neglect

Thursday, 04 August 2011 18:18

Wongai Zhangazha

AS the cold wind blows continuously across the small rooms without window
panes or doors, discomfort is written all over the faces of the youngsters.
While the ideal thing to do would be to position oneself in some corner of
the room there are very limited options.

The floor is bare, cold and dusty, and the walls are not plastered. The
pupils have no alternative but to sit on hard benches supported by bricks.
This is not a juvenile prison but one of the many backyard schools that have
mushroomed around the country.

Lighthouse College, a primary and secondary school situated in a 300 square
metre yard in Dzivarasekwa, is one such example.
While schools are expected to have spacious classrooms with playgrounds and
ablution facilities, Lighthouse College is the exact opposite.
Squeezed in a corner of a house under construction with no toilet
facilities, no playground, no administration offices, no library and no
uniform, nothing at all resembles a school environment at this place.

As they wait for school to start, the pupils wait outside the gate basking
in the sun.
Backyard schools are mushrooming in many of Harare’s high density suburbs
taking advantage of the government’s failure to deliver on its education
obligation due to a struggling economy and a lack of political will.

The situation has become so common that even the government has conveniently
abdicated its responsibilities by turning a blind eye to this increasing
dereliction. The quality of education these mainly underprivileged
youngsters receive at these schools is worrying and if the government
continues to turn a blind eye, the country could soon be plunged into mass
illiteracy in the not too distant future.

Based on the present nosedive in the country’s once solid education system,
the situation is likely to get worse. According to official statistics
contained in the 2011 national budget statement, less than 20% Ordinary
level candidates obtained a pass in 2009 and only 50% of the registered
students managed to sit for the 2009 examinations.

Statistics show that eight percent of school dropouts are children aged
between six and 17 years.
About 26% of primary school classrooms are in need of repairs, 555 primary
and 399 secondary schools have no desks, and worse still, 24% of the country’s
teachers are unqualified.

At this rate, Zimbabwe’s once glowing literacy rate could be relegated to
the country’s history dustbin.
Lack of government commitment to social services was exposed when Finance
minister Tendai Biti presented his midterm fiscal policy review statement
last week.

Foreign travel expenditure far outstrips high-priority capital projects,
such as education and health.
Government spent about US$30 million on foreign travel compared to US$500
000 spent on education.

Basic Education and Assessment Module and student support received less than
US$5 million.
The lack of a well-defined education environment and financial support has
resulted in the springing up of sub-standard educational and training
institutions countrywide.

Biti at one time bemoaned the emergence of “backyard” educational
institutions, which he said were compromising the quality of the country’s
education system.

In terms of the Education Act of 2006, individuals should not establish and
maintain a school unless it is registered.
A Tynwald South parent, Emilia Sibanda, said she opted for backyard schools
thinking it was a better option, but she now regrets sending her children to

“My children were learning at a council school, but I could not afford the
incentives that were demanded by the teacher of US$1 per day. It meant that
I had to pay US$10 at the end of the week for my children on top of the
US$35 fees per term.

“But Lighthouse has been the worst school ever and I regret sending my
children there,” said Sibanda.  “It was a waste of money. They are just
people who want to make money. The children did not learn last term because
they were always shifted from one house to the other because they were not
paying rent,” said Sibanda.

The owner of the house at which Lighthouse operates said she was left with
no choice but to fire the “school officials”.
“The headmaster had no experience whatsoever and there were no qualified
teachers. The school was being run worse than a school in the rural areas. I
felt that I was not doing justice to the children and decided not to
associate myself with these people. Imagine in the room that is the dining
room, there would be about three grades learning in one room. One teacher
has to shout to each grade to listen attentively while others are quiet as
she gives them work. She then shouts that the other grade must listen while
they are also given the work. That’s the confusion children have to go
through. I wonder why parents send their children to such schools,” Sibanda

They didn’t learn anything and spent most of the time out of school because
the so-called school authorities were not paying their rent.
“They just didn’t know how to handle the children and how can children have
geography lessons in Shona? It’s pathetic,” she said.
Educationalist Godfrey Museka said the backyard schools were producing raw
children who would face difficulties when they entered higher education

“People have generally lost faith in public education including the Zimbabwe
Schools Examinations Council,” said Museka.
“Parents have resorted to sending their children to private schools thinking
that it is the best option where they can be taught without any disturbances
like teachers going on strike and so forth.

“However, most of these backyard schools are not registered and most of the
teachers are unqualified. The end product is raw kids who know nothing. They
are not properly prepared for any higher education. Government must
immediately do something about this,” he said.

Education minister David Coltart said his ministry had recently procured 59
vehicles that were going to be used by district educational officials to
monitor and curb indiscipline and illegal schools operations which have
crept into the country’s education system.

“These unregistered schools have been a problem for some time and one of the
main problems has been the inability on government’s part to monitor the
situation on the ground to check if they are registered and operating within
the country’s laws,” said Coltart.

“We have about 73 district offices in the country and the vehicles we have
acquired will enable us to closely monitor schools. Those schools operating
illegally will be shut down in due course.”

Coltart revealed that it was impossible for a school operating from a rented
house to have basic facilities expected of a formal school.
He said applications for accreditation of schools involved a bureaucratic
process and thorough inspections had to be carried out on all premises
earmarked for housing a school.

“Anyone applying for a licence to operate a school has to go through the
provincial education director. There are certain building regulations that
they must satisfy us with and a lot of inspections are done in terms of the
health and safety of the children and other basic standards expected of a
school. If the building does not comply, the application would be rejected,”
said Coltart.

Click here or ALT-T to return to TOP

Indigenisation policy: More questions than answers

Thursday, 04 August 2011 17:41

Happiness Zengeni

WITH essential issues still on the table as the September deadline for the
submission of indigenisation proposals approaches, the Youth Development,
Indigenisation and Economic Empowerment ministry is yet to give a clear
outline on the implementation of the policy, particularly on the composition
of the thresholds and the Sovereign Wealth Fund (SWF).

At the Indigenisation Indaba held recently, minister Saviour Kasukuwere said
government would take a minimum 51% shareholding, which would be directed
towards three beneficiaries that will gain from the empowerment of the
mining sector. Under the plan, the community where the resource is found
will get 10%, the workers 10% while the remainder will be put into the
Sovereign Wealth Fund, which would be the national reservoir of resources.

And this is all based on the valuations of the minerals in a particular
location. According to Kasukuwere, the private sector will be left out as
there is need to avoid white-owned companies using black people as fronts as
happened in South Africa.

The government said it will target all companies with net asset values of
one US dollar or more, and where the investment is less than the value of
the asset government will end up owning, for instance as in areas like

To date no further information has been given about how this SWF will be set
up and how it will be aligned to the nation’s fiscal system, save for the
examples that the funds have been successful in some countries where they
have been implemented, such as China.

SWFs are defined as a special purpose investment fund or arrangement, owned
by the general government. Created by the government for macroeconomic
purposes, SWFs hold, manage, or administer financial assets to achieve
financial objectives, and employ a set of investment strategies.

Based on the source of funds there are two objectives that the minister can
follow in setting up an SWF in Zimbabwe. Firstly, as a reserve investment
that aims to enhance returns on reserves, and secondly, as a development
fund which uses returns to invest for development purposes. Whatever route
is followed, it is important that it has to be consistent with the overall
macroeconomic framework of the country.

Appropriate coordination between the SWF and the fiscal and monetary
authorities is critical to achieve a country’s overall policy objectives in
the context of which an SWF is established. It has to go beyond a PowerPoint
presentation at some conference and move over to implementation. The
ministers of Economic Planning and Finance left it out in their policy

There has to be a properly laid out plan and structure of the SWF as an
entity. Will it be set up as a unit under the Reserve Bank of Zimbabwe, the
ministries of Finance, Mines, Youth Development, Indigenisation and Economic
Empowerment, or maybe will it run as a separate legal entity?

However they are going to set it up it will be complicated. Regardless of
any governance framework that they will lay down for it to conduct its work
independently, it will be prone to political influence or interference.
Globally, the majority of governments have been known to fan corruption and
raise unemployment levels, thereby stopping the continuity of income.

There is currently a lot of debate on whether this fund then will only
benefit government. The most vocal of the empowerment groups, the
Affirmative Action Group (AAG), has openly said (assuming they want to be
the immediate beneficiaries) that government should not benefit at all from
the system, but rather the people should.  Government cannot be creator of
wealth; it can only be at best a facilitator, an enabler.

The focus should be on the development of an enabling economic environment
that is conducive for the development of local entrepreneurs and that also
channels the Essars and other foreign direct investors into Zimbabwe.

According to, globally SWFs are worth roughly around US$2,704
trillion, with Norway having the most successful at US$560,5 billion.  The
sources of most of these funds are commodities, particularly oil. It could
work in Zimbabwe, but to date even the minister concerned has been
inconsistent in his proclamations.

What has also not been clearly laid out is how the communities will benefit
from the 10% stake. Statutory Instrument 134 lays out how communities will
participate in the programme and how they will draw down benefits. According
to Kasukuwere, traditional chiefs and the rural district councils will be
involved and take the central role. What has not been pointed out is how
this will benefit the whole community.

Firstly, there has to be a fund which should be created to provide an
opportunity for the people to directly and indirectly acquire shares, with
equal access being granted to all.  Those with central roles will get board
representation, the aim being to make them decision makers. Overall, the
policy must directly impact on the lives of those purposefully and
systematically left out of the economy and not just a random selection of
those known in the community.

Attempting to paint the indigenisation policy as a people-centred strategy
in word has already created a lot of debate and the key is to handle it
carefully. The fluid nature of capital should guide policy makers and they
should take note of the contributions from the Reserve Bank of Zimbabwe,
Chamber of Mines and other proactive business people and scholars. For
Zimbabwe, the challenge is to facilitate the sustainable transfer of wealth
through a transformative, rather than a destructive policy.  But already
there are proclamations by Zanu PF members that the whole programme is a
party policy just like the BEE is an ANC policy.

Click here or ALT-T to return to TOP

Ministers clash over Hwange Colliery AGM

Thursday, 04 August 2011 16:08

Reginald Sherekete

DEPUTY Prime Minister Arthur Mutambara this week clashed with Mines minister
Obert Mpofu on whether Hwange Colliery Ltd should hold its annual general
meeting with the senior government official ordering management and a senior
bureaucrat not to participate at the meeting.

But Mpofu’s orders to fire the board at the meeting carried the day after
shareholders voted for the removal of the current board.
This came after board chairman Tendai Savanhu, who is a Zanu PF politburo
member, Hwange Colliery Ltd MD Fred Moyo, Valentine Vera, a director in the
Mines ministry were called to a meeting on Tuesday and ordered by Mutambara
not to proceed with the AGM.

Savanhu indicated at the AGM that he had the backing of Mutambara and the
acting Mines minister Nicholas Goche, who had clearly affirmed to him the
meeting would not proceed and was illegal.

Goche is currently acting Mines minister since Mpofu is away in China.
But shareholders, led by controversial businessman Nick van Hoogstraten and
Vera went ahead with the meeting ,prompting Savanhu to make incessant calls
to senior government officials to stop it.

Vera was seen twice being handed a cell phone by Savanhu as the chairman
sought to rein in the government official. Vera eventually pulled out of the
meeting after extensive private consultations with Savanhu, who is believed
to have been seeking higher authority from government to bar the meeting.
“I am officially pulling out of the meeting,” said Vera as he left with

Confusion ran riot among minority shareholders as to whether government was
still participating in the meeting after Vera pulled out.
Before the meeting started, Savanhu announced he would not participate,
citing procedural issues leading to the convening of the meeting.

He said: “I am also appointed by government and was consulted by government.
I stand by the notice of the board that the meeting was not properly
constituted. I have only seen the agenda of the meeting today. Therefore,
according to government, there is no meeting.”

Vera, who was holding the government proxy, then claimed to be the rightful
representative and was under instruction from Mpofu to proceed with the

After a heated debate among major shareholders and minorities, Savanhu
decided to adjourn the meeting, saying shareholders who wanted to proceed
with the meeting could do so.

“I am adjourning this meeting and if any shareholder wants to proceed with
it he/she can do so, but l will not be liable for any consequences of the
outcome,” said Savanhu as he walked out.

Board directors Fortune Chasi, Rosemary Sibanda, and Shingai Mutumbwa also
left with Savanhu.
The company lawyer Simplisius Chihambakwe advised shareholders that an AGM
was a shareholder’s meeting, not a directors’ platform, and that
shareholders’ had the mandate to nominate another director present, or any
other shareholder, to chair the meeting, in the absence of Savanhu.

Van Hoogstraten, the second largest shareholder in Hwange, seconded
Chihambakwe and ordered James Nqindi, a non executive director, to chair the

Nqindi is believed to be van Hoogstraten’s employee. “When I tell you to
stand up, you stand up,” Van Hoogstraten ordered Nqindi.
The new elected board members included Shingirayi Chibanguza, Jemmister
Chininga, Chamunorwa Haruperi, Nkosilathi Jiyane, Siphiwe Mapfuwa, Johnson
Mawere, Farai Mutamangira, Lucas Nkomo and Vera.

Mlawuli Manjingolo was the only member not elected from the nominated board
members after shareholders cited possible conflict of interest, given he
represented Mittal Steel, a key coking coal consumer.

Confusion further rocked the meeting as minority shareholders were left
wondering on the correct position of government and many called for the
board and the major shareholders to come to terms on the way forward.

Ousted director Chasi lambasted the poor standards which the major
shareholders were exhibiting since Hwange is also listed on the Johannesburg
Stock Exchange and the London Stock Exchange, where such flawed corporate
governance standards fret investors.

“We do not accept orders from the Minister of Mines because it is not good
corporate governance standards. We are a listed company and should conform
to the Zimbabwe Stock Exchange regulations and provisions of the articles of
association,” said Chasi.

Afterwards, Savanhu, Chasi and Mutumbwa called for a press conference and
dismissed the AGM as a “nullity.”
“What happened today (meeting) was a nullity,” said Savanhu. “Vera’s pulling
out means he no longer had the right to represent government. As chairman,
neither did I receive a proxy from Vera nor a letter from government
confirming that he could vote in the meeting.”

But since Vera had handed over his proxy 48 hours before the meeting to the
company secretary, all items on the agenda of the meeting were passed.
Hwange has been making headlines during the week as contradictory notices as
to the holding of the company’s 88th annual general meeting were being

“Government should govern and must not be involved in the business of
digging coal,” said an emotional James Logan, a shareholder present at the

Meanwhle, van Hoogstraten said: “The intention of nominating directors is
not so that ‘my voice can be heard in the boardroom’. For at least the last
10 years I have had three of ‘my’ nominated directors on the board and not
once have they needed to raise a personal agenda for myself.”

“A director is at all times expected and required to act in the interests of
the company and not even in the interests of his sponsor, if that interest
is perceived by him not to be in the best interests of the company. On
matters of interest to the sponsor, the nominated director should recuse
himself from the meeting.”

It emerged that Mpofu wrote a letter to Hwange board members representing
government ordering them to step down before the meeting.
Savanhu confirmed receiving a letter from Mpofu but argues his exit should
be procedural.
Savanhu said: “It’s true that we received a letter from Mpofu firing the
board. Mpofu thinks Hwange is a parastatal where you can just fire the board
by writing a letter. Hwange is a listed company. You put a notice of such
intent to shareholders, who can then vote on the matter.”

Click here or ALT-T to return to TOP

Econet seeks to gag Alpha Media

Friday, 05 August 2011 08:53

ECONET Wireless Zimbabwe Ltd has applied for a High Court interdict to stop
Alpha Media Holdings (AMH), the parent company of the Zimbabwe Independent,
NewsDay and the Standard, from publishing stories on the company which it
deems defamatory.

The mobile phone operator says the Independent ran four articles last month
it feels were defamatory. Econet wants the High Court to bar the Independent
and its sister newspapers from publishing, printing or distributing any
material that casts “aspersions upon their (Econet) competence, integrity or

AMH and its marketing and distribution firm Munn Marketing and the holdings’
printing company Strand Multiprint, website host company Webdev, business
mogul Nick van Hoogstraten and Independent senior business reporter Reginald
Sherekete were listed as respondents.

“Applicant apprehends respondents (AMH) will not stop tarnishing its good
name and will continue to injure their legitimate interests. This is what
has motivated this application,” Econet CEO Douglas Mboweni said in his
founding affidavit that was strangely dated August 25 2011.

Mboweni said the respondents last month acted with “reckless abandon” to
publish material which was defamatory to his company.
“In view of the incessancy of the publications, Applicant reasonably
apprehends the continuance of such publications to their irremediable
prejudice hence the filing of this application,” Mboweni said.

“Much as the right of the press to throw light remains unquestionable and
much as it remains a basic precondition for civilisation, the same press
clearly has no right to peddle falsehoods, malicious and unfounded
allegations calculated at injuring the good name and standing of Applicant
under the thin guise of freedom of expression.”

Econet said Sherekete acted irresponsibly when he published the articles.
The mobile firm also sought the respondents be interdicted from soliciting
attacks against Econet, interviewing Van Hoogstraten and carrying his views.
“Respondents shall not republish, reprint or re-distribute the material
forming the subject matter of the defamation action instituted by Applicant
or substantially similar matter pending the determination of that action,”
read part of the application.

Econet wants the respondents barred from publishing, printing or
distributing any material which relates to the mobile phone company without
its side of the story.

The order also seeks to compel Webdev to erase all defamatory information on
the Internet concerning Econet.

This High Court application comes just a few days after Econet claimed
US$1,5 million in damages from Alpha Media Holdings, Strand Multi Print,
Munn Marketing, Sherekete and Van Hoogstraten stemming from articles that
appeared  in the Zimbabwe Independent last month. –– Staff Writer.

Click here or ALT-T to return to TOP

Strike costs AirZim US$2 million

Thursday, 04 August 2011 16:13

Paul Nyakazeya

AIR Zimbabwe has lost nearly US$2 million in potential revenue, following
the cancellation of flights because of a pilots’ strike.
Pilots stopped work on Friday last week, demanding to be paid their
outstanding allowances backdated to April this year.

The national passenger airline owes its other workers about US$9,6 million
in unpaid salaries and allowances. An insider said about 65% of the staff
has not been paid since April.

The strike by 42 pilots has paralysed return flights on the airline’s
lucrative Harare-London, Harare-Johannesburg, Harare-Victoria Falls and
Harare-Bulawayo routes.

Air Zimbabwe board chairman, Jonathan Kadzura on Wednesday told
businessdigest that the board was still negotiating with the pilots and was
optimistic that a long-term, “lasting” solution would be reached between the
two parties. He said it was sad that the airline had lost more than a
million US dollars in potential revenue inside one week, but the airline
would continue to operate.

“We are still negotiating. Despite the potential revenue running into
millions that the airline has lost, we will continue to breathe,” he said.
Insiders said the airline would deposit nearly half of what they owe the
pilots into their bank accounts by the end of the week.

Pilots are being paid between US$1 200 and US$2 509 monthly. The pilots are
also supposed to get up to US$10 000 in monthly allowances before tax.
According to insiders at the national airline, a total of 405 passengers who
were booked on Air Zimbabwe were stranded in London as of last week.
Officials said this week the Boeing 767 plane which plies the Harare-London
route had been overbooked, leaving some passengers stranded. It carried 197

Air Zimbabwe flies to London twice a week on Sunday and Wednesday and
returns to Harare on Monday and Thursday.
A return ticket to London costs between US$1 132 and US$1 400, while a one
way ticket costs between US$595 and US$750.

According to figures to hand Air Zimbabwe has lost US$1 024 400 in potential
revenue from this route following the cancellation of the two flights.
Air Zimbabwe also flies to Johannesburg twice a week on the Boeing 737,
which carries 105 passengers at a cost of between US$385 and US$415 a

A total of US$819 000 in potential revenue from that route is said to have
been lost since Friday last week.
Air Zimbabwe has also lost US$64 960 in potential revenue after cancelling
daily flights between Harare and Bulawayo. The route is serviced by the
Modern Ark (MA) 60. A return ticket costs between US$230 –US$250 to fly to
Bulawayo from Harare.

According to bookings and reservations for passengers flying to Victoria
Falls from Harare, the national airline has lost US$53 830. Air Zimbabwe
flies to Victoria Falls on Monday, Tuesday, Thursday and Saturday. The
potential revenue in the period under review is said to be US$1 962 190.

These figures do not include meals that Air Zimbabwe had to pay for the
stranded passengers. Unlike the first pilot strike early this year, Air
Zimbabwe did not pay hotel bills for travellers who had to be booked at
different hotels.

The fourth strike by Air Zimbabwe pilots comes at a time when the Zimbabwe
government is accused of taking long to grant airline licences to nine
airlines that have proposed to fly into Zimbabwe this year, in a development
that could have seen increased traffic and revenue for the tourism sector
had applications been approved.

The airlines are –– Air France, Austrian Airlines, Egypt Air, Swiss Air,
Bulgarian Airlines, Qantas, Emirates Airways, KLM and Lufthansa.
However, some aviation experts said the Zimbabwean government was reluctant
to grant the airlines licences to fly into the country as they would offer
stiff competition to Air Zimbabwe, which they want to protect.

Click here or ALT-T to return to TOP

We need 18 hours of power supply –– CZI

Thursday, 04 August 2011 16:01

Paul Nyakazeya

LOCAL industries need at least 18 hours of uninterrupted power supply per
day in order to operate at optimum levels, according to the Confederation of
Zimbabwe Industries (CZI).

At its just ended annual general congress, the CZI resolved that its main
task was to seek a guarantee from Zesa that it ensured that power supply.
The congress was held under the theme “From Stabilisation to Growth:
Imperatives for Zimbabwe Industry.”

CZI president Joseph Kanyekanye said other resolutions agreed upon this year
were that labour laws should be reviewed so that they are more flexible and
improve the competitiveness of business,  that lending rates should be 15%
and below and that genetically modified organisms (GMOs) should be embraced
in the country.

Kanyekanye said CZI would forward the resolutions to government, adding the
business body would follow up to make sure they were addressed for industry’s
revival and the growth of the economy.

Among other issues that were raised at the congress and needed attention
were anti-business laws in the country, the uncertainty surrounding the
drafting the country’s constitution, Zimbabwe Revenue Authority’s punitive
operations, the optimum use of the country’s natural resources, foreign
direct investment  and the fate of the unity government.

However, of all the issues raised, power supply took precedence. Kanyekanye
said erratic power supplies had forced industry to drastically reduce
production levels at a time when the Zesa was saddled with foreign debt and
had obsolete equipment at Hwange and Kariba power stations.

“We need at least 18 hours of power supply as well as a new power station,”
he said.
He said government must allow the importation of power by private companies
and revoke unutilised licences on power projects and issue them on the basis
of timelines and a financial plan, among other considerations.

“The pre-occupation with feasibility studies should not delay power
generation projects. An independent regulator must be established and be
appointed through Parliament,” Kanyekanye said.

“The use of alternative sources of energy must be actively promoted.
Returning the old thermal power stations to local authorities should be on
the basis of increased output and improved efficiencies,” he added.

Power supply was also one of the major issues discussed at last year’s CZI
annual congress which was held under the theme. “A paradigm shift for
economic growth and development.”

The CZI says labour laws should be reviewed so that they are more flexible
and improve the competitiveness of business. It propounds that remuneration
adjustments must be linked to productivity and arbitrators should work
within this framework.

On interest rates, the CZI said banks and the National Social Security
Authority had to reduce lending rates  to 15% and below.
“We urge them (banks) to continue to reduce towards LIBOR plus 5%,”
Kanyekanye said.

The CZI  said there was need to embrace GMOs as there was no scientific
evidence linking them to harm. The industrial body would work with relevant
authorities to communicate the correct position on GMOs.

Click here or ALT-T to return to TOP

The disaster is closer to home Cde Chombo

Thursday, 04 August 2011 17:53

MUCKRAKER was intrigued by Nathaniel Manheru’s column last weekend which
seemed designed to impress us with his importance.
It was about a meeting between President Mugabe and what sounded like Ronald
Reagan. After Reagan had finished speaking, Mugabe attempted to reply.
Sadly, he wasn’t allowed to because Reagan had other commitments, or at
least his aides claimed he had.
Why Manheru should have treated us to this little vignette is difficult to
say, except of course to illustrate how clever he is in comparison with the
editor of this newspaper.
He is so clever in fact that he is allowed to write forests of column inches
without any editorial restraint, a fact that doesn’t reflect very well on
those who so indulgently accommodate him! His contributions obtain no
benefit at all from the extra acres Manheru invades and occupies on a weekly
basis. Then of course there was the time he was so busy showing off that he
mixed up Harold Wilson and Harold Macmillan.
Last Saturday we tried to cut through the dross to interpret why he should
have waxed so indignant about Constantine Chimakure. Then it occurred to us
in a flash. The previous Friday George Charamba had been laying down the
law –– literally –– on the role of the Zimbabwe Media Commission and how the
Voluntary Media Council of Zimbabwe fitted into that. It was a little
lecture from on high and as Chimakure pointed out, we have our own ideas of
where to put the ZMC!
So Charamba should spare us his funny little homilies and his anecdotes from
years gone by and tell us what steps he is taking to remove himself as an
outstanding issue so the country can have a professional public servant in
that job.

There has been very little comment on the riots that took place in Malawi
two weeks ago. The country’s civil society has been excoriating about the
record of President Bingu waMutharika. He sacrificed the country’s essential
aid programme because a UK cable published by WikiLeaks described him as
“autocratic and intolerant”.
Isn’t that fair comment?
Nineteen people were killed in the riots in Blantyre. Malawi’s economy has
been sacrificed on the altar of pompous self-regard. Couldn’t many African
presidents be described as intolerant? And needless to say, he is one of
Zimbabwe’s few remaining allies in the region. Then there’s the wife. That’s
another story!

We were interested to read David Coltart’s remarks in The Australian ahead
of his visit to Sydney last week.
He was evidently anxious to dispel claims that President Mugabe was a
“No, he is not a monster,” he said.
“He is not Idi Amin… Fewer people are being murdered.”
Mugabe is a complex individual, Coltart  tells us. He even enquired after
Coltart’s daughter who had been injured in an accident.
It was such things that gave room for optimism, he felt.
Which is all well and good. But did Coltart tell his audience about the
disappearance of his election agent Patrick Nabanyama? Or the fate of MDC
officials who were incarcerated after being implicated in that case?
Then of course there was the LRF account (which Coltart helped to author) of
the thousands of people murdered in the Gukurahundi. Was any of that
It is one thing for Coltart to feel flattered, quite another for him to let
Mugabe off the hook marked Matabeleland 1982-1987. That will require
something more substantial. And Coltart should say so.

Muckraker is delighted to hear the news from Caracas. Hugo Chavez and Noam
Chomsky have fallen out.
Chavez has long considered Chomsky one of his best friends. He has basked in
his praise for Venezuela’s socialist revolution and echoes his attacks on US
imperialism, the Guardian reports. But now these two intellectual
heavyweights have quarelled after Chomsky accused Chavez of amassing too
much power and making an assault on democracy.
In particular Chavez has refused to heed Chomsky’s pleas for the release of
a notable judge. Chomsky accuses Venezuelan authorities of cruelty in
detaining the judge, a “glaring exception in a time of worldwide cries for
Chavez is rapidly running out of friends. First he alienated Brazil, then
Argentina. But Chomsky, it may be argued, was more important than either
He was a towering intellect whose book Chavez marketed during his visit to
the UN General Assembly a few years ago when George Bush was present.
Hot air balloon Tafataona Mahoso will have a problem choosing because he
admires them both. Chomsky accused Chavez of intimidating the judiciary and
adopting enabling powers to circumvent the national assembly.
Still in South America, what happened to the president’s proposed visit to
Ecuador? He had every chance to drop in there on his return from the UN
where he attended a youth conference. Why are we not being told why that
trip was cancelled? Also, why was he never invited to Venezuela?
Did Herald readers notice the reading material on General Chiwenga’a
bookshelf last Saturday? It was Tony Blair’s autobiography. This is where
Zanu PF got the silly story about a British invasion. In fact the UK Defence
minister is quoted as dismissing any such project. Nobody in Britain took
the claim seriously, but it was grist to the mill for the gang around
Blair repeated recently Britain’s offer to release funds for land reform so
long as the UNDP agreed to a credible programme.
On the subject of political studies, students should know that the Speaker
of the House of Assembly is known as the Speaker of Parliament. Muckraker
mentions it in passing because there was recently an attempt to mislead
people on that score.

Government says it will not hesitate to dismiss corrupt councillors from
across the political divide whose actions negatively impact on service
delivery, ZBC reported on Sunday.
The warning comes after MDC-T councillors, who dominate most urban local
authorities, “have made headlines for all the wrong reasons with the latest
being allegations of accumulation of ill-gotten wealth”.
Ironically Local Government minister Ignatius Chombo is at the forefront of
making the allegations. According to the report Chombo said reports
indicating that councillors are looting council resources for personal gain
show the calibre of people who were chosen in the 2008 harmonised elections.
“There have been reports that have reached my office that councillors are
living lavish lifestyles that cannot be accounted for,” Chombo said. “If
they are found to be abusing council resources, I will just fire them. The
law is very clear and no one should cry foul,” he said.
“All local authorities run by MDC-T councillors are a complete disaster,” he
said. “Zimbabwe is a democratic country but the parties should have set
standards for the candidates because we cannot have a local government
system run by small boys, who are careless and corrupt,” he said.

This is rich coming from Chombo who has acquired vast tracts of land and
property across the country under controversial circumstances. While we do
not condone any instances of corruption from whichever party, we find it
laughable that Chombo should have the temerity to describe others as having
lifestyles they cannot account for.
He is a “complete disaster”. Who can forget Chombo pushing out elected mayor
of Harare, Elias Mudzuri, replacing him with the Sekesai Makwavarara-led
commission. Harare and indeed most municipalities are still to recover from
Chombo’s meddling over the years.
Residents watched Harare, once one of the cleanest cities in Africa,
degenerate into a cesspool of waste and decay under the Makwavarara-led
Who is the disaster here?

We were concerned by the interest registered by Youth minister Saviour
Kasukuwere in Big Brother Amplified co-winner Wendall Parson. Kasukuwere was
among the first to issue a congratulatory message.
“We are proud of his achievement,” he said. “We would like to call upon the
nation to rally behind Wendall and expect a huge turnout at the Harare
International Airport when he comes back,” Kasukuwere said.
Muckraker hopes that there is no intention to “indigenise” Wendall’s money
by demanding a 51% stake. And by the way, what happened to Munya?

Two editors this past week got rapped for doing their job. One was our own
Constantine Chimakure for calling for media reforms and the other South
Africa’s City Press editor-in-chief Ferial Haffajee for unearthing ANC Youth
League president Julius Malema’s trust fund scandal.
Sowetan columnist Eric Miyeni had launched a scathing attack on Haffajee in
his column titled “Haffajee does it for white masters”.
In his column Miyeni said Malema “must never answer a Ferial Haffajee”.
“Who the devil is she anyway if not a black snake in the grass, deployed by
white capital to sow discord among blacks?” he declared.
“In the 80s she’d probably have had a burning tyre around her neck.”
Luckily Sowetan readers will be spared any more disgust at reading Miyeni’s
rants as his column was immediately discontinued.
Sowetan acting editor, Len Maseko, said Miyeni’s column has been
discontinued with immediate effect.
“Avusa Media and the Sowetan newspaper are committed to free, fair and
robust debate,” said Maseko.
“However, the expression of these views should not be accompanied by the
promotion or condonation of violence against those who hold differing views.
In his latest column Miyeni crossed the line between robust debate and the
condonation of violence.”
How many times have the Manherus and Jonathan Moyos of this world crossed
that line?

Meanwhile, as mentioned in our introductory remarks, closer to home
Chimakure was on the receiving end of personal attacks from Manheru for
having called for media reforms. Apparently Manheru was stung by Chimakure’s
call for the implementation of the Government Works Programme which, among
other things, is mandated to democratise the media space by introducing two
Bills — a Freedom of Information Bill and Media Practitioners Bill.
Chimakure went on to question how –– as George Charamba postulates –– the
Voluntary Media Council of Zimbabwe could be formed under the auspices of
the Zimbabwe Media Commission as a statutory body when it is supposed to
remain voluntary.
This elicited a venomous response from Manheru, with attacks on the person
of Chimakure. Fortunately Manheru’s readers were not fooled. A reader stated
that: “After reading through this article with its expletives, I expected to
be educated on where Chimakure erred. I can’t find it. What has caused him
(Manheru) to be so incensed? Does he think Zimbabweans are dumb? Thanks to
the Internet, everybody can now dissect his stupidity online and not have to
depend on the useless Herald.”

Some questions that need to be asked, a reader submitted last weekend.
“If the Chinese are classed as indigenous, can they vote? How many Chinese
are there in Zimbabwe? And when will we have a Chinese president?”
Don’t laugh. Have you done a head-count recently?
Muckraker visited a Chinese restaurant last weekend. The lady proprietor had
a Zimbabwean translator to say “Good evening, you are welcome”. She has been
in the country some 10 years. There is no need for her to learn any English.
Everybody she knows speaks Chinese.

Click here or ALT-T to return to TOP

Abysmal mid-year budget review

Thursday, 04 August 2011 17:45

A FEW days before Minister of Finance Tendai Biti presented his mid-term
Fiscal Policy Review for 2011 to parliament, the South African media
reported that at the preceding cabinet meeting, the minister had severely
angered President Robert Mugabe and  Zanu PF ministers by voicing intents to
cut budget allocations for defence, police, intelligence, prisons, war
veterans, foreign affairs, special services, and international travel.

With the frequency that the media has a tendency to cite speculation and
rumour, it was inevitable that many readers  assumed the reports of that
contentious cabinet meeting were nothing but speculation and rumour.

The reports pandered to the readers’ recognition of Zimbabwe’s gross
over-spend on these areas, to the immense prejudice of attaining the
economic recovery desperately needed to alleviate the poverty, suffering and
stress of Zimbabwe’s population. That readers of the press reports of the
alleged cabinet confrontations and hierarchy anger did not doubt the
veracity of those reports was compelling.

Irresponsible overspending had been a Zimbabwean government characteristic
for many years, vigorously pursued long before the inclusive government came
into being, and therefore symptomatic of the Zanu-PF fiscal policies.
Therefore, a divide between the leaders of Zanu PF and its partners in the
so-called inclusive government was assured.

Days later, on Tuesday July 16, the minister presented his review.  It was
commendable in that he readily identified some of the key challenges that
continue to confront Zimbabwe’s economy, even if in so doing, he undoubtedly
further alienated and aggravated Zanu PF.  He stated that amongst the
pronounced hindrances to the comprehensive economic recovery are:

    The political environment (which continues to be highly confrontational,
disrespectful of law, disrespectful of property and human rights, and a
deterrent to investment and lines of credit, as well as to developmental

    An absence of fiscal space and alternative financing instruments;

    Lack of implementation capacity;

    Slow pace of reform; and

    Unsustainable debt.

However, he failed to identify the  negative consequences of the foolhardy
manner in which Zimbabwe is pursuing much needed indigenisation and economic
empowerment, and in which it is failing to make land reform fully effective,
as well as its continuing and economically destructive alienation of much of
the international community.

And whilst a Minister of Finance cannot alone bring about the policy changes
necessary if Zimbabwe is to be set upon a path of real and meaningful
recovery, instead of only very nominal and marginal economic growth, and
that growth being at great risk of being reversed in the absence of the
necessary policy changes, his mid-year budgetary measures did naught to
prevent that reversal, nor to achieve even slight real ongoing growth.

llustrative of the very negative facets of the budget review were:
lBiti reiterated his fixation that the mining sector has “an
over-accommodating tax structure”. This has been his contention for some
time, but it is devoid of foundation.  Although mining companies are
beneficiaries of a lesser rate of income tax than pertains to other sectors,
they are subjected to many other imposts.

These include, amongst others, mining licence fees, royalties, withholding
taxes, and numerous others (direct and indirect), to an extent that many are
subject to aggregate taxes as great as 68% of their income.

The development of mining, which had progressed significantly since 2009,
has since been grievously curbed by indigenisation minister Saviour
Kasukuwere’s recurrent emphatic insistence upon not less than 51%
indigenisation within the next two months. Biti’s repeated intimations to
increase the sector’s taxation commitments compounds the now intensive
investor reservations and reluctance to increase production of existing
mines, and to develop new ones.

    The minister correctly identified the tragic decline of the once
vibrant textile industry. He noted that the decline was of such magnitude
that whilst the textile sector had employed over 18 000 workers in 2009,
employment numbers had declined to 7 500 in 2010, and further to 3 000 in
2011. He also recorded that capacity utilisation had fallen from 2010’s low
30% to a current 8%, and that one of the main causes of the continuing
decline is the influx of imports. But he proposed nothing to address that

Months ago, he reduced the customs duty on textiles, clothing and footwear,
claiming that so doing would “provide modest protection to the local
industry and discourage smuggling”. In his review, he acknowledged that
imported clothing, textiles and other products “continue to flood the
 market”. That is unsurprising, for the reduced duties enhances import
product competitiveness, but nothing was proposed in the fiscal review to
address the industry’s crisis circumstances. At the very least, the duty
rates should have been reverted to prior levels, together with intensified
actions to contain smuggling.  Very justifiably, he has sought to give duty
protection to manufacturers of food products, but failed to do so for other

    In order to minimise tax evasion, government has been pursuing the
mandatory installation by all Vat registered operators of fiscalised devices
for the recording of taxable transactions, and for valid reasons has
extended the compliance date. But the extension is minimal in extent, to
October  1 2011, and with almost all enterprises being grievous victims of
under-capitalisation and gross illiquidity as they cannot fund the
acquisition of the devices without endangering their survival. Even the
empowerment of the Commissioner-General of the Zimbabwe Revenue Authority to
grant a further 90-day extension does not suffice. There is a right and a
wrong time for fiscal measures, and 2011 is irrefutably the wrong time to
enforce the installation of the devices.  The consequential collapse of
businesses will intensify unemployment, reverse any economic recovery, and
diminish the tax flows to the fiscus.

Many months ago, the minister disclosed that government has approximately 75
000 “ghost workers”. Instead of dynamic action to address that fiscally
catastrophic, corrupt circumstance, apparently nothing has as yet been done,
for in his review the minister said there is a “need of investigation and
scrutiny,” and that that would realise wage bill savings. Even if each of
those 75 000 are on minimum wage, the cost to government, and therefore to
taxpayers, is at least US$17,6 million per month!  Saving such amount should
have greater urgency than forcing private sector to install unaffordable
fiscal devices.

These, and many other defects, rendered the review appallingly abysmal.
Virtually the only redeeming features were that the minister has confirmed
the critically necessary continuance of the multiple currency system, the
intention being to compensate for demonetised Zimbabwean currency (even
minimal in extent), and the prescription that all traders must transact at
the daily official cross rates of the currencies in use.

Undoubtedly hindered by the President and cabinet colleagues, the review
fails to contain the state’s expenditures and consequential deficits, and
concurrently it does little to aid oppressed, survival-endangered commerce
and industry. Government’s fiscal policies are not an aid to economic
recovery, but an impediment. -Eric Bloch

Click here or ALT-T to return to TOP

Debt: The albatross around Zim’s neck

Thursday, 04 August 2011 17:36

By Deprose Muchena

IT IS common cause that the Government of National Unity (GNU) has presided
over a dramatic economic turnaround, which has seen the country claw its way
back from the brink of total economic collapse. It is also widely
acknowledged that there are serious obstacles in the way of a sustainable
economic recovery. However, it is not universally known that one of the most
serious constraints — indeed it is an almighty albatross around the country’s
neck — is Zimbabwe’s massive debt burden.

To appreciate the full scale of the economic crisis, it is important to note
that Zimbabwe faced a myriad of socio-economic and governance challenges
prior to the inauguration of the GNU. The economy had cumulatively declined
by 54,8% from 1999 to 2008, resulting in one of the longest recessions in
the history of any country. Prolonged international isolation since the
launch of the fast track land reform programme in 2000 resulted in no
meaningful engagement with the international community and development

Widespread poverty and gross inequality unleashed a damaging assault on
social stability. Social indicators fell dramatically, while incomes
plummeted across the labour market as more and more companies closed.
Unemployment and underemployment soared across all social classes; mass
informalisation of the economy took root. Social mobility and equal
opportunities had become alien concepts for most people.

Other key characteristics of Zimbabwe’s macroeconomic crisis included
foreign currency shortages, de-industrialisation, deteriorating
infrastructure, low capacity utilisation, food and fuel shortages and a
constrained supply of basic utilities such as electricity and water, among
others. Industrial capacity utilisation plummeted demonstrating the severity
of the economic collapse and the extent to which the manufacturing sector —
the second most dynamic sector of the economy after agriculture — had
surrendered its potency and promise.

The economic meltdown was largely underpinned by runaway inflation, which
officially peaked at 231 million percent in July 2008 — although an
unpublished report in December 2008 estimated that it had risen to 3,2
quintillion percent.

While populists were clamouring for the continued existence of the Zimbabwe
dollar, the move immediately eliminated the notorious parallel market for
goods, cash and services. It slashed inflation from millions of percent to
single digits. The multi-currency regime boosted business confidence,
generated an atmosphere of predictability and soon companies began to
increase their activity and profits.

Significant progress has definitely been made under the auspices of the GNU,
at least in terms of stabilising the economy and meeting basic needs,
particularly in health and education.

For this, the economic and social ministries need to be commended. However,
these gains are slowly being reversed by the lack of sustainable economic
development and the absence of an effective recovery strategy for the
economy. Indeed, the economy is suffering from a structural malaise.

Despite registering economic growth in the last two years, this growth has
not translated into better human development indices or much needed jobs.
Zimbabwe is experiencing a kind of zero sum growth trajectory — with a
nominal growth in GDP without any corresponding jobs or opportunities

Therefore, the economic “recovery” remains very fragile, particularly as it
is dependent on a stable political situation. And because it is being
weighed down by an enormous burden — billions of US dollars of debt.

Zimbabwe’s sovereign debt overhang has not improved since the signing of the
GNU — and it is unlikely to improve in the near future as the country
battles to finance its economic recovery and social development.

The exact debt stock is debatable as official reports vary. However,
Zimbabwe currently faces a debt overhang conservatively estimated at US$6,9
billion — including US$5,2 billion in external debt. Of the publicly
guaranteed debt, US$3,2 billion is in arrears — including US$1,3 billion
owed to multilateral creditors (International Monetary Fund, World Bank and
other institutions), US$1,6 billion to bilateral creditors (Paris Club and
other individual countries) and US$200 million to credit suppliers .

With the 2009 Short Term Emergency Recovery Plan having identified a
resource gap of around US$8,3 billion for economic recovery, the greatest
challenge for the government is its ability — or lack thereof — to mobilise
financial resources to fund projects identified as critical for recovery. I

f the government needs to find US$8,3 billion for its recovery programme on
top of its debt obligations, then Zimbabwe somehow has to find US$15 billion
in the short term. Overall, following the cumulative economic contraction
between 1998 and 2008, the country needs US$45 billion over the next 10
years to regain the Gross Domestic Product (GDP) levels of 1997.

Globally speaking, many developing countries are caught in a vicious cycle
like Zimbabwe. The problems of under-funded social sectors such as education
and over-indebtedness are mutually reinforcing.

As governments struggle to meet unsustainable debt obligations, they are
forced to redirect scarce resources that could otherwise be used to achieve
the objectives of the Education for All campaign or the Millennium
Development Goals (MDGs). In many countries, debt servicing accounts for a
larger portion of the national wealth than the portion invested in
education — and this is clearly contributing to the fact that many
countries, including Zimbabwe, are not on course to achieve the MDGs by

The first step is for Zimbabweans — and the international community — to
publicly acknowledge the size of the debt problem and how it is acting as a
serious drag on the economic ship of state. While civil society
organisations in Zimbabwe have highlighted the issue, some elements of the
GNU continue to deny the shocking reality of Zimbabwe’s indebtedness.

In particular, there has been fierce opposition to declaring Zimbabwe a
highly indebted poor country, despite the fact that it is exactly that. But
the issue is not about whether to declare Zimbabwe a highly indebted poor
country or not. Zimbabwe has already been declared a crisis country, a
fragile state, a failed state, and a low-income country under stress among
others. These declarations do not resolve anything. Specific policy,
legislative and economic governance measures are needed.

While there have been some legislative changes, such as the Public Finance
Management Act, these have not been enough to remove the debt albatross. A
host of reforms are urgently needed, including the creation of a strong and
well-supported treasury; the establishment of a robust parliamentary
oversight mechanism with a greater role for the portfolio committees
responsible for national accounts, budget and revenue generation; and the
construction of a developmental democratic state that prioritises good
economic governance. Together these reforms will allow the government to
design and implement a sustainable debt management and relief strategy.

Given Zimbabwe’s levels of socio-economic distress, activists and civil
society organisations also maintain that the repayment of external debt
should not be given any priority until a proper national debt audit has been
carried out, which will show whether any of the debt is odious and
illegitimate. Side by side with this, there is a strong view that neither
debt cancellation (which is desirable) nor new loans (which are necessary)
should be extended until loan contraction and debt management legislation
and processes are thoroughly reviewed  — so it is imperative that the debt
audit is carried out now.

There is also an urgent need to pinpoint any odious debt and then cancel it
either because the creditors provided loans in the full knowledge that the
money would not be used in the legitimate national interest or simply
because they are un-payable. The Doctrine of Odious Debts, although now more
than 70 years old, helps to bring clarity to today’s complicated Third World
debt situation, where innocent citizens end up paying while corrupt and
negligent borrowers and lenders get away scot-free.

While the global South makes compelling moral arguments to cancel its
foreign debts, it also possesses an indisputable legal case because the
overwhelming majority of these debts are odious in law. “If a despotic power
incurs a debt not for the needs or in the interest of the state, but to
strengthen its despotic regime, to repress the population that fights
against it, etc, this debt is odious for the population of all the state.”

Finally, there is need for an imaginative and sustainable debt clearance
strategy, which combines re-negotiating repayments — including the
rescheduling of some debts and a moratorium on others — to enable the
accumulation of resources to repay legitimate debts, as well as systemic
policy and legislative reform to support the new debt management framework.
Once these actions are taken, Zimbabwe may not need to become part of the
highly indebted poor country initiative in its classic form — especially as
evidence from Zambia, Mozambique, Tanzania and Uganda among others, does not
provide a favourable picture of the impact of highly indebted poor country
status on debt relief.

The debt burden is the biggest albatross around Zimbabwe’s neck. It stands
in the way of Zimbabwe’s economic recovery and long-term economic
development. Its resolution requires domestic leadership and political will
to reform policy, legislation and practice. In addition, the international
community needs to be creative and supportive — realising that economic
stabilisation is still in its nascent stages, recovery is still
characterised by “jobless growth” and key social sectors are still
recovering from a decade-long malaise. The un-payable debt needs to be
cancelled, thereby offering Zimbabwe a fresh start and brighter prospects
under new economic governance rules.

Click here or ALT-T to return to TOP

Violence perpetrators must pay for 2008 abuses

Thursday, 04 August 2011 17:33

By Arnold Tsunga

ZIMBABWE achieved its Independence in 1980 after a brutal war during which
widespread and serious human rights atrocities were committed. The new Prime
Minister, Robert Mugabe, called for reconciliation and forgiveness and no
one was prosecuted for the atrocities.

A few years later, Mugabe’s government was involved in gross human rights
violations during the Gukurahundi campaign in Matabeleland and Midlands
Provinces, during which about 20 000 people are believed to have been
killed. In 1987, a Unity Accord was signed between the ruling Zimbabwe
African National Union Patriotic Front (Zanu PF) and the opposition Zimbabwe
African People’s Union (Zapu), bringing an end to the violence. Once again,
the government called for reconciliation and national healing and no one was
prosecuted for these extra-judicial killings and enforced disappearances.

But the cycle of violence did not end. Zimbabwe has experienced spikes in
organised violence and torture, particularly around elections. It has become
obvious that Zanu PF uses targeted organised violence and torture against
unarmed civilians as a primary method of power retention. After the March
2008 elections that Mugabe lost to Morgan Tsvangirai, the leader of the
Movement for Democratic Change (MDC-M), the country saw an escalation in
orchestrated violence with reports showing that hundreds of unarmed
civilians were extra-judicially killed while some disappeared as Zanu PF
tried desperately to cling to power.

Despite the fact that the election violence was highly publicised, no
meaningful prosecutions or investigations have occurred domestically to an
uncooperative government. Impunity has been a central feature accompanying
the organised violence and torture against unarmed civilians. It is
therefore critical that any process towards transitional justice and
national healing is predicated on an unequivocal goal of breaking the cycle
of impunity rather than letting “bygones be bygones”.

After the March 2008 elections, Zanu PF either directly ordered or, at a
minimum, allowed groups of Zanu PF youths and political members, acting on
the orders of the military, to commit crimes against members of the MDC and
other opposition political parties.

Between 200 and 500 unarmed civilians perished as a result of the execution
of this policy of politically motivated and targeted killings. Because of
the involvement of the state apparatus in the targeted executions, no
prosecutions or meaningful investigations have been recorded. Impunity

For the purposes of effective transitional justice and national healing, it
is important that investigations into these killings are conducted promptly
to ensure that “as much evidence as possible is obtained that otherwise
might degrade or be destroyed in the intervening period”.

The investigations need to obtain as much information as possible concerning
the crimes, perpetrators and victims so as to be prepared for the widest
possible range of future prosecutions, commissions or panels of inquiry.
This is the only way in which the country can break the cycle of impunity
that is so necessary for effective transitional justice and national

Enforced disappearances were also a feature of the 2008 violence. In
practice, the “act of enforced disappearance typically involves the
abduction, arrest or detention of an individual — usually a perceived
political opponent — by members of a state-sponsored military group, and a
deliberate denial by authorities of any knowledge of the victim’s arrest,
whereabouts, or condition: the individual effectively vanishes.”

According to criminal law expert Wayne Jordash: “Enforced disappearances
have become increasingly recognised as a crime throughout much of the world.
It is considered a crime against humanity and can be prosecuted as one at
the International Criminal Court”.

Many human rights groups have evidence that suggests that supporters of the
MDC were routinely abducted, detained and tortured by individuals associated
with Zanu PF political structures in 2008. In this context, any process of
transitional justice and national healing in Zimbabwe must deal head on with
the phenomenon of enforced disappearances so that a new state is built on a
national value system that is intolerant of enforced disappearances.

The political, military and police involvement in the enforced
disappearances and extra-judicial executions that were part of a widespread
and systematic attack against a civilian population in Zimbabwe constitute a
crime against humanity.

Human rights groups and communities are therefore encouraged during the
documentation of these serious violations to identify the suspected
perpetrators, their precise role in the commission of the crimes and
attribute roles and responsibility to specific individuals, where
appropriate. Those responsible for planning, ordering, instigating, aiding
or abetting, or otherwise facilitating the crimes ought not to evade

Senior officials can be punished for acts committed by their subordinates
that they failed to prevent or punish through command responsibility.
According to Jordash, command responsibility holds that just because crimes
“were committed by a subordinate… (this).… does not relieve his superior of
criminal responsibility if s/he knew or had reason to know that the
subordinate was about to commit such acts or had done so and the superior
failed to take the necessary and reasonable measures to prevent such acts or
to punish the perpetrators.”

Jordash argues further that through the principle of joint criminal
liability, the prosecution of individuals who act in furtherance of a common
plan, design or purpose, which amounts to a crime in international law, is
possible. The individuals can be found guilty of crimes, which emanate from
acts committed in furtherance of this agreement.

    Tsunga is the Director of the Africa Programme of the International
Commission of Jurists. He is indebted to the research and information
provided by Wayne Jordash — an international criminal law expert in the
 UK. — Openspace.

Click here or ALT-T to return to TOP

Alternative financing explored

Thursday, 04 August 2011 16:15

Julius Chikomwe

FINANCE minister Tendai Biti, last week indicated in his mid term fiscal
review that the country had limited fiscal space within which to manoeuvre.
This resulted in him allocating a paltry US$70 million towards the Zimbabwe
Economic Trade Revival Facility (ZETRAF). The minister lamented the absence
of alternative sources of finance for business.This article gives insight on
some of the alternative finance avenues Zimbabwean business might consider

ALTERNATIVE financing, as the name suggests, is business finance from other
sources other than commercial lending institutions. Alternative financing is
normally used by smaller businesses. The reason is that, unlike the bigger
and more established businesses smaller businesses, in most of the cases, do
not meet the two major requirements under which banks are willing to advance
credit-collateral security and business records.

In the context of Zimbabwe, one can say that there are about seven
alternative sources of funding. We will examine five of them; factoring,
community banks, venture capital, credit unions and yes-friends and family.

Factoring receivables basically involves a business selling its yet to be
collected invoices to an institution established for this purpose at a
discount. Why would a factoring company be interested in this sort of
arrangement? Well, mainly because it realises a margin in each case, which
is basically the difference between the discounted value of the invoice and
full value of the invoice when the invoice is eventually settled. Pretty
easy isn’t it? No.

Firstly, because factoring companies, like commercial lending institutions,
exercise usual credit judgment and are unlikely to want to take risks unless
the invoice that is the basis of the proposition is from a  reputable
company. Secondly given the high interest  rates commercial banks are
charging, it would seem that  factoring companies would charge more than
what banks are charging. As a result, this would render this particular
financing method less attractive to small businesses.

Community banks
Community banks, unlike commercial banks, are driven by developmental rather
than commercial considerations. Their primary objective  is to overcome the
barriers that prevent many small businesses from accessing business
financing from the conventional sources. They seek to achieve this through
less stringent lending requirements and offering their target market cheaper
money. This sort of funding is usually specific in terms of both the target
sectors  and beneficiaries that may access it.

The POSB serviced the market for a very long time. But, as we know, the POSB
left this market when it converted into a commercial bank. It is hardly
surprising therefore that there is no  reputable institution that  is
filling the gap that was created by the POSB’s exit. Some could argue that
Sedco is playing a  role in this area. But even if this were the case, at
the rate at which Sedco is going we might need life times to notice their
impact. In short, a lot more needs to be done. Perhaps the honourable
minister needs to come up with policies that will demonstrate the government’s
appreciation of  the special needs of this sector. In addition, there is the
need to incentivize private companies and developmental organisations to
invest in this sector.

Venture capital
Under this option, the owner of the business sells part of the business in
exchange for capital injection by the venture capitalist. The arrangement is
usually for a fixed time period, at the end of which, the venture capitalist
is expected to exit. The exit, of course, would be in terms of previously
agreed options.

This option is the least burdensome on small businesses. They just need to
get professional advice when entering into such arrangements so that they
can avoid entering into one sided arrangements that are detrimental to
themselves and the country. In the preceding sentence, I have implied that
venture capital would have to come from without. The reason is that venture
capital is supposed to be patient capital, with arrangements taking on
average between 5 and 10 years. It does not seem that Zimbabwe has, at this
stage, capital that can be that patient.

Significant changes have taken place in Zimbabwe during the last decade
regarding ownership of the means of production, particularly in the
agriculture and mining industries. However, many of the new owners lack the
necessary skill and capital to make a positive contribution towards
improving their own lives and the country’s economy.  With the right policy
framework, this would be a viable option for bridging the capital and skills
gap that so many farmers and owners of mining claims face today.

This option dovetails with the government’s economic aspirations in the
sense that investors do not become perpetual owners but exit at the end of
an agreed term. Finance minister  Tendai Biti may want to consider this as a
viable policy option for translating indigenisation policies into something
meaningful for Zimbabwe’s mining claim holders and landowners who can’t
afford to pay US$300 schools per term while they are sitting on a farm or
mine that could potentially bring them a better life.

Credit unions
Another alternative funding source is credit unions. Most of these were
buried during the hyperinflation years. There is need to revive this
particular sector as it is cheap and very effective way of mobilising
finance amongst members of a credit group. Credit unions are an attractive
source of funding for group members because the administrative routines for
accessing the money are usually very simple. In addition, it provides  a
useful learning ground for members to understand the basics of business and
managing credit on a very small scale. Both sets of skills become
increasingly useful as the business grows.

The trade union movement  should lead the way in setting up and propagating
credit unions. Employees and family members of employees would benefit from
raising money for informal businesses so as to diversify their sources of
income and to reduce dependence on wages as the only source of income.

Friends and family
Friends and family are an alternative source of financing. This particularly
so when one is embarking on a new business, when it is not clear if the
business is going to survive. Friends and relatives are a useful source of
money for the promoter of a small business to establish  its basic
infrastructure and facilities. More importantly, it creates a window through
which the promoter of the business can begin to develop the reputation of
the business and setting up basic business infrastructure such as record
keeping, a necessary requirement of the business needs formal borrowing
facilities even with non-conventional sources of capital.
In this article, I have confined myself to the alternative sources of
financing that are relevant to Zimbabwe. This is not  an exhaustive list of
all the possible sources of alternative financing.

A lot has happened since 1997 when Zimbabwe’s financial health began to
decline. This was followed by decade-long hyperinflation. Hyperinflation has
since been superseded by low inflation. But the market is still very
Zimbabweans now have the resources. The number of small business has
increased as a result of the policy of indigenisation. But, they do not have
the capital and or skills that would enable them to derive a meaningful
livelihood and generate wealth from the resources that they now own. The
policy framework, on the funding side, has largely remained the same as what
it was a decade ago.

The needs and priorities of Zimbabwe’s  small businesses  have changed; they
are now completely different from those that existed a decade ago. There is
therefore the need for the Ministry of Finance to come up with a policy
framework will attract investments through alternative sources of capital to
meet the needs and priorities of a nation that is now empowered but still
needs capital to take the final step towards translating empowerment into
meaningful economic participation.

Julius Chikomwe is an LLM (Finance and Law) Student at Duisenberg School in
Amsterdam,  Netherlands.

Click here or ALT-T to return to TOP

Land tenure audit now without delay

Thursday, 04 August 2011 18:13

IT was a bit of a relief to hear the Reserve Bank governor admitting in his
monetary statement last week that the land reform programme was a failure,
not so much because of anything else but because of the ineptitude of those
who were allocated the land.

Gono insists that those beneficiaries should not take their failures
elsewhere. Unless he was grandstanding as Kasukuwere accused him of doing
last year, the governor needs to be applauded for facing up to the truth. It
takes a lot for one to admit where they have failed or made mistakes. Once
you have admitted your mistake, you open up the opportunity to rectify it
and perhaps move on positively. Okay, so now the land reform was, as we have
always known, chaotic.

What next?
Given that the global political agreement acknowledges that the land reform
programme is irreversible, and I quote article 5.5 of the GPA which states:
“Accepting the irreversibility of the said land acquisitions and
redistribution,” we now need to move to the next stage, making the land

Again, we are not saying something out of the blue. Article 5.9 (f) of the
same agreement states that the parties should “work together for the
restoration of full productivity on all agricultural land”.  But this cannot
be done until a semblance of order is brought to the current land tenure

We are aware that there is multiple farm ownership and these multiple farm
owners are doing sweet nothing on that land. Gono ought to have gone further
and reminded the players in the GPA that a land audit ought to be conducted
so that multiple farm owners be dispossessed of the extra farms and these be
allocated to others, preferably those who are more deserving, including the
former white farmers, yes the former white farmers!

The point is the “powers that be” have driven the point home that they have
the power to dispossess one at whim. It is a fact that all governments are,
by nature, dictatorships. Apart from expropriating land, they daily
expropriate our hard earned earnings in the various forms of taxes, which,
if we are lucky they may use for purposes that benefit us.

Otherwise, more often they take this money and use it on arms in the names
of defence and peace. Whose peace? People are generally at peace with each
other, it’s governments that are not and need defence. For the average
Themba, all he needs is a good police force. Japan has no army to talk
about, look how successful it has been and so has Germany.

Now in case you are lost in all this as I am, the point I was driving home
is that our government has demonstrated to the former white farmers that it
wields the ultimate power. It’s time for an armistice where they can get
these farmers back on the land, on the government’s terms. I can somehow
hear Tafataona Mahoso saying we believe only whites can farm.

No sir. We’re saying let’s have those who have experience in commercial
farming come back and work with their far less experienced colleagues. As a
reminder, the GPA requires the current unity government to “conduct a
comprehensive, transparent and non-partisan land audit”, during the tenure
of the Seventh Parliament of Zimbabwe, for the purpose of establishing
accountability and eliminating multiple farm ownerships.

The land tenure audit must be done asap so that we bring back productivity
on the farms
We want the land reform programme to come to a conclusion so that we can
proceed with the much more important agrarian reform.

Candid Comment- Itai Masuku

Click here or ALT-T to return to TOP

Take time to listen Kasukuwere

Thursday, 04 August 2011 18:09

INDIGENISATION and Empowerment minister Saviour Kasukuwere last Friday made
a reckless pronouncement to the Confederation of Zimbabwe Industries
conference when he said government would soon be moving to grab
shareholdings in foreign-owned banks in pursuit of its company seizures

Besides his latest target, the minister has threatened to nationalise mines
which have not complied with the indigenisation regulations by the end of
next month.

Kasukuwere’s latest utterances have understandably send shivers down the
spines of both local and international investors who have been waiting in
the wings to be part of the action to revive our economy. Lest we forget the
economy almost imploded due to a combination of poor policies and autocratic
governance by President Robert Mugabe’s regime at the turn of the previous

What is startling is that Kasukuwere seems determined to push an
indigenisation agenda that lacks clarity and whose hallmark is not wealth
creation, but outright theft. Our banking sector is fragile and the Reserve
Bank of Zimbabwe (RBZ) has been battling to maintain stability in the
financial service sector. Pronouncements by Kasukuwere will definitely rock
the boat and forestall the revival process. The realities of the financial
services industry are simple: you must have the wherewithal to own a bank.

While Kasukuwere was threatening the banking sector, RBZ governor Gideon
Gono in his supplementary statement to his mid-year monetary policy the same
day, exuded wisdom on how to implement effective economic empowerment and
indigenisation. While we don’t agree wholly with his proposed panacea, his
argument is compelling. By the way, Gono’s proposal is not part of his
“Damascus experience”. He started arguing his case way back but was
dismissed by Kasukuwere as trying to seek relevance.

Gono’s argument is that the indigenisation drive should never be “used to
multiply pockets of inefficiency, in as far as utilisation of national
resources and opportunities of the country is concerned”.

He sees the policy being used to enrich a few haves at the expense of the
“It would be wrong to continue to concentrate new and scarce resources and
opportunities on a few individuals, some of whom are even struggling to
utilise what they already have to the economy’s advantage,” said Gono. “This
economy is littered with cases of productive farms lying idle, farms which
have been turned into grasslands instead of maize-lands, soya-lands and so
forth, yet we need to be utilising the available resources, including and
especially the land, to advance our national economic fortunes, as the land
is the basis of our sustenance.”

Gono suggests that the empowerment strategy should be executed to
immediately reduce poverty and enhance social welfare.
“The model must also respond to, and tackle, each of the eight UN Millennium
Development Goals, namely the eradication of extreme poverty, support
towards the achievement of universal primary education, promotion of gender
equality and empowerment of women (and the youths), reduction of child
mortality, improvement in maternal health, combating of HIV and Aids,
malaria and other diseases, ensuring and assisting environmental
sustainability and assisting in the development of global partnerships for
development,” Gono suggested.

He proposed what he called a Supply and Distribution Indigenisation and
Empowerment (SaDIE) Model, premised on the participation of a broad spectrum
of the population, through the supply and distribution chain of the whole
country’s economic cake, as opposed to primarily focusing on equity

“Under this framework, government can ensure that indigenous people supply
inputs and services into the country’s production processes. This strategy
effectively empowers indigenous people to control downstream industries
through the supplying of raw materials, services and other inputs,” Gono
said. “The model also envisages a gradual approach to attainment of the
company ownership thresholds by indigenous Zimbabweans, in a manner that
ensures sustainable empowerment, inflows of much-needed foreign capital and
minimal disruption to economic activity. Under the empowerment-led
indigenisation initiatives, companies will, thus, be required to source a
specified proportion of their inputs, raw materials and spares from
indigenous entities.”

Gono argues that after achieving the empowerment drive, government could
then move a gear up or accelerate ownership of companies by indigenous
Zimbabweans through a carefully planned indigenisation implementation
But will Kasukuwere listen?

Editor's Memo- Constantine Chimakure

Click here or ALT-T to return to TOP

Banks crisis: Prevention is better than cure

Thursday, 04 August 2011 16:03

By Linda Tsarwe

THE monetary policy statement might well have come at just the right time
following the Renaissance bank saga. Or did it? The argument in the market
is that the financial authorities should be more proactive rather than being
mere fire fighters. There are well known indicators that signal if any
intervention is needed for any particular bank.

Certain elements in the banking system ought to be identified before they
reach a critical stage, a function that our authorities have failed to
conform with. Regulatory bodies such as the ZSE have been blamed for letting
issues of corporate governance go by default when they have the resources at
their disposal which can make it easier for them to track down any corporate
governance deficiencies.

The recent instabilities in the banking sector have awakened fears of
another 2004 banking crisis which is still fresh in depositors’ minds.
According to the monetary policy statement, after the Renaissance saga there
was an estimated US$1,2billion flight of deposits to banks that are
perceived to be safe (foreign banks).  Justifiably, the big banks such as
Standard Chartered and Barclays are adequately capitalised and are prudent
in their lending culture, which gives some sort of comfort to depositors.

However, the Reserve Bank governor highlighted that the flight created
liquidity challenges as foreign banks have a lower average loan-to-deposit
ratio of 66% compared with 80% for the local banks as at June 10.

Notwithstanding perceived advantages of aggressive lending, local banks also
run the risk of having significant non-performing loans on their books as
quality is compromised under an aggressive lending strategy. To date, the
39% of the total loans in the banking sector are non-performing, a situation
which is not healthy, particularly given their concentration among less well
capitalised banks.
It only takes one troubled bank to spark a financial crisis in the economy.

The use of foreign currency as legal tender has heightened risk aversion
among depositors, which makes scenarios such as flight of deposits
inevitable in the event of a crisis. Instead of waiting for a bank to be
technically insolvent, regulation on factors such as minimum capital
requirements should become tightened. By the time Renaissance was placed
under curatorship, it was technically insolvent, with negative capital of
US$15,7million, a status which authorities should have been or were already
aware of.

Currently six banks (including Renaissance) are not in compliance with
minimum capital requirements. Of the six, only three banks, namely, Kingdom,
Royal and ZABG have tabled their proposals with the RBZ on how they plan to
raise the required capital. The importance of adequate capital cannot be

Adequately capitalised banks have a buffer which ensures that they can
survive even when they are making losses, hence protecting depositors’
funds. Rather than crafting plans on how banks already in operation can
adequately capitalise, the RBZ should not have issued a banking licence to
an institution that does not have adequate capital. All these events put the
stability of the financial sector at risk. At the end of the day, the most
important stakeholder, the depositor, ends up being the biggest loser.

Development of the Multidisciplinary Financial Stability Committee (MFSC),
initiated by the RBZ, necessitates detection of potential sources of risk so
as to minimise it. This concurs with the IMF recommendations that financial
authorities should step up their supervisory efforts to stabilise the
country’s banking sector. It is necessary that other regulatory bodies do
likewise to ensure critical issues such as inadequate corporate governance
are avoided.
However, it remains to be seen if the committee will fulfill its mandate.

Will it work differently from the many committees that we have in business
circles while corporate governance still remains lax? The people given the
responsibility in the MFSC should fasten bolts to ensure that any loose ends
in the banking sector are tied up now.

The governor, taking recommendations from the IMF, announced in the monetary
policy statement that the prudential liquidity ratio has been increased from
20% to 25%. Though this is higher than the average of 10% obtaining in the
region, the ratio is reasonable given the lack of a lender of last resort
function by the RBZ. This will ensure that banks are liquid enough to meet
their short-term obligations.

Though the purpose of placing a bank under curatorship is to safeguard
depositors’ interests, it is an undesirable remedy. It creates noise and
stirs panic among depositors. Inevitably, banking business is disrupted and
mainly smaller banks suffer. It is up to the financial authorities to make
sure banking business is done above board, corporate governance is in place,
and should a worst case scenario arise; a smooth exit is in place for
troubled banks.

Most importantly, no bank should be allowed to commence operations without
adequate capital or be given a licence in the first place. As one investor
puts it, no “mickey mouse” bank should be allowed to tamper with depositors’
funds so as to cover up for their lack of capital.

Back to the Top
Back to Index