|The ZIMBABWE Situation||Our
thoughts and prayers are with Zimbabwe |
- may peace, truth and justice prevail.
Ethiopian Special Buffet something to die for
6/12/03 6:06:49 AM (GMT +2)
AVONDALE, once a quiet village with a family-run supermarket and a
coffee shop, is rapidly growing into one of Harare’s premier shopping
There is also a great choice of restaurants serving either fast food
or slow food, and at least one supermarket serves a punnet of tasty-looking
stew and steaming sadza at lunch time. This can be eaten in your car while
you snatch a half-hour lunch break, to the envy of those parked on either
side of you.
Last Sunday, George, Elise and I considered the lunchtime options
available and unanimously decided to visit Fontana di Trevi in Avondale for
their weekly Ethiopian Special Buffet, currently priced at $7 000.
The terracotta-coloured, hacienda-style Fontana di Trevi is situated
in King George Road, adjacent to the bend in the road frequently used to
facilitate speed traps and roadblocks.
A large bird advertising Famous Grouse does sentinel duty near the
entrance, and there is plenty of safe parking in a gravel drive way behind
We had booked "a table for three in the gazebo", which was fortunate,
as when we arrived, the restaurant was three- quarters full and the buffet
in full swing.
A genial waiter seated us and took our drinks order: a Castle for
George, ($850) Mazoe Orange and water ($350) for Elise and me. The same
waiter, whose bonhomie did not once falter during the long gastronomic
afternoon, then led us to the "authentic Ethiopian buffet" and described the
different creations as they steamed in their chafing dishes, tempting us
with their aroma.
Traditional Ethiopian stews, known as "wats", formed the basis of the
buffet, all subtly flavoured with a blend of spices known as "Berbere",
which varies accordingly to suit the dish.
A perfectly cooked chicken wat, combining hardboiled eggs and a rich
sauce, varied in colour and flavour from a hot and spicy lamb wat. I gave
the beef wat a miss, needing to save space for the grilled lambs’ ribs. The
various lentil and chick pea wats and a mixed vegetable wat combining
carrots and zucchini would have kept a large party of vegetarians quite
happy, and a traditionally prepared bowl of rape, onion and tomatoes had to
be re-filled at least twice.
A large platter of Njera, a sponge-textured pancake equivalent of
bread, was available for aficionados to eat with the wats, and for the less
adventurous, a platter of pitta bread was just as satisfying. A bowl of
crumbled sour cheese, garnished with green herbs, could be eaten to temper
some of the hotter meat and lentil dishes.
Our waiter encouraged us to try all the dishes, and to return for
second helpings, providing us with a clean plate and clean cutlery. I couldn
’t resist a second helping of lamb wat and a few more spoonfuls of the fiery
national favourite, the chickpea wat. And another serving of rape, and just
a little sprinkling of crumbled cheese …
Finally satisfied, we rounded off our meal with two different types of
ice cream and a slice of vanilla gateau. The piece de resistance was a cup
of "ritual Ethiopian coffee, made the traditional way, out in the garden",
over a small fire of hot coals. While sipping this stimulating brew, we
inhaled the heady incense used in its preparation and listened to stories of
how the Arabian Queen of Sheba paid a visit to the court of King Solomon,
bearing gifts of gold, jewels and spices. Ethiopian tradition has it that
Sheba married Solomon and their offspring, Menelik 1, founded the royal
dynasty of Ethiopia.
Special mention should be made of the garden at Fontana di Trevi, with
its inviting green lawns and palm trees, both exotic and indigenous. A
Jumping Castle, constantly in use last Sunday, provides entertainment for
the under 12s. With children in mind, and those who prefer mildly flavoured
and less spicy food, there are simple and less pungent traditional dishes
There is also an extensive a la carte Italian menu available, with a
wonderful range of antipasti, pasta, grills, fish, chicken and beef.
Fontana di Trevi has a well-stocked bar and whisky drinkers can enjoy
a tot of J&B for $2 000, or a Famous Grouse for $2 500.
The Ethiopian Special buffet lunch, from being a monthly event, is
growing in popularity and can now be enjoyed every Sunday of the month.
Fontana di Trevi Restaurant
7 King George Road
Tel 703038 / 703826
Closed : Monday
GMB food procurement in limbo
Dumisani Ndlela News Editor
6/12/03 2:13:22 AM (GMT +2)
A REGIONAL food security assessment organ has warned the Grain
Marketing Board (GMB) could fail to execute its food procurement obligations
due to "inherent inefficiencies and corruption".
"Reduced deliveries to the GMB, together with inherent inefficiencies
and corruption within the parastatal are expected to limit the government’s
capacity to provide food," the Southern African Development Community Famine
Early Warning Systems Network (Fews) said in its latest report on the
country’s food security situation.
The GMB is the sole legal procurement agency for maize grain, both
locally and offshore.
Zimbabwe’s southern parts are facing a serious threat of famine due to
The government has already declared a disaster in the south,
encompassing mainly the two Matabeleland provinces.
In its food security report, Fews warned that the parastatal would
even be constrained from making substantial imports by the current foreign
currency shortages in the country.
"It’s capacity to import is going to be reduced further by the poor
export performance that is expected to continue throughout the current
marketing year," the report said.
GMB has in the recent past managed to get an average 13 percent of the
estimated national maize production, with projections hinting a rocky spell
for the parastatal due to a host of factors, the report said. Major
constraints likely to affect GMB’s market operations include a lower maize
producer price offered by the parastatal, limited deliveries by smallholder
farmers due to poor harvests and non-production by large-scale commercial
This week, Agriculture Minister Joseph Made said the GMB would ensure
it moved closer to farmers to reduce transport costs.
This, he said, would ensure transport costs do not erode the farmers’
The Fews report said staple cereals — maize, wheat and sorghum—
remained critically in short supply throughout the country, and this was
pushing prices up, forcing sellers to evade GMB to sell on the parallel
Farming industry players said non-governmental organisations were
trying to avert the disaster by marshalling enough food aid.
It is understood the government is pleading with donors for food aid
but it will take some time before more assistance starts trickling in as
donors such as the WFP have to forward the request to the UN.
Food aid from non-governmental organ- isation has played a critical
role in averting famine in the country, currently going through its worst
economic crisis in history which has been worsened by erratic rainfall in
the past three years.
Many large-scale farmers have been replaced by peasants and
non-farming urbanites in a move designed to de-racialise commercial farming.
That has reduced farming output. Some have not occupied pieces of land
allocated to them as they do not have adequate funds to buy inputs and
machinery and develop required infrastructure.
The government says the uptake for the commercial farms has been in
the region of between 70 and 75 percent.
Output in timber industry declines by 10pc
Zhean Gwaze Staff Reporter
6/12/03 2:14:54 AM (GMT +2)
NON-EXPANSION of existing plantations has affected the production of
timber, with no major planting taking place in the past two years.
The chief executive of the Timber Producers Association, Bill Johnston
has said output in the timber industry has been on the decline since 2001.
Johnston told The Financial Gazette: "Forestry reserves have shrunk by
approximately 10 percent due to losses suffered from the land reforms and
National annual timber statistics indicate that 119 000 cubic metres
of timber were produced in 2001.
The figure dropped by 10 percent in 2002 to 108 000 cubic metres.
Figures for this year are yet to be released.
Johnston said the decline was mainly a result of the land reform,
which displaced a number of white farmers who were involved in timber
Changes in the land tenure system since 2001 forced many players in
the industry not to expand their plantations, as they were not sure how the
process would affect their operations. The government’s agrarian reform has
led to the appropriation of over 90 percent of the country’s 4 500
white-owned commercial farms for the resettlement of the landless blacks,
many of whom lack resources to farm on a large scale.
Major timber producing areas were acquired for resettlement and most
of the settlers started depleting the forests for firewood and construction
material. They also overgrazed the land.
Uncontrolled veld fires have also contributed to the decline, Johnston
The timber industry has a long production cycle. Pine trees mature
after a period of up to 25 years and continuous replanting is required.
The timber industry contributes about four percent of the Gross
Domestic Product and earns the country the much-needed foreign currency
through exports to regional and international markets.
Industrial Development Corporation of Zimbabwe general manager, Mike
Ndudzo said communities in timber growing areas must be given concessions to
They must be allowed to process timber at village level to motivate
them to look after the trees.
The MDC blundered, period!
6/12/03 2:10:45 AM (GMT +2)
In February 2000, soon after the referendum results, mobs of war
veterans invaded white- owned farms defying the law and signifying the
demise of property and land rights.
In the same year the High Court ordered the police to evict farm
invaders from commercial farms and the police defied the order indicating
the grotesque breakdown of the rule of law.
When the government resolved to fast-track the land reform, the
Supreme Court rendered the move illegal but the order fell on the police’s
That marked the beginning of lawlessness in this country which the
international community and civic society greatly lambasted.
The police became selective in enforcing court orders as they in fact
challenged a High Court order by applying for an order stopping them
(police) from evicting the invaders and limiting their intervention to only
ensuring that the situation remained peaceful. This application was
dismissed with costs.
As lawlessness progressively seeped through the fabric of society seen
in the run-up to the parliamentary and presidential elections in 2000 and
2002 respectively, human rights abuses rapidly escalated, attracting wide
condemnation the world over.
The situation deteriorated to the extent that the whole social,
political and economic set-up was disintegrating until the Movement for
Democratic Change (MDC) called for the "final push".
There have been several suggestions put across as to the objective(s)
of the inconclusive "final push" with some saying it was meant to evict
Robert Mugabe from State House.
MDC spokesperson Paul Themba-Nyathi said it was to bring Mugabe to the
negotiating table and a government minister even gave the impression that,
"the clear intent behind such threatened actions is to effect a coup d’etat
against the legitimately elected government of Zimbabwe."
Whatever hullabaloo the "final push" might have caused and whichever
way one might want to interpret it, what sticks out like an ugly rib through
the chest is the court order of May 31 barring the MDC from taking mass
action from June 2-6.
The MDC erred by failing to explicity define the major objective of
the "final push"upon which the government and its sympathisers eagerly
sought to either ridicule their motive as a dream or more gravely as a coup
Unlike in the past when the police developed cold feet in executing
court orders to evict farm invaders, the ZRP this time responded with
unparalled enthusiasm to thwart the planned opposition mass protest that
they had defined in such a way as to render it treasonous.
Supposing the government, instead of Police Commissioner Augustine
Chihuri, had applied for the order to illegitimitise the mass action, would
the police have sought "an order stopping them from preventing street
protests and limiting their intervention to only ensuring that the situation
remained peaceful" as they did during the farm invasions?
The crux of the matter however is MDC’s response to the fateful court
That ill-gotten court order should have sent loud warning signals to
the opposition that the much-awaited and much-publicised street marches to
State House would never be, at least not that week (June 2-6).
That ill-gotten court order was exactly what the ruling party needed
to legitimise their brutal clampdown on anyone suspected of sympathising
with the opposition’s pilgrimage to Mugabe’s abode.
The logical thing that the MDC leadership should have done on June 1
was to — in earnest — call off the mass action.
Had the MDC called off the mass action then, not only would they have
adhered to the rule of law, (a principle that the party passionately asserts
to uphold) but they would also have bought invaluable time to unpuzzle ZANU
PF’s "shock and awe" blitzkrieg.
It was an act of blindness for the party to go through with the
planned mass action in spite of a court order to the contrary. By stubbornly
insisting on ‘lawlessness’ not only did the MDC reduce themselves to the
level of the 2000 farm invaders but they also fell into ZANU PF’s neatly
The first casualty of that trap was Morgan Tsvangirai who was quickly
bundled up to police sanctuary before he could carry out his defiance of the
somehow ‘unlawful’ court order.
That move effectively deemed the planned march protests a non-starter
since sheep without a shepherd easily fall into the jaws of hungry wolves.
That ill-gotten court order was an indication that security agents
would be out to make the mass action a picnic of blood and bandages. That in
itself sent waves of confusion, despair and indeed shock and awe throughout
the entire stronghold of the long-suffering opposition.
The MDC blundered, period!
After Tsvangirai’s arrest they still had an opportunity to postpone
the mass protests, but someone must have ill-advised them to go through with
it though the atmosphere was clear — ZANU PF was more prepared to deal with
the mass action than MDC was to go through with it.
Of course in one breath passed through a whistle, the MDC managed to
shut down the whole nation, but I don’t think I’d be way off if I say that
was the final whistle — the game of stayaways is over! The enthusiasm for
staying at home without even a worthless dollar in your pocket is long gone.
The MDC must now learn to play the game on the field rather than off
(away) it. If they do not want to play the game on the field then ZANU PF
will continue to win by default.
While MDC captain Tsvangirai languishes in police custody probably for
another month he must spare a sobering thought to strategies that will not
fail. On the other hand, the ruling party must be on guard since prolonging
Tsvangirai’s detention might trigger spontaneous mayhem. We should give it
to him that though in custody, Tsvangirai still commands a lot of charisma.
However, the MDC’s failure to achieve the people’s objectives is
slowly fragmenting the once dominant opposition party whose members are
being painfully disillusioned about the continued failed schemes to put
buttered bread on their tables.
The MDC should not have embarrassed itself. It should have been
subtler, more calculative, more prudent, more cunning and more strategic,
especially when dealing with a party of the calibre of ZANU PF.
Hongu ZANU yaora asi haisati yava honye. The ruling party still has a
few more tricks it can employ before it completely decays.
As the nation burns, it’s clear the armed forces hold the fuel and the
water and it remains their discretion as to what they should splash on the
The armed forces must however, remember that though they might prevent
political change, they cannot implement economic emancipation.
Dollarisation in Zim: official or unofficial?
6/12/03 2:41:15 AM (GMT +2)
Experiences elsewhere have shown that countries characterised by
galloping or runaway inflation or any high levels of inflation, have faced
the challenge of restoring lost purchasing power of their currencies.
One of the adverse effects of unsustainable levels of inflation is
that it imposes what is termed inflation tax on the pockets of consumers. A
typical example is given by a case where one used to spend $5 000 to fill up
a Mazda 323 with fuel but now, one needs more than twice as much to do so.
(Of course, depending on where fuel is procured!) This simply means that the
purchasing power of $5 000 has been eroded by inflation.
Lost purchasing power has therefore hit hard bank savings on fixed
interest rates, pensioners income, and others on fixed incomes where annual
increments, if any, fail to keep pace with inflation. When consumers are
hurt by inflation tax, they hedge that tax by finding alternative means and
ways of ensuring that they store their wealth in those assets that do not
easily lose value such as gold, real estate, silver cutlery or jewellery.
The process of hedging not only inflation but adverse economic
policies such as an unfavourable exchange rate by exporters and importers,
and adverse interest rate policy by bank clients, is not only new to
Zimbabwe but has already been experienced elsewhere.
This process of hedging prompts one to stimulate debate on the
question of whether Zimbabwe is slowly getting into a situation where there
is unofficial or official dollarisation. If this is the case, should
Zimbabwe continue to have a wait and see stance as inflation moves from
single to double, and now triple digit levels?
The implicit question being raised here in order to avoid full
dollarisation is the need to address the root causes of inflation, by
putting in place those policy measures that reverse the inflationary trend
that is now heading towards a quadrupling of the inflationary figures.
The definition of dollarisation therefore has a broader focus. It
should not only be considered in terms of US dollars but it is use of any
foreign currency together with or instead of the domestic currency.
This can be done officially or unofficially. However, in most
countries where there is unofficial dollarisation, the US dollar has tended
to become the foreign currency of choice.
Zimbabwe is a typical example of a country that is now using more US
dollars (on the parallel market though!) relative to prior periods.
Dollarisation therefore normally arises as a counter-response to
adverse inflationary conditions that wipe out the purchasing power of a
currency, or that wipe away the competitiveness of exports regionally and
Unofficial dollarisation occurs when individuals hold much of their
financial wealth in foreign assets even though foreign currency is not legal
tender that is, people will tend to hold foreign-currency bank deposits or
notes (paper money) to protect themselves against high inflation in the
To some extent, unofficial dollarisation is beyond the control of the
government because it normally takes place without formal legal approval.
It can also arise when people hold foreign assets legally or
illegally. For example, when people are allowed to hold accounts such as
dollar accounts in the form of individual and corporate foreign currency
accounts, then this is considered to be legal but it would still be illegal
to hold other kinds of foreign assets, such as bank accounts abroad such as
Swiss accounts, unless special permission has been granted.
This can include holding any of the following: foreign bonds,
foreign-currency deposits, other non-monetary assets that are normally held
abroad; foreign-currency deposits in the domestic banking system; for
example, individual and corporate foreign currency accounts or foreign notes
(paper money) in wallets, mattresses or safes at home.
Dollarisation may begin with asset-substitution then followed by
currency substitution that is, in the first instance, people substitute cash
for assets such as purchase of real estate or gold rather than holding cash.
A higher level involves substitution of currency that is, rather than
use Zimdollars, people will prefer to hold US dollars, South African rands
or Botswana pulas or any other currency for the simple reason that
preference is made of using a stable means of payment and store of value.
Other bills will however continue to be paid for in the local currency
such as wages, taxes, and everyday expenses such as groceries and telephone
bills (unless one is roaming on a mobile!)
However, there is a tendency that expensive items such as vehicles,
mobile phones and houses may continue to be paid for in foreign currency. An
advanced stage of unofficial dollarisation sees people thinking in terms of
foreign currency. Most if not all prices in the domestic currency end up
indexed to the exchange rate. This is what defined some circles as " the
economy is priced to the parallel market."
Official dollarisation is also known as full dollarisation and this
arises when foreign currency is exclusively or predominantly considered to
be legal tender. In this case, foreign currency will not only be used in
contracts between private parties, but will include the government which
will now be using it to effect payments too.
Domestic currency may continue to exist, but coins that have small
value will be largely used. Most countries that have adopted official
dollarisation have approved one foreign currency to be legal tender.
Official dollarisation occurs when a government finally adopts foreign
currency as the predominant or exclusive legal tender. In some cases, a
country can be specific and adopt say the US dollar as the predominant
currency by allowing residents of that country to accept it as legal tender.
In some cases, multiple currencies would be acceptable. With official
dollarisation, a country may end up not issuing domestic currency and
instead, use will be made of foreign currency.
Empirical evidence on the ground has indicated the following in
- Real estate is one sector that pioneered the billing of rentals in
US dollars. This includes the selling of properties.
- Airlines are now charging fares in US dollars.
- The Zimbabwe Electricity Supply Authority is now billing in foreign
currency, in line with the NERP.
- In line with the NERP again, modalities are being developed of
ensuring that tourist travellers pay in foreign currency for fuels. Once in
place, this would be further green light for residents to accept US dollars,
rands or either as legal tender, depending on government instructions;
- Procurement of fuel in foreign currency has recently become a common
phenomenon, as most garages are now accepting US dollars as legal tender.
- Other (not yet known to me!)
There are very few countries that have adopted official dollarisation
because of the political symbolism that is granted on a national currency.
Some economic factors such as the perceived costs of dollarisation have also
discouraged other countries from considering full or official dollarisation.
Dollarisation has witnessed generally unimpressive economic growth in
most dollarised. As people suddenly switch into foreign currency, this has
had a tendency to depreciate the domestic currency, thereby starting an
inflationary spiral that is very unhealthy for economic growth and
Whilst this is not the only incident, Zimbabwe has experienced this
about two weeks ago when excessive demand for US dollars pushed the rate
from Z$1 500 : US dollar to somewhere around Z$2 900 : US$1. The net effect
is that the cost of a depreciating currency is passed on to the consumer
through increased prices.
Where people hold extensive foreign-currency deposits, a change in
domestic or foreign interest rates can trigger large shifts from one
currency to the other, as a means of speculating about the exchange rate.
Such shifts complicate the job of a central bank that is trying to target
the domestic money supply.
An officially dollarised country may end up relinquishing the
independent of its monetary policy to the country whose currency it uses.
This means that should Zimbabwe decide to have official dollarisation and
thereby adopt the South African rand for instance, as acceptable legal
tender, in addition to Zimdollars, this means that Zimbabwe will have to
adopt and or align its monetary policy with that of South Africa.
Interest rates will also tend to be broadly similar throughout the
zone. However, some difference in interest rates may arise due to various
risk factors for example, country risk. With this development, the need for
currency conversion fees will disappear.
Whilst dollarisation has its ugly face on one side, its beauty is also
seen where unofficial dollarisation provides a hedge against inflation in
the domestic currency. This can increase the stability of the banking
system. Furthermore, by allowing domestic banks to accept deposits in
foreign currency (e.g. FCAs), this means that depositors do not have to send
their money out of the country when they want to switch it into foreign
The question that remains unanswered is where the money goes to once
such accounts have been declared illegal. Zimbabwe’s experience has shown
that the money flies back to where it can from, or it seeks a safe haven
where it would not be forcible liquidated at a government determined
exchange rate but a market –based rate, or it seeks a home where access will
always be guaranteed without queuing for it for example, a Swiss account, or
Dollarisation also reduces the risk of currency devaluation and this
ultimately reduces the risk of a bank run, thereby ensuring the stability of
the banking sector.
An officially dollarised country becomes part of a unified currency
zone with the country whose currency it uses. Examples include the
Dollarzone, Eurozone or the zone that may be defined by the African Union.
Within the unified currency zone, arbitrage that is, the buying and selling
of goods, services, financial assets etc in order to take advantages of
differences in prices, will tend to keep prices of similar goods within a
The list on the pros and cons of dollarisation discussed here is not
exhaustive. The rest would be brought up in the debate. In a nutshell, the
purpose of this article was simply to discuss the notion of dollarisation,
the risks that we take as a country as we fail to control inflation, and the
ultimate measures that people take in order to hedge inflation.
The issue here is not about the need for Zimbabwe to be on unofficial
or official dollarisation, neither is it about the country being under
unofficial or planning to have official dollarisation.
The issue that should stimulate debate is on the nature of specific
measures that should be taken in order to tackle inflation head on and
thereby get the macroeconomic environment right.
Inflation was declared enemy number one a long time ago but we seem to
continue to approach it without much confidence. Inflation has to be fought
head on otherwise unofficial dollarisation will continue to creep in and
ultimately force the introduction of official dollarisation. Whither
Zimbabwe with dollarisation? Unofficial, official or none of the above?
Judith Kateera is a member of the Zimbabwe Economic Society
Govt must restructure domestic debt
6/12/03 5:43:08 AM (GMT +2)
THE major source of the economic problems facing the country has
undoubtedly been the budget deficit, which has largely been financed by
Throughout the reform period, the budget deficit has exceeded six
percent of the GDP, with the highest deficit to date being 23 percent of the
GDP — being experienced during the 2000 fiscal year.
However, owing to government’s domestic debt restructuring exercise
and the non-payment of foreign debt due to foreign currency shortages, the
deficit fell to about nine percent of the GDP in 2001.
Last year the deficit rose to around 14.1 percent and is estimated to
fall slightly to 11.5 percent during the current fiscal year. Supplementary
budgets could see the deficit rising.
As has always been noted by many analysts and commentators, the
problem with the government budget deficits is how they are financed —
borrowing from the domestic banking sector.
This has been compounded by the restrictions on foreign borrowing by
international aid agencies, a situation that has resulted in the reliance on
domestic capital markets to finance government budget deficits.
Before Zimbabwe severed relations with the multilateral donor
community, the government used to enjoy about 40 percent funding of its
deficit from the donor community, a figure that rose to more than 60 percent
in the first half of the 1990s.
Because there has been no foreign funding of the budget deficit during
the past four years and an ever-declining revenue base due to the poor
performance of the economy, the government has been left with no option but
rely on the domestic economy to fund its chronic expenditure overruns.
It is against this background that the government decided to
restructure its domestic debt starting in 2001 so a greater proportion of
the debt becomes medium to long-term.
During the first year, the government set itself a target of reducing
short-term debt to 70 percent of total domestic and 30 percent for medium to
long-term debt. Last year and thereafter, the government’s aim was to
intensify its domestic debt restructuring exercise by increasing the
proportion of medium and long-term debt to at least 40 percent.
These targets have, however, not been met as government only managed
to reduce the proportion of its short-term debt by about four percentage
points to 90.7 percent while the proportion of long-term debt rose by the
same basis points to 9.3 percent.
What is now worrying is that since last year it seems as though the
debt-restructuring programme has been discarded as the proportions of short
and long-term debt have reverted to their pre-policy announcement levels of
five percent and 95 percent, respectively as shown in the diagram below.
The government, therefore, needs to urgently resuscitate the domestic
debt-restructuring programme that it initiated in 2001 as the large
proportion of short-term debt imposes a serious debt service burden and has
negative implications on the economy.
To minimise the adverse impact of short-term funding on domestic
financial markets, it is my hope that the new Reserve Bank governor should
resuscitate the domestic debt-restructuring programme by shifting short-term
debt towards longer-term securities.
However, it should be noted that the major threat to such an exercise
is inflation as high inflation has the effect of shifting the composition of
domestic debt towards the short-term.
In this regard, therefore, inflation stabilisation is critical, if the
debt restructuring exercise is to be realised and assist in the
stabilisation of the current volatile macroeconomic environment.
Commonwealth snub to Mugabe
By Tim Butcher in Johannesburg
A Zimbabwean official was barred from a Commonwealth meeting in Johannesburg
yesterday as President Robert Mugabe's regime tried to defy its suspension
from the organisation.
Zimbabwe claimed incorrectly that its "suspension from the councils of the
Commonwealth", imposed after Mr Mugabe's widely condemned re-election last
year, had lapsed. But the Commonwealth stood firm, refusing the official
access to a three-day science council meeting.
By contrast, some countries have allowed Zimbabwean officials to evade a
European Union travel ban. France allowed Augustine Chihuri, the Harare
police commissioner, to attend Interpol meetings last year, and Spain
allowed Mr Mugabe to land in Madrid.
"The situation is that Zimbabwe remains suspended from the councils of the
Commonwealth and it is encouraging that all members fulfilled their
obligations to maintain the suspension," a Commonwealth spokesman said.
Zimbabwe's suspension is up for review in December at the Commonwealth Heads
of Government meeting.
Zimbabwe's science minister, Olivia Muchena, was anxious to ensure that her
representative was allowed to muscle into the official Commonwealth
"It's not like I am gate-crashing," she said. "I came on an invitation.
Zimbabwe has taken a position that the suspension ended in March."
Cottco reaps gold, RBZ fails dismally
6/12/03 2:02:36 AM (GMT +2)
The processor of white gold has indeed made its mark. What a
marvellous trail the company has blazed so far! From a stodgy parastatal,
through a successful listing, Sylvester Nguni and his team have transformed
the Cotton Company of Zimbabwe into one of the most profitable companies on
the local exchange. Meikles, you oughta watch out for these boys!
Earnings per share (EPS) have grown from $3.12 to $17.92, a growth of
These earnings are definitely going to go up for a variety of reasons.
Bearing in mind that the company only consolidated part of SeedCo’s results
into their own, the share from the associate is bound to increase.
Had the company consolidated full year results for the latter, then
the contribution after tax would have been slightly above $1 billion. Yet
the company only recorded SeedCo’s contribution as $187 million owing to the
timing of the transaction.
Synergies to be brought about by linking up SeedCo and Quton are still
to come to fruition but one supposes they could be substantial if the
companies integrate well.
Also the cotton prices around the world are likely to remain above
US$0.50 per pound of lint in the short to medium term. This would greatly
benefit the company.
Even if the company were to give farmers $400 per kg of cotton, heck,
even $800 per kg, they would still make obscene amounts of money!
The company is also substantially cash positive and to that extent, it
could utilise those amounts of cash to generate substantial finance income.
In the first six months of last year, they netted above $750 million in
finance income and close to a billion at the end of the year. The amount
netted in the first half rivalled many a small bank’s bottom line in the
In short this company is here to stay so long as the management is
empowered and power struggles in shareholding do not interfere with the
running of the entity.
Let me end on a personal note: I think the company must give more to
its outgrowers and stop sponsoring rugby festivals and concentrate on
developing its impoverished outgrower community.
For not making available cash on the market as and when needed. Though
not a regular fan of Undenge, I believe this act is unlawful. I mean this
should be a top priority of the central bank. No one really cares where they
get the foreign currency to print $500 notes.
Instead of addressing the problem, the central bank was elusive while
this was happening leaving the media to inform the public where they really
stood through guess-work.
Meanwhile the bank issued the same statements each day trying to trash
stories reported in the private media on various issues. I think last month
would be remembered as the month the bank’s corporate affairs department
worked overtime the most.
What was next? We heard the governor was calling it a day. This
baffled every concerned citizen. Was he going because of the monetary
problems or what? Whatever reasons given for his resignation, the man will
rue the day he accepted the offer to become the guardian-in-chief of
Regardless of how intelligent our governor is (having spent successful
years as a scholar in the United States), no sane treasury chief would like
to be remembered for introducing new notes and coins of higher denominations
during one’s tenure.
In essence this means one would have failed to contain inflation and
money supply growth. On the contrary one would have helped fuel it. So I
think the oratory published in the Herald to describe his tenure were a
painful send-off to the man.
Imagine, Al Greenspan, leaving a legacy that he brought about the
introduction of new US$500 and US$1 000 bills!
That would defeat the whole purpose of his job.
Fertiliser industry faces serious viability problems
THE fertiliser industry is facing serious viability problems due to the
shortage of foreign currency to source inputs and industrial spares needed
to boost production in order to meet a growing agrarian reform-induced
This was revealed at an urgent meeting between the Minister of Lands,
Agriculture and Rural Resettlement, Cde Joseph Made, and executives of the
country’s leading fertiliser manufacturers — Zimbabwe Phosphate Indus-tries
Cde Made convened the meeting to discuss the situation in the fertiliser
industry, the closure of Windmill’s Mt Hampden plant and to raise concerns
for newly resettled farmers who urgently needed fertiliser for their winter
He said the closure of the plant had a direct impact on the operations of
farmers in the country who were determined to enhance the country’s food
"We would want that plant to operate," he said. "There is a huge demand for
fertiliser for the winter and summer crop and farmers want more fertiliser."
"Fertiliser is what makes a crop yield well. This is what will bring income
to the farmer, food security, better returns and the capacity for farmers to
repay loans," he said.
He urged fertiliser companies to supply fertiliser timeously so that farming
operations would not be disrupted.
Many farmers who had tilled their land to grow wheat had not started
planting because of lack of fertiliser.
ZimPhos general manager Mr Misheck Kachere said fertiliser companies were
facing serious viability problems owing to the shortage of foreign currency
to procure inputs and industrial spares.
He said the fertiliser industry had a capacity to produce 200 000 tonnes but
operated at 65 percent capacity due to foreign currency shortages, transport
problems, fuel and coal shortages and erratic electricity supply.
"Production of fertiliser for the five months to May 2003 was 130 000
tonnes," he said in a report. "As a result, 60 000 tonnes for the winter
crop was supplied up to the end of May 2003 against the 95 000 tonnes
Windmill managing director Mr Andy Humpreys said his company had closed the
Mt Hampden plant due to lack of chemical inputs, which are imported.
The major ingredients in the manufacture of fertiliser are potash imported
from the Middle East, Chile and Europe and sulphur imported mainly from
Mr Kachere said ZimPhos requires US$500 000 every month to import 3 000
tonnes of sulphur required to fully utilise capacity.
But he said in the last two years the company had not been allocated any
"There is now only one month of sulphur stocks left for which ZimPhos owes
the supplier and Spoornet US$800 000," he said. "Sulphur will run out by the
end of June 2003 and further supplies will only be made upon settlement and
cash upfront for future supplies."
Sulphur is used for the manufacture of sulphuric acid, which in turn is used
for converting phosphate rock to soluble phosphates.
Windmill and the Zimbabwe Fertiliser Company require US$700 000 every month
to import sufficient potash to fully utilise production capacity.
"So far this year no foreign currency has been availed for potash imports,"
Mr Kachere said. "As a result, capacity utilisation was constrained despite
reformulation of some compounds to minimise potash usage."
Kwekwe-based Sable Chemicals needs to import an additional 3 000 tonnes of
ammonia at a cost of US$750 000 a month to operate at full capacity.
Ammonia is used in the manufacture of ammonium nitrate fertiliser and Sable
only produces 70 percent to meet its requirements.
Last year, Sable Chemicals recorded a loss of $6 billion owing largely to
lack of foreign currency to buy inputs and spares.
Demand for fertiliser has surged to more than one million tonnes a year up
from 500 000 tonnes in the last few years largely due to the agrarian
reforms through which the Govern-ment input scheme has generated
unprecedented demand for fertiliser.
It is estimated that the country suffered a 600 000 tonne deficit of
fertiliser in this current farming season and agricultural experts say this
may worsen if nothing is done to revive the fertiliser industry.
Only 420 000 tonnes of the product was produced out of the required one
million last year.
Mr Kachere said the industry would only produce 300 000 tonnes under the
current circumstances from June to December this year against an estimated
500 000 which would only be possible if the industry gets foreign currency.
He said the industry would need US$2,45 million every month or a total of
US$14,7 million in the last half of the year to ensure maximum capacity
Improved transportation of raw materials by the National Railways of
Zimbabwe was also necessary for the industry’s operations.
At least 27 tonnes of sulphur, potash, phosphate rock and pyrites have to be
moved monthly for the industry to operate viably in the last half of the
Fertiliser companies need US$500 000 to buy spares every month but no
allocation has been made so far this year.
The shortage of foreign currency has resulted in delays of around two weeks
or more in completing annual maintenance shutdowns.
The operation of the industry has also been curtailed by the insufficient
quantities of consumables — catalysts and water treatment chemicals required
in the manufacture of phosphates and ammonium nitrate respectively.
Insufficient wagons and engines have led to the NRZ failing to deliver
quantities required by the fertiliser industry by 43 percent.
This has been made worse following South Africa’s Spoornet move to place an
embargo on NRZ wagons which it says were unsafe while it does not want their
own wagons to cross into Zimbabwe due to long turnaround times.
As a result, sulphur from Durban now takes three months instead of two weeks
to get to Harare.
The sulphur burning plant at ZimPhos was shut down for the whole of December
2002 and the annual maintenance shutdown in March 2003 was extended for one
month due to poor delivery of sulphur.
Local fertiliser companies were failing to get adequate coal supplies and
were resorting to road haulage, which was very expensive, to transport coal
from Hwange and inputs from SA.
The fertiliser industry requires 50 000 litres of diesel and 20 000 litres
of petrol every month but was relying on about 60 percent of these totals.
The cost of raw materials has increased by more than 300 percent whereas
price increases were too low to allow the industry to generate sufficient
cash for normal working capital requirements.
The cost of coal has gone up from $20 000 to $80 000 per tonne while rail
transport costs have shot up from $4 500 per tonne to $35 000 per tonne.
Fertiliser company executives are expected to meet Industry and
International Trade Ministry officials today to discuss ways to improve
fertiliser production by the industry.
At present only 5 000 to 6 000 tonnes of fertiliser was going straight to
the market as the industry continues to face production constraints.