By Zach Helke, Avi Krawitz
Posted: 05/24/09 10:13
RAPAPORT... Rio Tinto Zimbabwe Limited (RioZim) is renewing its mining efforts in Zimbabwe with hopes of attracting foreign investment as hints of political reform filter through. RioZim and its partner Rio Tinto are planning a private placement with existing shareholders to bring in new capital to new and existing projects in Zimbabwe. An extraordinary general meeting (EGM) is expected this week to vote on the proposal. According to the Zimbabwe Financial Gazette, shareholders will be asked to vote to allow RioZim to nearly double its share capital to 62,487,582 ordinary shares. The move comes as prime minister Morgan Tsvangirai breaks with president Robert Mugabe’s policy of shunning the west and is looking for aid from the U.S. ad Britain. Tsvangirai’s Movement of Democratic Change party also holds the finance ministry in Zimbabwe’s national unity government. “The liberalization of the economy along with some of the fiscal measures pronounced in the recent budget and monetary policy statements induce a sense of hope particularly for gold producers who for many years have been subjected to unviable local financial arrangements,” RioZim said in a recent statement. RioZim operates the Murowa Diamond Mine, as well as gold and nickel mines and exploration projects in Zimbabwe. Its main focus now, however, is to invest $200 million it hopes to raise from the placement, to revamp and expand operations at Murowa. The company hopes to expand processing at Murowa tenfold to some 2 million tonnes per annum, and therefore significantly ramp up production from the 237,058 carats of diamonds the mine produced in 2008. The Murowa operation saw profits rise 64 percent to $2.3 million in 2008.
Monday, May 25, 2009
Saturday, May 23, 2009
Nordic funds consider Zimbabwe investments
A TECHNICAL team from the four Nordic Development Finance Institutions arrived in Zimbabwe this week to scout for investment opportunities.
The visit by the technical team from development funds in Demark, Norway, Sweden and Finland, is a follow up to the March tour by the two ministers from Norway and Denmark.
Norway's Environment and International Development Minister Erik Solheim. Solheim's visit was on how Norway could help the new administration find a better footing.
Danish Minister for Development Cooperation Ulla Tornaeas came in March on how Copenhagen would assist Harare in paying its civil service.
The Nordic Development Finance Institution-that is government owned investment funds-invest in private sector in developing countries.
Head of the delegation Kjartan Stigen told Bistandsaktuelt that: "The motivation of the visit is that the private sector development creates development. There is growing evidence of a business business environment emerging in Zimbabwe."
The team comprises Mr Jaakko Kangasniemi from Finnfund, Ms Lena Algerin from Swedfund in Stockholm, Mr Kim Gredsted from IFU of Denmark, he is based in South Africa, and Stigen, from Norfund, based in Oslo.
Together these 4 development finance institutions at year end 2008 had a portfolio of 2.2 billion US dollars.
"This is a fact finding mission from the funds to assess the economic situation and the environment for investments, including the level of reforms being implemented and the durability of these changes," Stigen said.
Delegations started arriving last Sunday and some jetted in on Monday and the team immdediately looked at possible investments into Zimbabwe and meet bankers and executives of some Zimbabwe Stock Exchange listed blue -chip companies.
The team held meetings with Finance Minister,Tendai Biti; Economic Planning and Investment Promotion Minister,Elton Mangoma; and Industry and Commerce Minister Welshman Ncube.
The team leaves Zimbabwe on Saturday and will write recommendations to their respective governments.
Norfund has two joint ventures: one to work with the energy sector in developing countries and the other to establish and manage local and regional development funds.
Norfund structures joint ventures with struggling firms in the developing countries. It exits when the firms are on a sound footing.
Norfund commenced operations in 1998 and receives its investment capital from the Norwegian government on an annual basis.
It was created to become a leading investment fund for emerging markets by combining a strong financial position with high-quality investment management skills and extensive international experience.
The Norwegian Embassy in Harare said: "The team came on their own and we have nothing to do with them. But I can confirm that we know they are here."
By John Mokwetsi
The visit by the technical team from development funds in Demark, Norway, Sweden and Finland, is a follow up to the March tour by the two ministers from Norway and Denmark.
Norway's Environment and International Development Minister Erik Solheim. Solheim's visit was on how Norway could help the new administration find a better footing.
Danish Minister for Development Cooperation Ulla Tornaeas came in March on how Copenhagen would assist Harare in paying its civil service.
The Nordic Development Finance Institution-that is government owned investment funds-invest in private sector in developing countries.
Head of the delegation Kjartan Stigen told Bistandsaktuelt that: "The motivation of the visit is that the private sector development creates development. There is growing evidence of a business business environment emerging in Zimbabwe."
The team comprises Mr Jaakko Kangasniemi from Finnfund, Ms Lena Algerin from Swedfund in Stockholm, Mr Kim Gredsted from IFU of Denmark, he is based in South Africa, and Stigen, from Norfund, based in Oslo.
Together these 4 development finance institutions at year end 2008 had a portfolio of 2.2 billion US dollars.
"This is a fact finding mission from the funds to assess the economic situation and the environment for investments, including the level of reforms being implemented and the durability of these changes," Stigen said.
Delegations started arriving last Sunday and some jetted in on Monday and the team immdediately looked at possible investments into Zimbabwe and meet bankers and executives of some Zimbabwe Stock Exchange listed blue -chip companies.
The team held meetings with Finance Minister,Tendai Biti; Economic Planning and Investment Promotion Minister,Elton Mangoma; and Industry and Commerce Minister Welshman Ncube.
The team leaves Zimbabwe on Saturday and will write recommendations to their respective governments.
Norfund has two joint ventures: one to work with the energy sector in developing countries and the other to establish and manage local and regional development funds.
Norfund structures joint ventures with struggling firms in the developing countries. It exits when the firms are on a sound footing.
Norfund commenced operations in 1998 and receives its investment capital from the Norwegian government on an annual basis.
It was created to become a leading investment fund for emerging markets by combining a strong financial position with high-quality investment management skills and extensive international experience.
The Norwegian Embassy in Harare said: "The team came on their own and we have nothing to do with them. But I can confirm that we know they are here."
By John Mokwetsi
Friday, May 22, 2009
IMF contributes to Zimbabwe's hyperinflation
By Thomas J. Hornes
THE IMF disputes the existence of any connection between Zimbabwe’s hyper-inflation and Zimbabwe’s printing - since 2005 - of ZW$21 trillion which it used to buy foreign currency from the parallel market and paid off its IMF debt arrears.
In a statement attributed to the IMF Director of External Relations, Thomas Dawson the IMF:
1. is still questioning the source of the foreign currency Zimbabwe has used to clear its IMF debt arrears;
2. is unaware of shortages of food, fuel and medicine bedevilling Zimbabwe; and
3. believes that if there have been shortages of basics as suggested, these have been caused by Zimbabwe’s failure to institute a comprehensive package of macro-economic and structural reforms.
Generally speaking, the IMF position stated above is dishonest. The IMF must accept that instead of ensuring world economic stability; in the case of Zimbabwe and other countries, it has been complicit in economic destabilisation. In fact, there are strong grounds for concluding that the IMF, as a global lender has been used by its principal powerful shareholders, in particular the IMF to penalise Zimbabwe for its national policies.
This is not to suggest that the IMF has caused Zimbabwe’s economic problems. Far from it; Zimbabwe’s land and other poor economic policies have resulted in a 6 year economic recession, de-industrialisation, loss of skilled labour through emigrating and increasing impoverishment. In addition, political violence, erosion of the rule of law, and basic human rights has resulted in international isolation.
However, the IMF has unfairly treated Zimbabwe. This has exacerbated the country’s economic recession, worsened the plight of a politically suppressed populace, worsened the social and economic effects of unemployment, of the AIDS/HIV pandemic, and the social fabric of the country.
When Zimbabwe defaulted on its IMF debt in 2001, the IMF refused to reschedule this debt, or offer Zimbabwe alternative lines of credit or other support geared at ensuring that the economy remained relatively stable. IMF has learnt such support to countries such as Argentina which defaulted on their sovereign debts. Instead expulsion procedures were activated. And it would seem that in some mad desperation, Zimbabwe has lately been printing Zimbabwe dollars which it used to finance the payment of its IMF foreign currency debts.
What explains this unfair differential treatment, given that Zimbabwe is not the first or only country to default on its IMF debt?
The answer is found in an American law called the Zimbabwe Democracy and Economic Recovery Act 2001 [1], which enabled the United States government to block any finance applications made by Zimbabwe to multilateral lending institutions, such as the IMF and World Bank in which the US has majority shares or influence. In other words, using its powerful influence over the world’s lending agencies the US imposed economic sanctions on Zimbabwe by imposing a world-wide freeze on Zimbabwe’s ability to access international credit. The reason: the US was unhappy with Harare’s political policies and in particular, its land expropriation policies.
The IMF remains accused of being an instrument of American foreign policy. American policy being hostile to Zimbabwe the IMF by extension opted to call in Zimbabwe’s debt, instead of entering into good faith rescheduling talks, extending lines of credit, some debt cancellation, etc, as happened before with other countries.
The government was obviously aware that its cash printing exercise would fuel hyper-inflation. By opting to print local currency to buy foreign currency from parallel market traders, Zimbabwe was evidently desperate. Because the IMF called in as opposed to rescheduling Zimbabwe’s debt, no other major international lending agencies lend to Zimbabwe.
Printing paper money to fund government expenditure and onerous debt payments whose value is not linked to productivity and earnings fuels inflation. In the case of Zimbabwe, this had led to hyper-inflation and its insidious side effects. Hyper-inflation decimates savings and earnings; it impoverishes people over a very short period of time, causes economic instability and above all, social and political upheaval.
This is the problem the IMF faces. If it accepts that its inflexible and American influenced position refusing to reschedule Zimbabwe’s IMF debt has forced Zimbabwe to print Zimbabwe dollars in order to fund its debt payments, leading in part to the country’s hyper-inflation, then it must accept that it is partly responsible for the impoverishment of the ordinary Zimbabwean. It must have been all too obvious to the IMF that Zimbabwe could not afford to make its debt-arrear payments. And that if made, the payments would cause shortages and a massive contraction in the economy and inflation.
The callous manner in which the IMF has treated and continues to treat Zimbabwe illustrates some of the reasons behind the calls for the reform of the IMF.
It is true that there should be greater transparency in Zimbabwe’s financial transactions. However, the IMF’s continued questioning of the source of the money used by Zimbabwe to pay their IMF debt arrears is patronising and smacks of bad faith. Since it decided not to reschedule Zimbabwe’s debts which would have given the country room to breathe and strategically plan, the IMF should simply be content to receive its dues. Period! Are the same questions asked of countries that pay their debts to the IMF? Surely, the IMF cannot micro-manage Zimbabwe’s economic affairs.
Mr. Dawson is of course correct when he states that shortages in Zimbabwe have been caused by Zimbabwe’s refusal to implement comprehensive economic and structural reforms. And these reforms need not necessarily be IMF sponsored or structured. At the end of the day, the buck must stop with the ZANU PF government. And it is the Zimbabwe government’s obligation to put in place an economic regime that engenders stability and growth. However Harare’s political sins do not justify the IMF’s actions which have increased poverty in Zimbabwe. The IMF must be part of the solution and not be part of the problem. In the case of Zimbabwe, the IMF has unfortunately contributed to the country’s perpetual economic crisis.
Mr. Dawson’s reported response in which he is alleged to have rejected the suggestion that in the past year there have been shortages of food, fuel, and medicines in Zimbabwe, and that these could have been worsened by the onerous debt payments bordered on the ridiculous. Who doesn’t know about Zimbabwe’s now fabled food, fuel and essential medicine shortages?
Mr. Dawson’s reaction is however understandable for the reasons already stated. If he had accepted that Zimbabwe was forced to pay around US$200 million to the IMF in the past 12 months in order to avoid expulsion from the institution, he must of necessity accept that if the IMF had rescheduled Zimbabwe’s debt, Zimbabwe could have used this amount to pay for much needed imports as well as stabilise its currency, reduce inflation and thereby its economy.
This criticism of the IMF does not absolve the Zimbabwe government of any blame for the economic collapse of the country. To be fair, Zimbabwe’s practice of printing money to fund expenditure, and the Reserve Bank’s practice of dishing out money to unproductive parastatals, and the continuing disruption of commercial farming, and repeated threats to private property underline the causes for the continuing economic collapse in Zimbabwe. In addition, ZANU PF’s mad policies are the reason why the US, the EU, Australia and a few other countries imposed unfortunate and punitive economic sanctions on the country; which others prefer to call smart sanctions.Zimbabwe has an obligation to engage with the IMF. However this is not a one way street. The IMF must engage with Zimbabwe in good faith. The IMF must enter into negotiations with a view to rescheduling Zimbabwe’s outstanding debt. Zimbabwe must undertake major structural and economic reforms. And in conclusion, political considerations must not influence IMF lending conditions.Hornes is a financial services lawyer[1] The Zimbabwe Democracy and Economic Recovery Act (S. 494) is an act passed by the United States Congress sanctioned to provide for a transition to democracy and to promote economic recovery in Zimbabwe. Senators Bill Frist (R-Tennessee) and Russ Feingold (D-Wisconsin) introduced the bill on March 8, 2001. Senators Frist, Jesse Helms (R-North Carolina), Hillary Rodham Clinton (D-New York), and Joseph Biden (D-Delaware) sponsored the bill. The Senate passed the bill on August 1, 2001 and the House passed the bill on December 4, 2001. President George W. Bush signed it into law on December 21, 2001. Simbi Veke Mubako, Zimbabwe's ambassador, and Cynthia McKinney accused supporters of the bill of anti-black racism.
THE IMF disputes the existence of any connection between Zimbabwe’s hyper-inflation and Zimbabwe’s printing - since 2005 - of ZW$21 trillion which it used to buy foreign currency from the parallel market and paid off its IMF debt arrears.
In a statement attributed to the IMF Director of External Relations, Thomas Dawson the IMF:
1. is still questioning the source of the foreign currency Zimbabwe has used to clear its IMF debt arrears;
2. is unaware of shortages of food, fuel and medicine bedevilling Zimbabwe; and
3. believes that if there have been shortages of basics as suggested, these have been caused by Zimbabwe’s failure to institute a comprehensive package of macro-economic and structural reforms.
Generally speaking, the IMF position stated above is dishonest. The IMF must accept that instead of ensuring world economic stability; in the case of Zimbabwe and other countries, it has been complicit in economic destabilisation. In fact, there are strong grounds for concluding that the IMF, as a global lender has been used by its principal powerful shareholders, in particular the IMF to penalise Zimbabwe for its national policies.
This is not to suggest that the IMF has caused Zimbabwe’s economic problems. Far from it; Zimbabwe’s land and other poor economic policies have resulted in a 6 year economic recession, de-industrialisation, loss of skilled labour through emigrating and increasing impoverishment. In addition, political violence, erosion of the rule of law, and basic human rights has resulted in international isolation.
However, the IMF has unfairly treated Zimbabwe. This has exacerbated the country’s economic recession, worsened the plight of a politically suppressed populace, worsened the social and economic effects of unemployment, of the AIDS/HIV pandemic, and the social fabric of the country.
When Zimbabwe defaulted on its IMF debt in 2001, the IMF refused to reschedule this debt, or offer Zimbabwe alternative lines of credit or other support geared at ensuring that the economy remained relatively stable. IMF has learnt such support to countries such as Argentina which defaulted on their sovereign debts. Instead expulsion procedures were activated. And it would seem that in some mad desperation, Zimbabwe has lately been printing Zimbabwe dollars which it used to finance the payment of its IMF foreign currency debts.
What explains this unfair differential treatment, given that Zimbabwe is not the first or only country to default on its IMF debt?
The answer is found in an American law called the Zimbabwe Democracy and Economic Recovery Act 2001 [1], which enabled the United States government to block any finance applications made by Zimbabwe to multilateral lending institutions, such as the IMF and World Bank in which the US has majority shares or influence. In other words, using its powerful influence over the world’s lending agencies the US imposed economic sanctions on Zimbabwe by imposing a world-wide freeze on Zimbabwe’s ability to access international credit. The reason: the US was unhappy with Harare’s political policies and in particular, its land expropriation policies.
The IMF remains accused of being an instrument of American foreign policy. American policy being hostile to Zimbabwe the IMF by extension opted to call in Zimbabwe’s debt, instead of entering into good faith rescheduling talks, extending lines of credit, some debt cancellation, etc, as happened before with other countries.
The government was obviously aware that its cash printing exercise would fuel hyper-inflation. By opting to print local currency to buy foreign currency from parallel market traders, Zimbabwe was evidently desperate. Because the IMF called in as opposed to rescheduling Zimbabwe’s debt, no other major international lending agencies lend to Zimbabwe.
Printing paper money to fund government expenditure and onerous debt payments whose value is not linked to productivity and earnings fuels inflation. In the case of Zimbabwe, this had led to hyper-inflation and its insidious side effects. Hyper-inflation decimates savings and earnings; it impoverishes people over a very short period of time, causes economic instability and above all, social and political upheaval.
This is the problem the IMF faces. If it accepts that its inflexible and American influenced position refusing to reschedule Zimbabwe’s IMF debt has forced Zimbabwe to print Zimbabwe dollars in order to fund its debt payments, leading in part to the country’s hyper-inflation, then it must accept that it is partly responsible for the impoverishment of the ordinary Zimbabwean. It must have been all too obvious to the IMF that Zimbabwe could not afford to make its debt-arrear payments. And that if made, the payments would cause shortages and a massive contraction in the economy and inflation.
The callous manner in which the IMF has treated and continues to treat Zimbabwe illustrates some of the reasons behind the calls for the reform of the IMF.
It is true that there should be greater transparency in Zimbabwe’s financial transactions. However, the IMF’s continued questioning of the source of the money used by Zimbabwe to pay their IMF debt arrears is patronising and smacks of bad faith. Since it decided not to reschedule Zimbabwe’s debts which would have given the country room to breathe and strategically plan, the IMF should simply be content to receive its dues. Period! Are the same questions asked of countries that pay their debts to the IMF? Surely, the IMF cannot micro-manage Zimbabwe’s economic affairs.
Mr. Dawson is of course correct when he states that shortages in Zimbabwe have been caused by Zimbabwe’s refusal to implement comprehensive economic and structural reforms. And these reforms need not necessarily be IMF sponsored or structured. At the end of the day, the buck must stop with the ZANU PF government. And it is the Zimbabwe government’s obligation to put in place an economic regime that engenders stability and growth. However Harare’s political sins do not justify the IMF’s actions which have increased poverty in Zimbabwe. The IMF must be part of the solution and not be part of the problem. In the case of Zimbabwe, the IMF has unfortunately contributed to the country’s perpetual economic crisis.
Mr. Dawson’s reported response in which he is alleged to have rejected the suggestion that in the past year there have been shortages of food, fuel, and medicines in Zimbabwe, and that these could have been worsened by the onerous debt payments bordered on the ridiculous. Who doesn’t know about Zimbabwe’s now fabled food, fuel and essential medicine shortages?
Mr. Dawson’s reaction is however understandable for the reasons already stated. If he had accepted that Zimbabwe was forced to pay around US$200 million to the IMF in the past 12 months in order to avoid expulsion from the institution, he must of necessity accept that if the IMF had rescheduled Zimbabwe’s debt, Zimbabwe could have used this amount to pay for much needed imports as well as stabilise its currency, reduce inflation and thereby its economy.
This criticism of the IMF does not absolve the Zimbabwe government of any blame for the economic collapse of the country. To be fair, Zimbabwe’s practice of printing money to fund expenditure, and the Reserve Bank’s practice of dishing out money to unproductive parastatals, and the continuing disruption of commercial farming, and repeated threats to private property underline the causes for the continuing economic collapse in Zimbabwe. In addition, ZANU PF’s mad policies are the reason why the US, the EU, Australia and a few other countries imposed unfortunate and punitive economic sanctions on the country; which others prefer to call smart sanctions.Zimbabwe has an obligation to engage with the IMF. However this is not a one way street. The IMF must engage with Zimbabwe in good faith. The IMF must enter into negotiations with a view to rescheduling Zimbabwe’s outstanding debt. Zimbabwe must undertake major structural and economic reforms. And in conclusion, political considerations must not influence IMF lending conditions.Hornes is a financial services lawyer[1] The Zimbabwe Democracy and Economic Recovery Act (S. 494) is an act passed by the United States Congress sanctioned to provide for a transition to democracy and to promote economic recovery in Zimbabwe. Senators Bill Frist (R-Tennessee) and Russ Feingold (D-Wisconsin) introduced the bill on March 8, 2001. Senators Frist, Jesse Helms (R-North Carolina), Hillary Rodham Clinton (D-New York), and Joseph Biden (D-Delaware) sponsored the bill. The Senate passed the bill on August 1, 2001 and the House passed the bill on December 4, 2001. President George W. Bush signed it into law on December 21, 2001. Simbi Veke Mubako, Zimbabwe's ambassador, and Cynthia McKinney accused supporters of the bill of anti-black racism.
Tuesday, May 19, 2009
World Bank resumes Zimbabwe aid
The Zimbabwean economy has been ravaged by the effects of hyperinflation
The World Bank has agreed to give Zimbabwe $22m (£14.4m), its first assistance to the heavily-indebted African country since 2000.
Zimbabwe has been appealing for $8.5bn to rebuild its broken economy after forming a unity government in February.
The World Bank said the relatively small amount of money was "a first step". More could be forthcoming when Zimbabwe begins to clear its arrears.
It owes the World Bank and the African Development Bank more than $1bn.
The money will be available in the next few weeks.
"The first task is to see how Zimbabwe can get on with debt reduction," said the World Bank's Toga Gayewea McIntosh.
Zimbabwe's finance minister, Tendai Biti, said the government would work with the World Bank on a debt reduction plan.
Since suspending its lending programme to Zimbabwe when it went into arrears in 2000, the World Bank has limited its support to "technical assistance and analytical work".
The World Bank has agreed to give Zimbabwe $22m (£14.4m), its first assistance to the heavily-indebted African country since 2000.
Zimbabwe has been appealing for $8.5bn to rebuild its broken economy after forming a unity government in February.
The World Bank said the relatively small amount of money was "a first step". More could be forthcoming when Zimbabwe begins to clear its arrears.
It owes the World Bank and the African Development Bank more than $1bn.
The money will be available in the next few weeks.
"The first task is to see how Zimbabwe can get on with debt reduction," said the World Bank's Toga Gayewea McIntosh.
Zimbabwe's finance minister, Tendai Biti, said the government would work with the World Bank on a debt reduction plan.
Since suspending its lending programme to Zimbabwe when it went into arrears in 2000, the World Bank has limited its support to "technical assistance and analytical work".
Zimbabwe: Government to Open Information Centres to Boost Trade
Dave Fish Eagle on May 18th, 2009 and filed under Financial News. Email This You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry
The Zimbabwe government is planning to open information centres in five strategic countries and to expand international media coverage of Zimbabwe as it moves to promote the country as a potential investment hub.
The initiative ties in with the objectives of last month’s ministerial retreat in Victoria Falls, which are aimed at achieving a quick revival of the country’s economy.
The Secretary for Media, Information and Publicity George Charamba told the House of Assembly’s Portfolio Committee on Media, Information and Communication Technology on Thursday that his ministry was working on recreating a positive image of Zimbabwe.
Although he did not give time-frames for the implementation of the initiative, Charamba said information attaches would be dispatched to South Africa, Malaysia, China, Britain and the US to spearhead the marketing program.
“The country needs to shed the negative image of the past,” he told the committee, whose objective on the day was to acquaint itself with the ministry’s operations. Under the program, the information centres will disseminate information on the inclusive government and Zimbabwe’s various tourist attractions.
The ministry’s international communication directorate will superintend the centres’ functions while collaborating with the relevant government portfolios on areas of common focus. Charamba said the formation of the inclusive government had opened a window for Zimbabwe to portray a positive image of itself internationally.
He said this and the country’s tourist attractions would be at the center of his ministry’s marketing efforts.
“The negative (image of the country) has been because of the political situation and this has been dealt with through the inclusive government. If we sort out our image mess back home thatwill reflect outwardly,” he said.
“So this is our foremost point: The fundamental issue is that Zimbabwe has rediscovered itself and that we are working in unison. We are also piggybacking our image via our natural attractions, as this has been identified as critical for the quick turnaround of our economy.”
The Secretary added that South Africa was a target market because of its business and investment value. Malaysia and China, which share strong historical ties with Zimbabwe, are centrally placed in the Far East, making them good business partners and springboards to other Asian markets.
“China is an emerging economic giant. In fact, the West is turning East for its economic turnaround. It is therefore important for an information attache to be based in Beijing and other emerging growth points in that country.
“London (in Britain), whatever the ups and downs of our relations, we need an attaché there whether we like it or not. It is a critical market and will also be a springboard for us to reach Paris, Frankfurt and other capitals within range.”
Charamba also told the committee, which is chaired by the Member of the House of Assembly for Southert on Gift Chimanikire, that his ministry was also considering reaching international audiences through digital media.
Among such media is satellite television, which would probably require collaboration between Zimbabwe and fellow Southern African countries. Questioned by committee member and Mutare North Member of the House of Assembly Charles Pemhenayi on the measures that his ministry has put in place to ensure Zimbabwe receives positive international media coverage, he said the international communication directorate was handling this area.
He revealed that the government has been engaging the BBC and CNN with a view to securing their coverage in addition to the work that various foreign journalists are already carrying out locally.
“Zimbabwe is exposed to the international media, as different foreign journalists have been operating here for some time now. There is, however, a dogged perception that we are an impermissible environment as what is referred to as the international media is the CNN and BBC,” he said.
“We would want to remind the CNN that they are not banned from this country. Nothing was given either orally or in writing, stating that they had been banned. It is just that they took a solidarity boycott with the BBC after we had said the latter was representing political interests.
“We have taken the decision that they must be engaged: Overtures have been made to both media organisations, and the BBC have said they’ll be coming over while the CNN’s coverage would be from South Africa.”
The Zimbabwe government is planning to open information centres in five strategic countries and to expand international media coverage of Zimbabwe as it moves to promote the country as a potential investment hub.
The initiative ties in with the objectives of last month’s ministerial retreat in Victoria Falls, which are aimed at achieving a quick revival of the country’s economy.
The Secretary for Media, Information and Publicity George Charamba told the House of Assembly’s Portfolio Committee on Media, Information and Communication Technology on Thursday that his ministry was working on recreating a positive image of Zimbabwe.
Although he did not give time-frames for the implementation of the initiative, Charamba said information attaches would be dispatched to South Africa, Malaysia, China, Britain and the US to spearhead the marketing program.
“The country needs to shed the negative image of the past,” he told the committee, whose objective on the day was to acquaint itself with the ministry’s operations. Under the program, the information centres will disseminate information on the inclusive government and Zimbabwe’s various tourist attractions.
The ministry’s international communication directorate will superintend the centres’ functions while collaborating with the relevant government portfolios on areas of common focus. Charamba said the formation of the inclusive government had opened a window for Zimbabwe to portray a positive image of itself internationally.
He said this and the country’s tourist attractions would be at the center of his ministry’s marketing efforts.
“The negative (image of the country) has been because of the political situation and this has been dealt with through the inclusive government. If we sort out our image mess back home thatwill reflect outwardly,” he said.
“So this is our foremost point: The fundamental issue is that Zimbabwe has rediscovered itself and that we are working in unison. We are also piggybacking our image via our natural attractions, as this has been identified as critical for the quick turnaround of our economy.”
The Secretary added that South Africa was a target market because of its business and investment value. Malaysia and China, which share strong historical ties with Zimbabwe, are centrally placed in the Far East, making them good business partners and springboards to other Asian markets.
“China is an emerging economic giant. In fact, the West is turning East for its economic turnaround. It is therefore important for an information attache to be based in Beijing and other emerging growth points in that country.
“London (in Britain), whatever the ups and downs of our relations, we need an attaché there whether we like it or not. It is a critical market and will also be a springboard for us to reach Paris, Frankfurt and other capitals within range.”
Charamba also told the committee, which is chaired by the Member of the House of Assembly for Southert on Gift Chimanikire, that his ministry was also considering reaching international audiences through digital media.
Among such media is satellite television, which would probably require collaboration between Zimbabwe and fellow Southern African countries. Questioned by committee member and Mutare North Member of the House of Assembly Charles Pemhenayi on the measures that his ministry has put in place to ensure Zimbabwe receives positive international media coverage, he said the international communication directorate was handling this area.
He revealed that the government has been engaging the BBC and CNN with a view to securing their coverage in addition to the work that various foreign journalists are already carrying out locally.
“Zimbabwe is exposed to the international media, as different foreign journalists have been operating here for some time now. There is, however, a dogged perception that we are an impermissible environment as what is referred to as the international media is the CNN and BBC,” he said.
“We would want to remind the CNN that they are not banned from this country. Nothing was given either orally or in writing, stating that they had been banned. It is just that they took a solidarity boycott with the BBC after we had said the latter was representing political interests.
“We have taken the decision that they must be engaged: Overtures have been made to both media organisations, and the BBC have said they’ll be coming over while the CNN’s coverage would be from South Africa.”
Monday, May 18, 2009
MTN Group seeking to enter Zimbabwe mobile phone market
MTN Group Ltd., Africa’s largest mobile-phone company, is “actively” seeking to enter Zimbabwe as the nation’s coalition government starts rebuilding an economy devastated by a 10-year recession.
The company may start a new operation or buy an existing business, Tim Lowry, MTN’s vice president for South and East Africa said in an interview in Johannesburg yesterday. MTN has had “engagements” with the government and mobile-phone companies operating in the country, he said.
“We’re not sitting back,” Lowry said. “There are two options. One is to acquire something and to recapitalize the business. Or the other is to start as a greenfield” operation.
Zimbabwe’s economy contracted 40 percent between 2000 and 2007 after President Robert Mugabe seized white-owned farms for redistribution to blacks, slashing export earnings and leading to shortages of food, fuel and foreign exchange. Mugabe agreed this year to share power with the Movement for Democratic Change, enabling Zimbabwe’s coalition government to secure $1 billion in credit lines from African lenders.
“There are lots of moving parts in Zimbabwe,” Lowry said. “We need to make sure the conditions associated with that are good for MTN shareholders because we are not in government donation mode. ”
Zimbabwe has three mobile-phone operators, the largest of which is Econet Wireless Holdings Ltd., followed by NetOne Cellular Ltd. and Telecel Zimbabwe. MTN may buy Telecel, Business Day said April 29, without saying where it got the information. The Zimbabwe government is considering the sale of its majority stake in NetOne, ITNewsAfrica.com said May 5, citing the company’s Chief Executive Officer Reward Kangai.
Econet CEO Strive Masiyiwa declined to be interviewed for this article. NetOne’s Kangai could not immediately comment when contacted by Bloomberg News on his mobile phone and didn’t answer four subsequent calls to his phone, which wasn’t taking messages.
Source: Bloomberg
The company may start a new operation or buy an existing business, Tim Lowry, MTN’s vice president for South and East Africa said in an interview in Johannesburg yesterday. MTN has had “engagements” with the government and mobile-phone companies operating in the country, he said.
“We’re not sitting back,” Lowry said. “There are two options. One is to acquire something and to recapitalize the business. Or the other is to start as a greenfield” operation.
Zimbabwe’s economy contracted 40 percent between 2000 and 2007 after President Robert Mugabe seized white-owned farms for redistribution to blacks, slashing export earnings and leading to shortages of food, fuel and foreign exchange. Mugabe agreed this year to share power with the Movement for Democratic Change, enabling Zimbabwe’s coalition government to secure $1 billion in credit lines from African lenders.
“There are lots of moving parts in Zimbabwe,” Lowry said. “We need to make sure the conditions associated with that are good for MTN shareholders because we are not in government donation mode. ”
Zimbabwe has three mobile-phone operators, the largest of which is Econet Wireless Holdings Ltd., followed by NetOne Cellular Ltd. and Telecel Zimbabwe. MTN may buy Telecel, Business Day said April 29, without saying where it got the information. The Zimbabwe government is considering the sale of its majority stake in NetOne, ITNewsAfrica.com said May 5, citing the company’s Chief Executive Officer Reward Kangai.
Econet CEO Strive Masiyiwa declined to be interviewed for this article. NetOne’s Kangai could not immediately comment when contacted by Bloomberg News on his mobile phone and didn’t answer four subsequent calls to his phone, which wasn’t taking messages.
Source: Bloomberg
Friday, May 15, 2009
New IMF mission heads to Zimbabwe next week
May 6, 2009
HARARE (AFP) — The International Monetary Fund (IMF) will send a team to Zimbabwe next week to assess the country's tax policy, banking and governance issues, an official said on Thursday.
The IMF technical team, the second delegation from the institution since March, will be in the country from Monday until May 29.
"An IMF delegation will be in the country on Monday next week to assess the country's financial systems," an official close to the delegation told AFP.
"The delegation's visit follows the executive board's decision early this month which approved technical assistance in the areas of tax policy and administration, payments system, lender-of-last-resort operations and banking supervision, central banking governance and accounting."
On May 6, the IMF announced that it had resumed technical assistance to targeted areas in Zimbabwe following consultations with the new unity government in the southern African country.
The board took into account a "significant improvement in Zimbabwe's co-operation on economic policies" to address its problems over arrears, which amounted to 133 million dollars, an IMF statement said after the board meeting.
The official however said "many outstanding issues need to be resolved before the IMF and other multilaterals like the World Bank and the African Development Bank can provide financial assistance to Zimbabwe."
"This is a first step that will start to resolve some of the outstanding issues," he added.
The new government led by Prime Minister Morgan Tsvangirai has made it a priority to restore relations with major international organisations and revive the country's economy.
In February, Tsvangirai joined President Robert Mugabe in a power sharing government.
"The government's forward-looking policy intentions are sound but their success mainly depends on the authorities' ability to sustain political commitment and strengthen technical capacity," an IMF report released this week said.
"Other risks include political tensions within the unity government and unfilled budgetary financing gaps."
HARARE (AFP) — The International Monetary Fund (IMF) will send a team to Zimbabwe next week to assess the country's tax policy, banking and governance issues, an official said on Thursday.
The IMF technical team, the second delegation from the institution since March, will be in the country from Monday until May 29.
"An IMF delegation will be in the country on Monday next week to assess the country's financial systems," an official close to the delegation told AFP.
"The delegation's visit follows the executive board's decision early this month which approved technical assistance in the areas of tax policy and administration, payments system, lender-of-last-resort operations and banking supervision, central banking governance and accounting."
On May 6, the IMF announced that it had resumed technical assistance to targeted areas in Zimbabwe following consultations with the new unity government in the southern African country.
The board took into account a "significant improvement in Zimbabwe's co-operation on economic policies" to address its problems over arrears, which amounted to 133 million dollars, an IMF statement said after the board meeting.
The official however said "many outstanding issues need to be resolved before the IMF and other multilaterals like the World Bank and the African Development Bank can provide financial assistance to Zimbabwe."
"This is a first step that will start to resolve some of the outstanding issues," he added.
The new government led by Prime Minister Morgan Tsvangirai has made it a priority to restore relations with major international organisations and revive the country's economy.
In February, Tsvangirai joined President Robert Mugabe in a power sharing government.
"The government's forward-looking policy intentions are sound but their success mainly depends on the authorities' ability to sustain political commitment and strengthen technical capacity," an IMF report released this week said.
"Other risks include political tensions within the unity government and unfilled budgetary financing gaps."
Wednesday, May 13, 2009
Zimbabwe: Investors to Get Perks
11 May 2009
Zimbabwe plans to overhaul investment regulations and policies and release a prospectus of investment opportunities as part of its action plan to attract investors.
Prime Minister Morgan Tsvangirai said the plan also lays the framework for the economic revival programme targeted at putting the country back on the right track.
He said a beneficial partnership with the private sector would be nurtured and the state's role would be restricted to facilitating investment, reports Business Day .
Telecommunications, tourism, mining, agriculture and manufacturing are some of the key sectors requiring urgent investment.
"We need investment in many areas, particularly rehabilitation and repair of broken infrastructure..." Tsvangirai said.
The government is working on various incentives to woo investors to the south African country devastated by years of mismanagement.
Zimbabwe plans to overhaul investment regulations and policies and release a prospectus of investment opportunities as part of its action plan to attract investors.
Prime Minister Morgan Tsvangirai said the plan also lays the framework for the economic revival programme targeted at putting the country back on the right track.
He said a beneficial partnership with the private sector would be nurtured and the state's role would be restricted to facilitating investment, reports Business Day .
Telecommunications, tourism, mining, agriculture and manufacturing are some of the key sectors requiring urgent investment.
"We need investment in many areas, particularly rehabilitation and repair of broken infrastructure..." Tsvangirai said.
The government is working on various incentives to woo investors to the south African country devastated by years of mismanagement.
Tuesday, May 12, 2009
Gono desperately seeking to destroy GNU and divide the Nation
By GARIKAI AGENDA CHIMUKA
The recent propaganda blitz being carried out by Gideon Gono by abusing the Herald through the self gratification stage managed interviews shows that our Governor is still in shock as his former powers are slowly but surely being eroded by the new unity government.
Garikai Chimuka - GMRI SENIOR POLITICAL ANALYST
The governor is now running scared like a headless chicken and in the process trying to incite in particular war veterans to fight Minister Biti and subsequently, the unity government
After the second hand car fiasco, Gono tried hard to set the new farmers particularly the rag tag elements within that group masquerading as war veterans against Biti by claiming that he had ordered the return of all farm equipment and machinery.
The allegations and strategy however failed to fly not least because only a fool would believe that Biti issued that order in the first place but because the Governor is no longer taken seriously by all sober minded Zimbabweans including rational ZANU PF supporters
Although Gono was trying to pretend that the RBZ will no longer be involved in quasi-fiscal activities, he has found this too hard to swallow for with it goes all his source of patronage and power since he can no longer be able to bribe and manipulate everyone like he used to do
This is why Gono is trying to narrowly define quasi-fiscal activities by arguing that everything he is dishing out like confetti starting with second hand cars to MPs and now fertilizer under the Fertilizer For Debt Swap was purchased long back before the new policy and thus distributing it by the RBZ does not in any way represent quasi-fiscal activities
This is clearly a pathetic argument that can only fool the gullible.
Quasi- fiscal activities must be interpreted broadly not only to refer to the use or abuse of taxpayers? money outside of the budgetary process but it also includes trying to usurp the powers of the various government ministries.
It does not matter whether cars were bought 100 years ago, what matters is are they being distributed by the right channels?
Why does Gono wants to do everything when there are constitutional bodies mandated to do so?
Take for example the so called Fertilizer for Debt Swap.
The governor claims that the government owes farmers about 20 million dollars.
Gono then goes on to say that he is now going to be distributing fertilizers in lieu of the debt the government owes farmers.
He then tries to take all Zimbabweans for fools by claiming that the fertilizer had been bought by the RBZ in 2008 and thus distributing it through the RBZ does not constitute quasi-fiscal activities.
Firstly, if it is true that Gono was holding on to fertilizers in dark alleys despite the widespread shortage of fertilizers for farmers in the 2008 farming seasons, then Gono is a saboteur who must be fired.
For how can he explain holding on to fertilizer when farmers were failing to access that fertilizer?
Isnt it Gono who declared the year 2008 season as the ?mother of all farming seasons? yet he was holding on to fertilizers.
Who is fooling who here?
The only plausible explanation is that the fertilizer is being clandestinely bought for nefarious political activities whilst hiding under the banner of Fertilizer for Debt Swap.
That is why most of us have been calling for a thorough investigation into the Marange diamonds and unravel the RBZ's role in the trade.
For where else can Gono get the money to run a parallel structure in complete challenge to the unity government?
Secondly, why does Gono want to distribute the fertilizers himself and not the Ministry of Agriculture?
If indeed the RBZ has ended quasi-fiscal activities, it must now hand over the fertilizer and schedule of what each farmer is owed to the Ministry of Agriculture who must distribute the fertilizer to the farmers and can be held accountable for the programme through parliament
It was also shocking to read Gono trying to incite MPs by claiming that they must be on watch for what he calls , alien?
pieces of advice in the national budget as revised by Minister Biti.Honestly, what does Gono mean by alien??
If the country should be wary of alien advice, then they must also be even more worried by the use of alien ? money especially given that money rather than advise defines nationhood
Therefore how can Gono accept alien? money whilst rejecting alien? advise.
The Governor is clearly sinking and clutching at straws in the attempt of fighting for relevance.
However, the people of Zimbabwe will never allow Gono to have his cake and eat it
Garikai Chimuka is the Senior Political Analyst at GMRI Capital.
He is based in the Netherlands and can be contacted at garikai@gmricapital.com
The recent propaganda blitz being carried out by Gideon Gono by abusing the Herald through the self gratification stage managed interviews shows that our Governor is still in shock as his former powers are slowly but surely being eroded by the new unity government.
Garikai Chimuka - GMRI SENIOR POLITICAL ANALYST
The governor is now running scared like a headless chicken and in the process trying to incite in particular war veterans to fight Minister Biti and subsequently, the unity government
After the second hand car fiasco, Gono tried hard to set the new farmers particularly the rag tag elements within that group masquerading as war veterans against Biti by claiming that he had ordered the return of all farm equipment and machinery.
The allegations and strategy however failed to fly not least because only a fool would believe that Biti issued that order in the first place but because the Governor is no longer taken seriously by all sober minded Zimbabweans including rational ZANU PF supporters
Although Gono was trying to pretend that the RBZ will no longer be involved in quasi-fiscal activities, he has found this too hard to swallow for with it goes all his source of patronage and power since he can no longer be able to bribe and manipulate everyone like he used to do
This is why Gono is trying to narrowly define quasi-fiscal activities by arguing that everything he is dishing out like confetti starting with second hand cars to MPs and now fertilizer under the Fertilizer For Debt Swap was purchased long back before the new policy and thus distributing it by the RBZ does not in any way represent quasi-fiscal activities
This is clearly a pathetic argument that can only fool the gullible.
Quasi- fiscal activities must be interpreted broadly not only to refer to the use or abuse of taxpayers? money outside of the budgetary process but it also includes trying to usurp the powers of the various government ministries.
It does not matter whether cars were bought 100 years ago, what matters is are they being distributed by the right channels?
Why does Gono wants to do everything when there are constitutional bodies mandated to do so?
Take for example the so called Fertilizer for Debt Swap.
The governor claims that the government owes farmers about 20 million dollars.
Gono then goes on to say that he is now going to be distributing fertilizers in lieu of the debt the government owes farmers.
He then tries to take all Zimbabweans for fools by claiming that the fertilizer had been bought by the RBZ in 2008 and thus distributing it through the RBZ does not constitute quasi-fiscal activities.
Firstly, if it is true that Gono was holding on to fertilizers in dark alleys despite the widespread shortage of fertilizers for farmers in the 2008 farming seasons, then Gono is a saboteur who must be fired.
For how can he explain holding on to fertilizer when farmers were failing to access that fertilizer?
Isnt it Gono who declared the year 2008 season as the ?mother of all farming seasons? yet he was holding on to fertilizers.
Who is fooling who here?
The only plausible explanation is that the fertilizer is being clandestinely bought for nefarious political activities whilst hiding under the banner of Fertilizer for Debt Swap.
That is why most of us have been calling for a thorough investigation into the Marange diamonds and unravel the RBZ's role in the trade.
For where else can Gono get the money to run a parallel structure in complete challenge to the unity government?
Secondly, why does Gono want to distribute the fertilizers himself and not the Ministry of Agriculture?
If indeed the RBZ has ended quasi-fiscal activities, it must now hand over the fertilizer and schedule of what each farmer is owed to the Ministry of Agriculture who must distribute the fertilizer to the farmers and can be held accountable for the programme through parliament
It was also shocking to read Gono trying to incite MPs by claiming that they must be on watch for what he calls , alien?
pieces of advice in the national budget as revised by Minister Biti.Honestly, what does Gono mean by alien??
If the country should be wary of alien advice, then they must also be even more worried by the use of alien ? money especially given that money rather than advise defines nationhood
Therefore how can Gono accept alien? money whilst rejecting alien? advise.
The Governor is clearly sinking and clutching at straws in the attempt of fighting for relevance.
However, the people of Zimbabwe will never allow Gono to have his cake and eat it
Garikai Chimuka is the Senior Political Analyst at GMRI Capital.
He is based in the Netherlands and can be contacted at garikai@gmricapital.com
Sunday, May 10, 2009
Zimbabwe: Gold mining firm resumes operations
By Individual.com, May 9th, 2009 at 6:47 pm
BULAWAYO - Turk Mine, just outside Bulawayo, is now back to full production and has so far earned US$1,3 million since it resumed operations in February. The gold mine suspended operations in
BULAWAYO - Turk Mine, just outside Bulawayo, is now back to full production and has so far earned US$1,3 million since it resumed operations in February. The gold mine suspended operations in
Saturday, May 9, 2009
MTN, Orascom interested in Zimbabwean mobile market
May 8, 2009 in Mobile and Telecoms
A leading Zimbabwean market comentator has named MTN and Orascom as the companies behind manouvres to buy into Zimbabwe’s NetOne and Telecel respectively.
The market analysts, Bulls and Bears, reported that NetOne had been approached by MTN with the view to purchasing a significant stake.
“NetOne has reportedly been approached by MTN of SA and indications are that the SA player will get about 40% stake in a JV where MTN will be the technical Partner. Orascom has also reportedly indicated that it will inject more funds into Telecel,” Bulls and Bears said.
“It is supposedly these behind the scenes developments that forced Econet to seek for the US$93m funding through EWG.” The companies could not be reached to comment on the reports.
The Zimbabwe telecommunications industry, like most businesses in the Southern African nation, has suffered from prolonged political turmoil, instability and hyperinflation.
The government recently revealed plans to reform the sector by removing high tax charges on imported equipment, and allowing network operators to bill customers in foreign currencies.
A leading Zimbabwean market comentator has named MTN and Orascom as the companies behind manouvres to buy into Zimbabwe’s NetOne and Telecel respectively.
The market analysts, Bulls and Bears, reported that NetOne had been approached by MTN with the view to purchasing a significant stake.
“NetOne has reportedly been approached by MTN of SA and indications are that the SA player will get about 40% stake in a JV where MTN will be the technical Partner. Orascom has also reportedly indicated that it will inject more funds into Telecel,” Bulls and Bears said.
“It is supposedly these behind the scenes developments that forced Econet to seek for the US$93m funding through EWG.” The companies could not be reached to comment on the reports.
The Zimbabwe telecommunications industry, like most businesses in the Southern African nation, has suffered from prolonged political turmoil, instability and hyperinflation.
The government recently revealed plans to reform the sector by removing high tax charges on imported equipment, and allowing network operators to bill customers in foreign currencies.
ZANU PF Governors to be paid for 5 Years After Ousting: WHY???
May 7, 2009 By Sakhile Malaba © zimbabwemetro.com ⋅
There is a storm brewing over the appointments and possible ousting of president Mugabe’s imposed Governors.
The six ousted Governors are, Cain Mathema, (Bulawayo) Sothokozile Mathuthu (Matebeleland North) Angeline Masuku (Mat South), David Karimanzira (Harare) and Titus Maluleke (Masvingo).
The three principals to the Global Political Agreement have agreed to compensate 6 ZANU PF governors who will step down to make way for new ones from the MDC formations, Newsreel learnt on Thursday.A highly placed source told us that during their Tuesday meeting, Robert Mugabe, Morgan Tsvangirai and Arthur Mutambara agreed that six out of the ten governors appointed by Mugabe on 24th August last year would have to step down. The sticking point during their previous meetings was what to do with the governors once they step down.
“The thinking between Tsvangirai and Mutambara was that it was not their problem to deal with that issue since they were not involved in their appointments in the first place. They felt Mugabe was best placed to deal with that because he unilaterally appointed the governors without consulting them,” our source told us.
Mugabe reportedly agreed to the sharing of Provincial governor positions under an earlier agreed formula but under one condition, that those jobless governors be paid their full salaries and benefits for up to five years. A governor’s term is usually five years but analysts point out that the inclusive government will probably last 18 months before fresh elections are held.
Economist Luke Zunga said the principals should approach SADC or the AU for the compensation since the inclusive government was broke.
“How can Zimbabweans be punished by providing tax money to compensate people who were irregularly appointed. The country is broke and the principals should go to SADC and the AU who are the guarantors of the inclusive government,” Zunga said.
Under the present formula the party with the most seats in a given province would nominate the governor in that province. Therefore, MDC-T is entitled to have five governors, Zanu PF four and the Mutambara MDC one.
The MDC-T is currently entitled to appoint governors in Harare, Bulawayo, Matabeleland North, Masvingo and Manicaland, while Mugabe should have the three Mashonaland provinces and Midlands. The Mutambara MDC faction will appoint a governor in Matabeleland South.
Tsvangirai’s spokesman James Maridadi confirmed to us that the issue of governors had now been dealt with. He also confirmed that the principals had agreed to compensate those who were to step down.
“Some will step down but others will remain. Those who will step down will be compensated,” Maridadi said. He however could not say how much each governor will receive as compensation.Maridadi said the principals also agreed during their Tuesday meeting that they would put finality to the remaining issues next week.
He added that the principals had made progress on some issues, and disagreement on others, but they have promised to deal with all the remaining concerns when they continue with their negotiations next week Tuesday.
The other outstanding issues which Mugabe has refused to back down are the reappointments of central bank governor Gideon Gono and Attorney-General Johannes Tomana, and the swearing in of MDC Treasurer General Roy Bennett as Deputy Minister of Agriculture.
The delay in finding a lasting solution to these concerns forced the MDC on Wednesday to issue a five day ultimatum to the principals to deal with them by Monday next week.
MDC Secretary General Tendai Biti told journalists in Harare that the slow pace of the negotiations were becoming of great concern to them. He said, in their view these issues should have been concluded soon after the formation of the inclusive government in February.
He said the party was worried that some elements in government, ZANU PF, the security forces and public media, ‘continued to disregard some clear provisions laid out in the Global Political Agreement.’
“There are a number of toxic and poisonous attitudes that some of these institutions are showing. Their attitude is as if they are in a war situation,” Biti said.
There is a storm brewing over the appointments and possible ousting of president Mugabe’s imposed Governors.
The six ousted Governors are, Cain Mathema, (Bulawayo) Sothokozile Mathuthu (Matebeleland North) Angeline Masuku (Mat South), David Karimanzira (Harare) and Titus Maluleke (Masvingo).
The three principals to the Global Political Agreement have agreed to compensate 6 ZANU PF governors who will step down to make way for new ones from the MDC formations, Newsreel learnt on Thursday.A highly placed source told us that during their Tuesday meeting, Robert Mugabe, Morgan Tsvangirai and Arthur Mutambara agreed that six out of the ten governors appointed by Mugabe on 24th August last year would have to step down. The sticking point during their previous meetings was what to do with the governors once they step down.
“The thinking between Tsvangirai and Mutambara was that it was not their problem to deal with that issue since they were not involved in their appointments in the first place. They felt Mugabe was best placed to deal with that because he unilaterally appointed the governors without consulting them,” our source told us.
Mugabe reportedly agreed to the sharing of Provincial governor positions under an earlier agreed formula but under one condition, that those jobless governors be paid their full salaries and benefits for up to five years. A governor’s term is usually five years but analysts point out that the inclusive government will probably last 18 months before fresh elections are held.
Economist Luke Zunga said the principals should approach SADC or the AU for the compensation since the inclusive government was broke.
“How can Zimbabweans be punished by providing tax money to compensate people who were irregularly appointed. The country is broke and the principals should go to SADC and the AU who are the guarantors of the inclusive government,” Zunga said.
Under the present formula the party with the most seats in a given province would nominate the governor in that province. Therefore, MDC-T is entitled to have five governors, Zanu PF four and the Mutambara MDC one.
The MDC-T is currently entitled to appoint governors in Harare, Bulawayo, Matabeleland North, Masvingo and Manicaland, while Mugabe should have the three Mashonaland provinces and Midlands. The Mutambara MDC faction will appoint a governor in Matabeleland South.
Tsvangirai’s spokesman James Maridadi confirmed to us that the issue of governors had now been dealt with. He also confirmed that the principals had agreed to compensate those who were to step down.
“Some will step down but others will remain. Those who will step down will be compensated,” Maridadi said. He however could not say how much each governor will receive as compensation.Maridadi said the principals also agreed during their Tuesday meeting that they would put finality to the remaining issues next week.
He added that the principals had made progress on some issues, and disagreement on others, but they have promised to deal with all the remaining concerns when they continue with their negotiations next week Tuesday.
The other outstanding issues which Mugabe has refused to back down are the reappointments of central bank governor Gideon Gono and Attorney-General Johannes Tomana, and the swearing in of MDC Treasurer General Roy Bennett as Deputy Minister of Agriculture.
The delay in finding a lasting solution to these concerns forced the MDC on Wednesday to issue a five day ultimatum to the principals to deal with them by Monday next week.
MDC Secretary General Tendai Biti told journalists in Harare that the slow pace of the negotiations were becoming of great concern to them. He said, in their view these issues should have been concluded soon after the formation of the inclusive government in February.
He said the party was worried that some elements in government, ZANU PF, the security forces and public media, ‘continued to disregard some clear provisions laid out in the Global Political Agreement.’
“There are a number of toxic and poisonous attitudes that some of these institutions are showing. Their attitude is as if they are in a war situation,” Biti said.
Hyper Hyper-Inflation
By Bob Davis
You know things are really awful when a nation’s rate of hyperinflation gets into the territory of Weimar Germany. Between August 1922 and November 1923, German inflation rose about 10 billion percent, according to a textbook by Columbia University’s R. Glenn Hubbard.
A Zimbabwe 50 billion dollar bill. (Getty Images)
Zimbabwe topped that record for economic mismanagement last year. The country’s annual rate peaked at 489 billion percent in September 2008, the International Monetary Fund reported, and for the full year averaged 56 billion percent. The Zimbabwe dollar became literally worthless, the IMF said, and by November 2008 it “virtually disappeared from circulation.”
Fed up, locals started using U.S. dollars, which put a sharp lid on inflation. This year, the IMF estimates that inflation will descend from hyper-stratosphere and average 6.9%, when measured in dollar terms.
The IMF is somewhat optimistic about a Zimbabwe turnaround now that the nation has a unity government, formed by rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai. When inflation was out of control, Zimbabwe’s gross domestic product fell 14% in 2008, on top of a 40% decline from 2000 to 2007, the IMF reported. In 2009, the IMF estimated, the economy will expand 2.8%.
So was Zimbabwe’s bout of hyper-inflation the worst since the 1920s? An IMF spokesman didn’t know.
Yugoslavia or Hungary may hold the record. According to a Web site maintained by Thayer Watkins, a San Jose State University economist, between October 1993 and January 1995, Yugoslavia, which then consisted of Serbia and Montenegro, suffered through a hyperinflation of five quadrillion percent. (That’s 5 followed by 15 zeroes.) Hungary’s inflation in 1945 and 1946 may have hit four quintillion percent some months. (Four followed by 18 zeroes.)
An IMF report from 2000 pegged Yugoslavia’s 1992 inflation at 6,147 pecent but didn’t have an estimate for 1993 through 1995. As for Hungary, the IMF didn’t open its doors for business until 1947, after the Hungarian hyperinflation subsided.
You know things are really awful when a nation’s rate of hyperinflation gets into the territory of Weimar Germany. Between August 1922 and November 1923, German inflation rose about 10 billion percent, according to a textbook by Columbia University’s R. Glenn Hubbard.
A Zimbabwe 50 billion dollar bill. (Getty Images)
Zimbabwe topped that record for economic mismanagement last year. The country’s annual rate peaked at 489 billion percent in September 2008, the International Monetary Fund reported, and for the full year averaged 56 billion percent. The Zimbabwe dollar became literally worthless, the IMF said, and by November 2008 it “virtually disappeared from circulation.”
Fed up, locals started using U.S. dollars, which put a sharp lid on inflation. This year, the IMF estimates that inflation will descend from hyper-stratosphere and average 6.9%, when measured in dollar terms.
The IMF is somewhat optimistic about a Zimbabwe turnaround now that the nation has a unity government, formed by rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai. When inflation was out of control, Zimbabwe’s gross domestic product fell 14% in 2008, on top of a 40% decline from 2000 to 2007, the IMF reported. In 2009, the IMF estimated, the economy will expand 2.8%.
So was Zimbabwe’s bout of hyper-inflation the worst since the 1920s? An IMF spokesman didn’t know.
Yugoslavia or Hungary may hold the record. According to a Web site maintained by Thayer Watkins, a San Jose State University economist, between October 1993 and January 1995, Yugoslavia, which then consisted of Serbia and Montenegro, suffered through a hyperinflation of five quadrillion percent. (That’s 5 followed by 15 zeroes.) Hungary’s inflation in 1945 and 1946 may have hit four quintillion percent some months. (Four followed by 18 zeroes.)
An IMF report from 2000 pegged Yugoslavia’s 1992 inflation at 6,147 pecent but didn’t have an estimate for 1993 through 1995. As for Hungary, the IMF didn’t open its doors for business until 1947, after the Hungarian hyperinflation subsided.
Friday, May 8, 2009
Re-introduction of zuim dollar will provide stimulus
Normally when Zimbabwe or any other nation has a serious problem there has to be a scapegoat or a fall guy to take all the blame for the crisis. In Zimbabwe’s case the economic decline is some how being blamed on the Zimbabwe dollar. And for that reason the Zimbabwe dollar was scraped. This argument totally misses the point that the Zimbabwe dollar previously functioned perfectly up to about 2004 .The dollar collapsed when the RBZ changed course and was transformed into a whole sale mega commercial bank and re-branded “ a developmental institution”. What was needed was to remove the person or people who caused the currency and not to remove or suspend the currency. In short this is equivalent of abandoning your house because you have just discovered that its infested with bed bugs. You don’t abandon the house you have to find ways to remove the bugs .There is need to clarify various aspects around money, inflation and economic growth .When governments produce money more rapidly than economic growth, the money supply overtakes economic value. Therefore, the excessive money supply eventually leads to depreciation of the market value of all money issued. This is called inflation. If the inflation rate approaches 50% per month that’s hyper inflation which is what Zimbabwe experienced. The cause of inflation is clearly excessive money supply and printing without a matched increased production .And to tame such inflation you stop printing more money what ever in circulation can be left in circulation with its value though low it will stabilize .If the economy and other factors improve then the currency will appreciate .Zimbabwe can introduce a new currency any day. This doesn’t have to wait for any assumed formula .The assumption that there is no sufficient economic activity to hold the value is misplaced since Zimbabwe is not using the Gold Standard .The gold standard is a monetary system in which a country’s medium of exchange are currency coins and notes that are can readily be convertible into pre-set, fixed quantities of gold. The gold amount is actually available and locked in a vault or some safe place .The gold standard is not currently used by any government, having been replaced completely by fiat currency which refers to legal tender made effective currency by an Act of Government or some legal authority.Zimbabwe’s inflation was not caused by having a local currency. Zimbabwe once had a local currency which had a steady value over a long period of time. Even though it remained a soft currency it was predictable and did not collapse . It was caused by excessive printing of the Zimbabwe dollar. So inflation could have been tamed by simply stopping the excessive currency printing. This would have partially stabilized the Zimbabwe dollar even though it would have remained weak due to a precarious balance of payment position .The argument provided that the Zimbabwe dollar was worthless because it lacked something to back it up would only have been correct and accurate if Zimbabwe was sticking to the Gold standard . This practice, before World War I, had been to link it to the sum of bullion held by the treasury the so-called 'gold standard. It meant the Governments can only print enough money backed by actual /real gold reserves they held. But this was long abandoned by most countries including the USA which dumped the Gold standard around 1973 adopting the “FIAT MONEY” Money is normally defined as anything that is generally accepted as payment for goods and services and repayment of debts. This is why Zimbabwe has been operating over the last 5 or so years with no proper currency or money. Instead there was the bearer cheques .The main uses of money are as a medium of exchange, a unit of account, and a store of value. The bearer cheques were not backed by any gold or any reserves whatsoever. But still for close to 5 years they allowed trade to take place. The currency went into a free fall after it became clear that the Central Bank was now printing money and directly feeding the black market without any record or trace of how much money had been printed. Instances such as Flat Water Investments when Z$ 7.5 trillion was released to a shelf company without any proper record or legal agreement served to confirm that the Zimbabwe dollar was now a Mickey mouse currency not to be trusted.The key here is a credible record of how much currency is being printed and is it being injected into the financial system through established international standards. If the Central Bank of any country including USA decide to clandestinely print money and hap-hazardly inject that money into the financial system then that currency will join the Zimbabwe dollar in the grave yard. Note the problem is not the currency. The problem is those who manage or rather mis manage it. Its more like having some salt in your vegetables. Its healthy to have some salt but too much of it is not good or healthy. So just because somebody has put too much salt in vegetables it doesn’t mean salt is bad or vegetables are bad. it’s the same thing with the Zimbabwe dollar. People meant to safe guard the Zimbabwe dollar abused the currency, this doesn’t make the currency bad or the trouble causer. Its clear who or what the problem is.There is need to highlight that Zimbabwe like all nations was using Fiat Money .Fiat money is any money whose value is determined by legal means. The terms fiat currency and fiat money relate to types of currency or money whose usefulness results not from any intrinsic value or guarantee that it can be converted into gold or another currency, but instead from a government's order (fiat) that it must be accepted as a means of payment. Therefore this money has not direct link with economic value. It derives its value from legal power and enforceability at law as accepted method to settle debts.Fiat money is created when a type of credit money typically notes from a central bank, such as the Federal Reserve System in the U.S.) is declared by a government act to be acceptable and officially-recognized payment for all debts, both public and private. The current unconfirmed reports claim Zimbabwe’s economy is functioning at 20% of it capacity. And Zimbabwe dollar will be re-introduced when the economy reaches around 60% of capacity . It is clear that it will take a very long time to have the economy recover without injection of out side capital. Or some form of internal stimulus supported by external funding and an improvement in sentiment and currency management.A look at the current Economic downturn will clarify the point why Zimbabwe needs the Zimbabwe dollar as a matter of urgency .There is a basic need to understand how part of an Economic Stimulus package works . In short the Government prints its own money. This money is not backed by gold or any real tangible reserve except that particular Government’s Taxing power as a way to make good of any debts created as part of the Stimulus package .Looking at the USA stimulus package will help .The American Recovery and Reinvestment Act of 2009 is an economic stimulus package enacted by the United States Congress and signed into law by President Barrack Obama on February 17, 2009. The Act of Congress was based largely on proposals made by President Obama and is intended to provide a stimulus to the U.S. economy in the wake of the economic downturn. The measures are nominally worth $787 billion. We cant say the same about the various Quasi Fiscal Activities which were the cover up to print excessive Zimbabwe dollars. No independent body Government or private can verify how much was printed and for that reason the old Zimbabwe dollar could not be valued because for u to value something u need to know the quantity that’s available otherwise no credible valuation can be done of that currency. So the GNU needs to introduce a new Zimbabwe Dollar which is backed by credible systems in terms of how much is printed and how its injected in the system. This will assist the GNU to have some breathing space whilst long term measures are being developed and implemented. This will slowly result in that currency stabilizing and appreciating as exports pick up.What is clear from the USA Stimulus package is that its clear on several things . The amount is known, congress was involved, senate was involved, the President had to make a proposal and fight hard to have it approved .The Congressional Budget Office was involved. The Congressional Budget Office (CBO) is a federal agency within the legislative branch of the United States government. It is a government agency that provides economic data to Congress. The involvement of all these various entities serves to lend credibility to the whole process and the currency remains respectable as everyone knows how much was printed ,for what and how it will be injected in the financial system. A country that does not have its own currency can not effect such a stimulus package. And for this reason the recovery of the Zimbabwean economy is in fact not in the hands of Zimbabweans directly.A practical example can illustrate the effect that a re-introduced Zimbabwe Dollar will have on Government functions .Assuming the GNU re-introduces a new Zimbabwe dollar and prints sufficient quantity to pay all civil servants for a period of 6 months ( salaries paid monthly of course).These employees have some basic but critical needs that can be paid for using the re-introduced Zimbabwe dollar. Examples include payments for school fees at Government Schools,ZESA bills,ZINWA bills, City council rate bills and any other Government service including payment of income and corporate tax .This should ideally have been introduced when the GNU was sworn in. Because everyone was euphoric and hopeful the currency would have been easily accepted as people believed the GNU had potential and capacity to deliver service plus attract additional funds. Even though its late the same measure can still be taken with a bit of raising public awareness that the currency is no longer under the management of the previous individuals who molested the national currency in the name of sanctions busting .The introduction of such a stimulus package in form of currency re-introduction to pay civil servants is good policy in as far as allows the GNU to deliver service plus pay for actual work done whilst other resources are being sought. Right now it appears the game plan is limited to begging the international community. Whilst this is necessary it is critical that more dynamic options be placed on the table and be explored . The re-introduced Zimbabwe dollar to pay civil servants would then need to be properly packaged as a Stimulus package. Because it is. In the recovery of the Economy Zimbabwe Government will have to contribute something beyond the normal sloganeering. That contribution can be in the form of the Civil Service salaries package as outlined above or a modified version thereof. It definitely doesn’t help to keep going around begging without a plan to be doing something on the ground to show that Zimbabweans themselves are determined to succeed. Whilst people have a good reason to be skeptical about a local currency there is need to be able to separate the fact that the currency was sacrificed for political correctness leaving the people at the Reserve Bank who systematically destroyed the currency .These are the people who should have been suspended not the Zimbabwe dollar.Gilbert Muponda is an Entrepreneur based in Canada. He is Founder of GMRI Capital He can be reached at; Email: gilbert@gilbertmuponda.com . Skype ID: gilbert.Muponda Twitter ; http://twitter.com/gmricapital Phone: 1-416-841-5542
Thursday, May 7, 2009
Rush to open Zimbabwe mines as gold output down
2009-05-06 17:00:00
By Geena Paul
In a year which saw soaring gold prices and demand, everybody is eyeing a country with 1,00,000 per cent inflation. That is Zimbabwe, which is reeling under severe inflation and internal problems. Still international miners are eyeing Zimbabwe because of its abundant gold mines. Mining is Zimbabwe’s one major source of economy. But Draconian laws had been blocking the mining industry from expanding business in Zimbabwe. Following this, the government has been working on new rules for mining in the country. Now, the country has implemented these laws and gold producers are re-opening mines shut down in Zimbabwe. As a result of the new set of rules, the companies can sell gold directly in world markets which was not the case earlier.
The rush to re-open the mines comes at a time when Zimbabwe’s President Robert Mugabe administration is seeking to revitalise the economy. Zimbabwe’s wealth of mineral resources could attract some daring investors. However, Zimbabwe’s gold output came down by around 300 kg between January and April 2009 compared to 1,407 kg in the same period last year. The reason for this is a wave of gold firms shut down mines leading to near halt in output in the face of sharply rising costs and frequent power cuts. A key stumbling block to mining investment in Zimbabwe — which has the world’s second-biggest platinum reserves and hefty deposits of diamonds, coal and nickel — is a law limiting foreign ownership of mines to 49 per cent. But government has indicated that it was prepared to reconsider allowing investors to have more than 49 per cent shareholding, depending on the size of their investment. Gold producers already in the country have jumped at the opportunity presented by the central bank, which in February relinquished its role as sales agent for gold, allowing firms for the first time to sell the metal and retain all the proceeds. Zimbabwe’s central bank, which owes gold miners millions of dollars, plans to repay this in special foreign currency bonds. A number of gold firms that had shut down their mines, leading to near-cessation in output are now seeking funds to resume operations. The country’s biggest gold producer, Metallon Gold, London-listed Mwana Africa and Canada’s New Dawn Mining Corp are all planning to re-open their gold mines within months. According to the new law, companies can keep all the proceeds from sales of gold mined in Zimbabwe and a number of firms, including Metallon Gold, Caledonia Mining, New Dawn Mining and Mwana Africa, are now planning to re-start production on properties in the country
By Geena Paul
In a year which saw soaring gold prices and demand, everybody is eyeing a country with 1,00,000 per cent inflation. That is Zimbabwe, which is reeling under severe inflation and internal problems. Still international miners are eyeing Zimbabwe because of its abundant gold mines. Mining is Zimbabwe’s one major source of economy. But Draconian laws had been blocking the mining industry from expanding business in Zimbabwe. Following this, the government has been working on new rules for mining in the country. Now, the country has implemented these laws and gold producers are re-opening mines shut down in Zimbabwe. As a result of the new set of rules, the companies can sell gold directly in world markets which was not the case earlier.
The rush to re-open the mines comes at a time when Zimbabwe’s President Robert Mugabe administration is seeking to revitalise the economy. Zimbabwe’s wealth of mineral resources could attract some daring investors. However, Zimbabwe’s gold output came down by around 300 kg between January and April 2009 compared to 1,407 kg in the same period last year. The reason for this is a wave of gold firms shut down mines leading to near halt in output in the face of sharply rising costs and frequent power cuts. A key stumbling block to mining investment in Zimbabwe — which has the world’s second-biggest platinum reserves and hefty deposits of diamonds, coal and nickel — is a law limiting foreign ownership of mines to 49 per cent. But government has indicated that it was prepared to reconsider allowing investors to have more than 49 per cent shareholding, depending on the size of their investment. Gold producers already in the country have jumped at the opportunity presented by the central bank, which in February relinquished its role as sales agent for gold, allowing firms for the first time to sell the metal and retain all the proceeds. Zimbabwe’s central bank, which owes gold miners millions of dollars, plans to repay this in special foreign currency bonds. A number of gold firms that had shut down their mines, leading to near-cessation in output are now seeking funds to resume operations. The country’s biggest gold producer, Metallon Gold, London-listed Mwana Africa and Canada’s New Dawn Mining Corp are all planning to re-open their gold mines within months. According to the new law, companies can keep all the proceeds from sales of gold mined in Zimbabwe and a number of firms, including Metallon Gold, Caledonia Mining, New Dawn Mining and Mwana Africa, are now planning to re-start production on properties in the country
Zimbabwe economy shrank 14% last year
The Zimbabwe economy shrank 14% last year according to an e-mailed statement from the International Monetary Fund. The fund says the contraction in the countries economic caused "catastrophic" poverty. From Bloomberg, reporters Nasreen Seria and Mike Cohentells tell us more of what was in the IMF's statement.
Between 2000 and 2007, the economy shrunk 40 percent, while inflation was estimated at a record 500 billion percent last September, the Washington-based lender said in an e-mailed statement today. The economy will probably rebound this year, expanding an estimated 2.8 percent, the IMF forecast.Zimbabwe’s economy has shrunk every year this past decade after President Robert Mugabe seized farms belonging to white farmers to redistribute to blacks. That slashed export earnings, resulting in shortages of food, fuel and foreign exchange. Mugabe agreed this year to share power with the opposition Movement for Democratic Change, paving the way for Zimbabwe to begin negotiating with the IMF and other lenders for loans.“A decade of high inflation, severe economic decline, and rising poverty has culminated in an acute, ongoing humanitarian crisis,” the IMF said. “Zimbabwe is now at a critical juncture.”The IMF’s Executive Board agreed today to lift its suspension of “technical assistance” to Zimbabwe and plans to help the country with advice on tax policy, payments systems and banking supervision, the fund said.The IMF requires Zimbabwe to clear its arrears to all multinational lenders and demonstrate a sound policy track record before it can resume lending to the southern African nation. Zimbabwe’s debt arrears total about $3.8 billion, with about $133 million owed to the IMF and a total of $1.1 billion to the World Bank and the African Development Bank.
Between 2000 and 2007, the economy shrunk 40 percent, while inflation was estimated at a record 500 billion percent last September, the Washington-based lender said in an e-mailed statement today. The economy will probably rebound this year, expanding an estimated 2.8 percent, the IMF forecast.Zimbabwe’s economy has shrunk every year this past decade after President Robert Mugabe seized farms belonging to white farmers to redistribute to blacks. That slashed export earnings, resulting in shortages of food, fuel and foreign exchange. Mugabe agreed this year to share power with the opposition Movement for Democratic Change, paving the way for Zimbabwe to begin negotiating with the IMF and other lenders for loans.“A decade of high inflation, severe economic decline, and rising poverty has culminated in an acute, ongoing humanitarian crisis,” the IMF said. “Zimbabwe is now at a critical juncture.”The IMF’s Executive Board agreed today to lift its suspension of “technical assistance” to Zimbabwe and plans to help the country with advice on tax policy, payments systems and banking supervision, the fund said.The IMF requires Zimbabwe to clear its arrears to all multinational lenders and demonstrate a sound policy track record before it can resume lending to the southern African nation. Zimbabwe’s debt arrears total about $3.8 billion, with about $133 million owed to the IMF and a total of $1.1 billion to the World Bank and the African Development Bank.
Tuesday, May 5, 2009
From John Robertson
The death of the unmourned Zimbabwe dollar has not quite removed the need to know exchange rates and the widely differing amounts that the equivalent of a US dollar, converted into Zimbabwe dollars, could pay for at different points in the past year. I have attached a table that traces the month-end history of the Zimbabwe dollar costs of a list of basic household needs and these are shown against the official and parallel market exchange rates of the time. You will see below those an attempt to work out the implied US dollar costs of a loaf of bread, but this part of the exercise was mainly to illustrate the extent of the absurdities. You will also see a spreadsheet with the parallel and official rates, but in this the detail becomes more complete after the August 2009 devaluation and zero-ectomy. The whole thing peters out as the Zim dollar faded away
Business Conditions in Zimbabwe, May 2009
Many Zimbabweans have enjoyed a significant change for the better in their personal circumstances in recent months, if only because the shops are better stocked and, now that they are priced in US dollars, the stocks are being offered at reasonably constant, if not falling prices. These constitute major improvements on the very poor supplies at very rapidly rising prices that all consumers experienced for some years before these dramatic changes.
While most people will readily accept that conditions are easier, the new circumstances fall a long way short of qualifying as government achievements. On the contrary, they all amount to government being forced to step aside because of its failures. Zimbabwe had no option but to adopt currency notes that belong to other countries when government could no longer patch up and prop up the wreckage of Zimbabwe’s own currency.
When they themselves didn’t want to receive Zimbabwe dollars, the government officials had to concede that they couldn’t force others to accept them. Even then, the wreckage of the system was left in place and slowed the pace of change for three more months before the Zimbabwe dollar was officially declared to be defunct.
With the Zimbabwe dollar’s demise, many of the Reserve Bank’s functions became redundant and it lost the ability to wield many of its former powers. The IMF, in its brief Press statement on its recent visit to Zimbabwe, generously observed that it “welcomed” government’s “commitment” to eliminate quasi-fiscal activities, but these activities were brought to a stop automatically because the Reserve Bank of Zimbabwe in not authorized to print US dollars.
Similarly, the IMF acknowledges that “positive steps…have already been implemented” in reference to the removal of price controls, foreign exchange surrender requirements and most exchange controls. In fact, these were not voluntary steps. The greatly resented impositions to which the IMF referred inevitably fell away with the collapse of the whole monetary structure.
Unfortunately, this collapse took down with it most of the private sector’s financial services infrastructure as well. The liquid assets of savings institutions and pension funds had already disappeared by the time the crunch came, but when it did, it wiped out what was left of personal and corporate deposits and forced the whole banking system into a liquidity crisis.
Regrettably, that is the starting point for the needed observations on business conditions. Serious shortages of foreign exchange remain firmly in place, despite the fact that all retail transactions and payments for utilities, rents, transport and all other services are being made in hard currency.
So far, efforts to borrow usefully large sums have yielded disappointing results, but large sums are urgently needed for many reasons. Zimbabwe’s ability to earn a reasonable foreign income from commodity exports, manufactured goods exports and tourism has been badly affected by the damage done to capacity in those sectors and to investor confidence. But all of these have become casualties of the severely degraded electricity, water, education, health, transport and communications services infrastructure. We now need funds to fix all of them, all at once.
This brings in the equally serious damage done by all recent events to Zimbabwe’s credit rating. Most of what government has chosen to describe as sanctions is simply the absolutely inevitable difficulty the country has in trying to borrow money, when we have failed to meet loan repayment obligations. Zimbabwe owes more than US$2,3 billion and the repayments are all in arrears. To get around that problem, Zimbabwe has to become immensely more deserving of help than the country is now.
Some local banks with international connections have been able to obtain conditional assurances that lines of credit will be offered, but the conditions usually include the production of evidence that government intends to change the policies that did the damage.
So far, the Zanu PF-administered ministries have shown determination only to prevent change and the meetings between the party leaders have mostly broken down, despite the need for urgent decisions. The few concessions made have been offered grudgingly and without much recognition of their urgency.
In most of the Zanu PF statements, the emphasis has been on the claimed need to preserve policies such as Land Reform and to prevent the Government of National Unity from making any changes to security issues or to the legislation passed to permit increasing state control over the business sector.
The party’s position on these illustrates its continuing conviction that Zimbabwe’s precipitous economic decline was not caused by these policy choices and therefore the needed economic recovery can proceed without making any policy changes.
The party insists that its members actually believe these claims, despite the facts that the policies closed down Zimbabwe’s biggest industrial sector, deprived the country of more than half its export earnings and destroyed most of the jobs held by the country’s largest labour force.
More undisputed facts can be shown to link the loss of the commercial farms to the loss of inputs for the majority of manufacturers and the loss of tax revenues to the state, so the belief that the broad membership of Zanu PF remains convinced that the policies had merit deserves to be challenged.
The more believable claim is based on another fact, which is that the party’s hierarchy profited hugely from the transfers of wealth made possible by the process. Today these still influential people more concerned about losing what they have personally gained than they are about putting Zimbabwe onto a recovery path.
Whether or not this view has been consciously recognised by donor countries, aid agencies or development institutions, a frequently repeated sentiment has been that flows of money from such sources will not materialise while people in positions of authority still include individuals considered to be responsible for Zimbabwe’s economic collapse.
To qualify for the needed assistance, the Government of National Unity is therefore being challenged to achieve more penetrating changes that will include office-bearers as well as policies.
Business Conditions in Zimbabwe, May 2009
Many Zimbabweans have enjoyed a significant change for the better in their personal circumstances in recent months, if only because the shops are better stocked and, now that they are priced in US dollars, the stocks are being offered at reasonably constant, if not falling prices. These constitute major improvements on the very poor supplies at very rapidly rising prices that all consumers experienced for some years before these dramatic changes.
While most people will readily accept that conditions are easier, the new circumstances fall a long way short of qualifying as government achievements. On the contrary, they all amount to government being forced to step aside because of its failures. Zimbabwe had no option but to adopt currency notes that belong to other countries when government could no longer patch up and prop up the wreckage of Zimbabwe’s own currency.
When they themselves didn’t want to receive Zimbabwe dollars, the government officials had to concede that they couldn’t force others to accept them. Even then, the wreckage of the system was left in place and slowed the pace of change for three more months before the Zimbabwe dollar was officially declared to be defunct.
With the Zimbabwe dollar’s demise, many of the Reserve Bank’s functions became redundant and it lost the ability to wield many of its former powers. The IMF, in its brief Press statement on its recent visit to Zimbabwe, generously observed that it “welcomed” government’s “commitment” to eliminate quasi-fiscal activities, but these activities were brought to a stop automatically because the Reserve Bank of Zimbabwe in not authorized to print US dollars.
Similarly, the IMF acknowledges that “positive steps…have already been implemented” in reference to the removal of price controls, foreign exchange surrender requirements and most exchange controls. In fact, these were not voluntary steps. The greatly resented impositions to which the IMF referred inevitably fell away with the collapse of the whole monetary structure.
Unfortunately, this collapse took down with it most of the private sector’s financial services infrastructure as well. The liquid assets of savings institutions and pension funds had already disappeared by the time the crunch came, but when it did, it wiped out what was left of personal and corporate deposits and forced the whole banking system into a liquidity crisis.
Regrettably, that is the starting point for the needed observations on business conditions. Serious shortages of foreign exchange remain firmly in place, despite the fact that all retail transactions and payments for utilities, rents, transport and all other services are being made in hard currency.
So far, efforts to borrow usefully large sums have yielded disappointing results, but large sums are urgently needed for many reasons. Zimbabwe’s ability to earn a reasonable foreign income from commodity exports, manufactured goods exports and tourism has been badly affected by the damage done to capacity in those sectors and to investor confidence. But all of these have become casualties of the severely degraded electricity, water, education, health, transport and communications services infrastructure. We now need funds to fix all of them, all at once.
This brings in the equally serious damage done by all recent events to Zimbabwe’s credit rating. Most of what government has chosen to describe as sanctions is simply the absolutely inevitable difficulty the country has in trying to borrow money, when we have failed to meet loan repayment obligations. Zimbabwe owes more than US$2,3 billion and the repayments are all in arrears. To get around that problem, Zimbabwe has to become immensely more deserving of help than the country is now.
Some local banks with international connections have been able to obtain conditional assurances that lines of credit will be offered, but the conditions usually include the production of evidence that government intends to change the policies that did the damage.
So far, the Zanu PF-administered ministries have shown determination only to prevent change and the meetings between the party leaders have mostly broken down, despite the need for urgent decisions. The few concessions made have been offered grudgingly and without much recognition of their urgency.
In most of the Zanu PF statements, the emphasis has been on the claimed need to preserve policies such as Land Reform and to prevent the Government of National Unity from making any changes to security issues or to the legislation passed to permit increasing state control over the business sector.
The party’s position on these illustrates its continuing conviction that Zimbabwe’s precipitous economic decline was not caused by these policy choices and therefore the needed economic recovery can proceed without making any policy changes.
The party insists that its members actually believe these claims, despite the facts that the policies closed down Zimbabwe’s biggest industrial sector, deprived the country of more than half its export earnings and destroyed most of the jobs held by the country’s largest labour force.
More undisputed facts can be shown to link the loss of the commercial farms to the loss of inputs for the majority of manufacturers and the loss of tax revenues to the state, so the belief that the broad membership of Zanu PF remains convinced that the policies had merit deserves to be challenged.
The more believable claim is based on another fact, which is that the party’s hierarchy profited hugely from the transfers of wealth made possible by the process. Today these still influential people more concerned about losing what they have personally gained than they are about putting Zimbabwe onto a recovery path.
Whether or not this view has been consciously recognised by donor countries, aid agencies or development institutions, a frequently repeated sentiment has been that flows of money from such sources will not materialise while people in positions of authority still include individuals considered to be responsible for Zimbabwe’s economic collapse.
To qualify for the needed assistance, the Government of National Unity is therefore being challenged to achieve more penetrating changes that will include office-bearers as well as policies.
Monday, May 4, 2009
Politics holds the key, Biti told
May 3, 2009
Finance Minister Tendai Biti
Washington, DC (Zimbabwe Mail) - Despite reports of growing divides in embattled Zimbabwe’s unity government, Finance Minister Tendai Biti called for increased aid and investment in an optimistic speech in Washington, DC this week and made a stop over in the United Kingdom.
In his twitter message, British Foreign Secretary David Miliband said, “I met Tendai Biti, Secretary General of the MDC and Minister of Finance in the new transitional government. His economic responsibilities are massive - but the use of Dollars and Rand as hard currency has brought inflation down from crushing levels and brought food and goods back into the shops. His economic plan is a good basis for progress. But politics hold the key - whether Prime Minister Tsvangirai and his colleagues are able to exercise the power for which the Zimbabwean people voted, and which the agreement to a transitional government provides. That is the basis for the re-engagement of the international community on which Zimbabwe depends.”
Biti was in the U.S. capital for the spring meetings of the World Bank and International Monetary Fund, and he also met with United States officials. Following the meetings, he addressed Zimbabwe observers for over an hour at the National Endowment for Democracy.
Biti said that Zimbabwe was experiencing peace and stability, “the biggest achievement of the inclusive government.” But, he added, “peace and stability does not make headlines.”
Biti said that progress made over the past two months had opened the door to change “slightly ajar.”
“The only way we can deal with toxicity by ensuring that door is fully opened, but it cannot be fully opened if there is no investment in this experiment,” he said.
After meetings with Biti, the U.S. gave no signals that it was going to shift course in its Zimbabwe policy. “We want to see how the government is making progress on democratic reforms, economic reforms and then we will make a decision on whether we want to provide significant development assistance,” State Department spokesman Robert Wood told Reuters.
The United States still has targeted sanctions against many Zimbabwean political leaders, including President Robert Mugabe other key members of his Zimbabwe Africa National Union-Patriotic Front (Zanu-PF) party. The United States does give humanitarian aid to non-governmental organizations in Zimbabwe.
Human Rights Watch, in a statement coinciding with Biti’s arrival in London on Wednesday, seemed to echo the U.S. position, encouraging donor governments and institutions, the United Kingdom in particular, to continue to take a wait-and-see approach.
“Until the new government takes bold, irreversible steps to end human rights abuses and carry out major legislative reforms, the international community should continue to withhold longer-term development aid and maintain its targeted sanctions,” said Georgette Gagnon, Africa director at Human Rights Watch.
Donors in Washington appeared to agree with Biti’s plan to begin to rebuild Zimbabwe, but questioned the sincerity of Mugabe and other Zanu-PF leaders’ commitment to change.
Biti acknowledged that major issues remain, including the recent invasions of farm land and the continuing detention of members of his Movement for Democratic Change (MDC). He said that the time has come for Roy Bennett, the MDC treasurer, to be sworn into his cabinet position.
He blamed the current obstacles on “catfish” in Zanu-PF because “where there is clarity the catfish starves.”
Biti also said there were ways to work around the problem of sending aid directly to government coffers, including setting up trust funds in foreign embassies in Zimbabwe.
Biti’s fractious relationship with Reserve Bank Governor Gideon Gono seems to be deteriorating. Biti wants Gono to leave his position, but Gono so far has refused, apparently backed by Mugabe.
On Monday, Biti strongly criticized the Reserve Bank without naming Gono, and outlined a plan for reform which calls for weakening the bank’s powers. Biti said that adopting multiple currencies would limit the bank’s quasi-fiscal activities, which have in the past been used as a vehicle to buy support for the ruling party.
Earlier this month, Biti reportedly accused Gono of borrowing U.S. $1 billion without approval. The two also clashed over 50 cars that Gono distributed to members of Parliament.
Gono shot back, though, in a paid advertisement in the state-owned Herald newspaper on Monday, questioning Biti’s proposed budget and strongly criticizing a reduced allocation for quasi-fiscal activities. Gono added that Biti’s budget had “alien pieces of advice.”
Finance Minister Tendai Biti
Washington, DC (Zimbabwe Mail) - Despite reports of growing divides in embattled Zimbabwe’s unity government, Finance Minister Tendai Biti called for increased aid and investment in an optimistic speech in Washington, DC this week and made a stop over in the United Kingdom.
In his twitter message, British Foreign Secretary David Miliband said, “I met Tendai Biti, Secretary General of the MDC and Minister of Finance in the new transitional government. His economic responsibilities are massive - but the use of Dollars and Rand as hard currency has brought inflation down from crushing levels and brought food and goods back into the shops. His economic plan is a good basis for progress. But politics hold the key - whether Prime Minister Tsvangirai and his colleagues are able to exercise the power for which the Zimbabwean people voted, and which the agreement to a transitional government provides. That is the basis for the re-engagement of the international community on which Zimbabwe depends.”
Biti was in the U.S. capital for the spring meetings of the World Bank and International Monetary Fund, and he also met with United States officials. Following the meetings, he addressed Zimbabwe observers for over an hour at the National Endowment for Democracy.
Biti said that Zimbabwe was experiencing peace and stability, “the biggest achievement of the inclusive government.” But, he added, “peace and stability does not make headlines.”
Biti said that progress made over the past two months had opened the door to change “slightly ajar.”
“The only way we can deal with toxicity by ensuring that door is fully opened, but it cannot be fully opened if there is no investment in this experiment,” he said.
After meetings with Biti, the U.S. gave no signals that it was going to shift course in its Zimbabwe policy. “We want to see how the government is making progress on democratic reforms, economic reforms and then we will make a decision on whether we want to provide significant development assistance,” State Department spokesman Robert Wood told Reuters.
The United States still has targeted sanctions against many Zimbabwean political leaders, including President Robert Mugabe other key members of his Zimbabwe Africa National Union-Patriotic Front (Zanu-PF) party. The United States does give humanitarian aid to non-governmental organizations in Zimbabwe.
Human Rights Watch, in a statement coinciding with Biti’s arrival in London on Wednesday, seemed to echo the U.S. position, encouraging donor governments and institutions, the United Kingdom in particular, to continue to take a wait-and-see approach.
“Until the new government takes bold, irreversible steps to end human rights abuses and carry out major legislative reforms, the international community should continue to withhold longer-term development aid and maintain its targeted sanctions,” said Georgette Gagnon, Africa director at Human Rights Watch.
Donors in Washington appeared to agree with Biti’s plan to begin to rebuild Zimbabwe, but questioned the sincerity of Mugabe and other Zanu-PF leaders’ commitment to change.
Biti acknowledged that major issues remain, including the recent invasions of farm land and the continuing detention of members of his Movement for Democratic Change (MDC). He said that the time has come for Roy Bennett, the MDC treasurer, to be sworn into his cabinet position.
He blamed the current obstacles on “catfish” in Zanu-PF because “where there is clarity the catfish starves.”
Biti also said there were ways to work around the problem of sending aid directly to government coffers, including setting up trust funds in foreign embassies in Zimbabwe.
Biti’s fractious relationship with Reserve Bank Governor Gideon Gono seems to be deteriorating. Biti wants Gono to leave his position, but Gono so far has refused, apparently backed by Mugabe.
On Monday, Biti strongly criticized the Reserve Bank without naming Gono, and outlined a plan for reform which calls for weakening the bank’s powers. Biti said that adopting multiple currencies would limit the bank’s quasi-fiscal activities, which have in the past been used as a vehicle to buy support for the ruling party.
Earlier this month, Biti reportedly accused Gono of borrowing U.S. $1 billion without approval. The two also clashed over 50 cars that Gono distributed to members of Parliament.
Gono shot back, though, in a paid advertisement in the state-owned Herald newspaper on Monday, questioning Biti’s proposed budget and strongly criticizing a reduced allocation for quasi-fiscal activities. Gono added that Biti’s budget had “alien pieces of advice.”
Saturday, May 2, 2009
On May Day, Zimbabwe's Biggest Union Threatens Protests Over Low Wages
By Thomas Chiripasi & Patience Rusere Washington01 May 2009
A showdown is looming between the cash strapped Zimbabwean government and the Zimbabwe Congress of Trade Unions whose leaders threatened at a May Day rally to stage street protests over the low wages received by the few who hold jobs.
ZCTU President Lovemore Matombo told workers gathered to celebrate the May Day holiday at a Harare stadium that the union would organize demonstrations if the government fails to raise salaries from the current stipend of US$100 a month to at least US$454.
Matombo said Zimbabwean workers were subsidizing the government because their wages are beneath the poverty line, describing their plight as "forced labor."
Prime Minister Morgan Tsvangirai, a former trade unionist and guest of honor at the May Day celebration, said state coffers were empty and asked workers to give the government the time it needs to mobilize resources to address their grievances.
About 90% of the Zimbabwean work force is jobless. Conditions for business have improved since the government abandoned the worthless Zimbabwean dollar and authorized the use of a mix of hard currencies including the U.S. dollar and South African rand, but most firms say they are short on currency and many companies pay their employees in kind.
Studio 7 correspondent Thomas Chiripasi reported from Harare.
Labor expert Munyaradzi Gwisai said that while the presence of government officials at the Workers' Day celebrations was a welcome change in Zimbabwe, he warned that the government and ZCTU are heading for a showdown on wages.
Gwisai, chairman of the Zimbabwe Labor Center, said the absence of Finance Minister Tendai Biti showed that the government lacked sensitivity to the plight of workers.
A showdown is looming between the cash strapped Zimbabwean government and the Zimbabwe Congress of Trade Unions whose leaders threatened at a May Day rally to stage street protests over the low wages received by the few who hold jobs.
ZCTU President Lovemore Matombo told workers gathered to celebrate the May Day holiday at a Harare stadium that the union would organize demonstrations if the government fails to raise salaries from the current stipend of US$100 a month to at least US$454.
Matombo said Zimbabwean workers were subsidizing the government because their wages are beneath the poverty line, describing their plight as "forced labor."
Prime Minister Morgan Tsvangirai, a former trade unionist and guest of honor at the May Day celebration, said state coffers were empty and asked workers to give the government the time it needs to mobilize resources to address their grievances.
About 90% of the Zimbabwean work force is jobless. Conditions for business have improved since the government abandoned the worthless Zimbabwean dollar and authorized the use of a mix of hard currencies including the U.S. dollar and South African rand, but most firms say they are short on currency and many companies pay their employees in kind.
Studio 7 correspondent Thomas Chiripasi reported from Harare.
Labor expert Munyaradzi Gwisai said that while the presence of government officials at the Workers' Day celebrations was a welcome change in Zimbabwe, he warned that the government and ZCTU are heading for a showdown on wages.
Gwisai, chairman of the Zimbabwe Labor Center, said the absence of Finance Minister Tendai Biti showed that the government lacked sensitivity to the plight of workers.
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