It has just been brought to my attention by those FT nutjobs that there is some crazy firm called Imara Asset Management that has a fund called the Zimbabwe Value fund! Yes, it's true. These crazy cats are going to invest in Zimbabwe! You know, gold, diamonds, shit like that. Well, I admire them. I really do. These guys are living on the edge, man.
O Master, isn't it a bit risky?
O my child, as I said, they are living on the edge. You got a problem with that?
Well …
Jesus H. Christ! Let me tell you about risky, my child. Risky, man, risky is going on to the astral plane without a white sheet or shades. That's risky! I put my life on the line every day.
No one's asking you to do that though, are they?
Eh?
It was your choice, Master. Everyone told you it was dangerous. You knew that Jack Pickles would take advantage of the situation and try to attack you.
But he hasn't attacked me.
Not yet.
You worry too much, my child. That's your problem. Nietzsche said we should build our homes on the sides of volcanoes. Live dangerously!
And you live in West London, don't you?
So?
Well, how many fucking volcanoes have you got in West London? I know Maurice lives in Acton. There's a hill there. Acton Hill. I remember the Acton Hill cafe. That's gone now. But there is no fucking volcano!
Nietzsche wasn't speaking literally, you prick! And watch your attitude with me.
What do you mean?
You know what I mean. For fuck's sake! I was in a good mood this morning.
Posted by Michael Fowke at 09:40
Tuesday, June 30, 2009
Sunday, June 28, 2009
Zimbabwe PM rules out reviving worthless local currency
JOHANNESBURG (AFP) — Zimbabwe Prime Minister Morgan Tsvangirai on Saturday ruled out reviving in the short term the worthless local currency scrapped earlier this year to beat world record inflation.
But his comments clashed with veteran leader Robert Mugabe's assertions to the contrary a day earlier, highlighting the uneasy relationship between the two former arch-foes currently sharing power in a unity government.
"For economic reasons, there is no way you can resort to the Zimbabwean dollar currency in a situation of low production," Tsvangirai told a news conference in Johannesburg.
"You have to increase your productivity levels from the current 10 percent to about 50-60 percent, otherwise you slide back to... inflation," he said.
"It is impracticable to talk about even resorting to a currency which is worthless at this stage.
"There are no plans yet. There are discussions" to revive the Zimbabwe dollar, which was once on a par with the British pound but is now arguably the world's most useless currency.
Mugabe however Friday said the local money should be revived as multiple currencies introduced earlier this year to beat inflation were not helping the plight of the people.
"Yes, prices may have gone down but the people should have the money," the state-controlled Herald newspaper quoted Mugabe as saying.
"If they don't have the money, how will they buy the goods? We can't run a country like that. We are considering changing that and reverting to our own currency."
The government allowed shops and service providers to trade in foreign currency, mainly the US dollar and the South African rand, to help businesses acquire stocks from neighbouring countries.
Before the introduction of other currencies, most shops resembled empty warehouses as businesses failed to restock because of constantly changing prices.
Faced with a worsening economic crisis and political tensions, Zimbabwe's three main political rivals have formed a power-sharing agreement aimed at reviving the economy and easing tensions.
But his comments clashed with veteran leader Robert Mugabe's assertions to the contrary a day earlier, highlighting the uneasy relationship between the two former arch-foes currently sharing power in a unity government.
"For economic reasons, there is no way you can resort to the Zimbabwean dollar currency in a situation of low production," Tsvangirai told a news conference in Johannesburg.
"You have to increase your productivity levels from the current 10 percent to about 50-60 percent, otherwise you slide back to... inflation," he said.
"It is impracticable to talk about even resorting to a currency which is worthless at this stage.
"There are no plans yet. There are discussions" to revive the Zimbabwe dollar, which was once on a par with the British pound but is now arguably the world's most useless currency.
Mugabe however Friday said the local money should be revived as multiple currencies introduced earlier this year to beat inflation were not helping the plight of the people.
"Yes, prices may have gone down but the people should have the money," the state-controlled Herald newspaper quoted Mugabe as saying.
"If they don't have the money, how will they buy the goods? We can't run a country like that. We are considering changing that and reverting to our own currency."
The government allowed shops and service providers to trade in foreign currency, mainly the US dollar and the South African rand, to help businesses acquire stocks from neighbouring countries.
Before the introduction of other currencies, most shops resembled empty warehouses as businesses failed to restock because of constantly changing prices.
Faced with a worsening economic crisis and political tensions, Zimbabwe's three main political rivals have formed a power-sharing agreement aimed at reviving the economy and easing tensions.
Saturday, June 27, 2009
Mugabe says Zimbabwe may revive use of own currency
06.26.09, 04:45 AM EDT
HARARE, June 26 (Reuters) - President Robert Mugabe said Zimbabwe may revive the use of its own currency because the U.S. dollar introduced to tame hyperinflation was unavailable to a majority of people.
The local state Herald newspaper on Friday quoted Mugabe as saying his new unity government with rival Morgan Tsvangirai was battling to ease economic hardships, but that Zimbabwe could not have a system where rural people were forced to trade their livestock.
'We cannot have a country like that. We are reviewing this so that we can go back to the use of our own national currency,' he was quoted as telling a meeting of his ZANU-PF party in the local Shona language.
(Reporting by Cris Chinaka)
HARARE, June 26 (Reuters) - President Robert Mugabe said Zimbabwe may revive the use of its own currency because the U.S. dollar introduced to tame hyperinflation was unavailable to a majority of people.
The local state Herald newspaper on Friday quoted Mugabe as saying his new unity government with rival Morgan Tsvangirai was battling to ease economic hardships, but that Zimbabwe could not have a system where rural people were forced to trade their livestock.
'We cannot have a country like that. We are reviewing this so that we can go back to the use of our own national currency,' he was quoted as telling a meeting of his ZANU-PF party in the local Shona language.
(Reporting by Cris Chinaka)
Sunday, June 21, 2009
Zimbabwe officials wrangle over bank turf
Published: June 20, 2009 at 9:02 PM.
HARARE, Zimbabwe, June 20 (UPI) -- An effort is under way to circumvent Zimbabwe's central bank so certain donor funds can be controlled by Prime Minister Morgan Tsvangirai, observers say.
The wrangling over the Reserve Bank of Zimbabwe began when Zimbabwean President Robert Mugabe named Gideon Gono governor and another member of his ZANU-PF party, Johannes Tomana, as attorney general, the IRIN news agency reported Saturday.
Gono allegedly has admitted raiding the bank accounts of private individuals and non-profit organizations for foreign currency.
Tsvangirai's Movement for Democratic Change party argues the Gono and Tomana appointments were an end-around on a global political agreement in February that created the unity government. Mugabe has refused to concede the point and recently got the support of the armed forces, which contends Gono's position as central bank governor was "non-negotiable."
Finance Minister Tendai Biti of the MDC will have oversight of a Multi-Donor Trust Fund that will accept donations with a cabinet committee on aid coordination led by Tsvangirai, responsible for disbursing funds.
Gorden Moyo, an MDC minister of state, told local media the arrangement is meant to assuage concerns in the donor community about how their money will be spent.
"We now have a framework of operation, and it sends a clear message that Zimbabwe is ready to receive aid and use it effectively for the benefit of the people of Zimbabwe," Moyo said.
HARARE, Zimbabwe, June 20 (UPI) -- An effort is under way to circumvent Zimbabwe's central bank so certain donor funds can be controlled by Prime Minister Morgan Tsvangirai, observers say.
The wrangling over the Reserve Bank of Zimbabwe began when Zimbabwean President Robert Mugabe named Gideon Gono governor and another member of his ZANU-PF party, Johannes Tomana, as attorney general, the IRIN news agency reported Saturday.
Gono allegedly has admitted raiding the bank accounts of private individuals and non-profit organizations for foreign currency.
Tsvangirai's Movement for Democratic Change party argues the Gono and Tomana appointments were an end-around on a global political agreement in February that created the unity government. Mugabe has refused to concede the point and recently got the support of the armed forces, which contends Gono's position as central bank governor was "non-negotiable."
Finance Minister Tendai Biti of the MDC will have oversight of a Multi-Donor Trust Fund that will accept donations with a cabinet committee on aid coordination led by Tsvangirai, responsible for disbursing funds.
Gorden Moyo, an MDC minister of state, told local media the arrangement is meant to assuage concerns in the donor community about how their money will be spent.
"We now have a framework of operation, and it sends a clear message that Zimbabwe is ready to receive aid and use it effectively for the benefit of the people of Zimbabwe," Moyo said.
Zimbabwe seeks foreign investors
A host of British business leaders, including Sir Richard Branson, the creator of the Virgin brand, and Martin Sorrell, the chief executive of WPP, yesterday met Morgan Tsvangirai, the prime minister of Zimbabwe, to explore the possibility of private investment into the troubled country.
By Rupert NeatePublished: 9:22PM BST 20 Jun 2009
Mr Tsvangirai told the meeting, chaired by David Miliband, the Foreign Secretary, that Zimbabwe has made substantial progress towards rebuilding the economy and is actively seeking investment from multinational companies.
"Over the last few decades Zimbabwe has radically changed, but the people, natural resources and some of the basic infrastructure are still in place and ready to be invested in once again," Mr Tsvangirai said. "We have a real chance to turn Zimbabwe into a success story in partnership with the international community".
Mr Tsvangirai said the country has brought inflation down from 500bn pc to just 3pc in the four months since he formed a coalition government with Robert Mugabe.
Sir Richard said: "Zimbabwe is at a critical turning point and needs the support of the global community. This isn't just a job for aid organisations, and governments. There is a lot business can do to help bring humanitarian support and inspire investment."
Other business leaders at the meeting included James Hussey, of De La Rue, Ian Farmer, of Lonmin, and Dr Nicholas Blazquez, of Diageo.
By Rupert NeatePublished: 9:22PM BST 20 Jun 2009
Mr Tsvangirai told the meeting, chaired by David Miliband, the Foreign Secretary, that Zimbabwe has made substantial progress towards rebuilding the economy and is actively seeking investment from multinational companies.
"Over the last few decades Zimbabwe has radically changed, but the people, natural resources and some of the basic infrastructure are still in place and ready to be invested in once again," Mr Tsvangirai said. "We have a real chance to turn Zimbabwe into a success story in partnership with the international community".
Mr Tsvangirai said the country has brought inflation down from 500bn pc to just 3pc in the four months since he formed a coalition government with Robert Mugabe.
Sir Richard said: "Zimbabwe is at a critical turning point and needs the support of the global community. This isn't just a job for aid organisations, and governments. There is a lot business can do to help bring humanitarian support and inspire investment."
Other business leaders at the meeting included James Hussey, of De La Rue, Ian Farmer, of Lonmin, and Dr Nicholas Blazquez, of Diageo.
Friday, June 19, 2009
Zimbabwe is dreaming of the World Cup tourist dollars
Jun 19, 2009
Zimbabwe, its economy in ruins, is dreaming of millions of tourist dollars and even training visits by international soccer stars when the World Cup comes to South Africa next year. Scottish explorer David Livingstone is said to have written after first seeing the Victoria Falls in 1855: "On sights as beautiful as this, angels in their flight must have gazed."
The magnificent waterfalls were once one of Africa's biggest tourist attractions, but Zimbabwe's political violence and economic collapse have reduced visitors to a trickle both here and at the country's other attractions. Tourist income has slumped from $360 million at its 1999 peak to $29 million last year.
An influx of soccer fans before or after the tournament would be a godsend for this once prosperous nation and visits by teams like Brazil, Germany or even England would offer a rare morale boost for millions of impoverished but soccer-mad fans.
The sight of David Beckham marvelling at the Victoria Falls or bending a trademark free kick on a local pitch would be a huge coup for a nation battling to shake-off its bad-boy image.
Tourism officials believe Zimbabwe could reap as much as $100 million from the World Cup, a windfall for a government which is broke and continues to be shunned by foreign donors.
The country has made international headlines for all the wrong reasons in the past decade, from violent seizures of white-owned farms, to election violence and political repression to the world's highest rate of hyper-inflation."This would be the perfect opportunity to showcase the other side of Zimbabwe by cleaning up our pariah image and showing the world that we have much to offer especially to tourists," said economist John Robertson.
UNREALISTIC DREAM?
But while the dream is almost painfully enticing for long-suffering Zimbabweans, it may well be unrealistic.
Teams looking for high altitude training to acclimatise for the June 11-July 11 World Cup may feel more comfortable in countries like Angola, Botswana, Namibia and Zambia, who do not have the baggage of an economy in ruins and a new power-sharing government that still has not won wide recognition.
A decade of crisis has wrecked infrastructure, including soccer stadiums and roads.
The 55,000-seater National Sports Stadium in Harare has been under repair for the past two years with no indication it will be ready in time.
Only one other stadium is up to scratch while plans to construct new ones were abandoned last year.
"When you look at the state of the pitch (at the national stadium), it is deplorable. We are a bit worried with the rate at which construction is going," said Henrietta Rushwaya, chief executive of the Zimbabwe Football Association (ZIFA).
Zimbabwe needs $2 billion to revamp decaying infrastructure, according to Public Works Minister Theresa Makone, and the dangerous state of the crumbling roads is another major concern.
But Western governments, who distrust President Robert Mugabe, are holding back on direct aid pending political and economic reforms.
Paul Matamisa, the tourist authority's 2010 coordinator, also cited a patchy telecommunications network, the slow upgrade of airports and the parlous state of loss-making Air Zimbabwe.
The Victoria Falls airport is too small to handle larger aircraft, even though Zimbabwe is only 90 minutes from Johannesburg, heart of the World Cup matches next year.
A decade ago nearly a dozen airlines flew to Zimbabwe but only four remain on the route.
"Those are the issues that Zimbabwe needs to address if we are to say we are ready to receive our visitors for the 2010 World Cup," Matamisa told Reuters.There are also deep concerns over the country's health services after the biggest cholera outbreak in Africa in recent times left more than 4,200 dead and close to 100,000 infected.
ODDS
But while the odds seem stacked against Zimbabwe, officials are not giving up on winning some benefit from the World Cup. They personally handed Brazilian President Lula da Silva an invitation for the five-time world champions to train in Zimbabwe.
ZIFA has formally invited the English FA and is still awaiting a response.The Premier League is enthusiastically followed in Zimbabwe, like much of the rest of Africa, and if England accepted it would not only thrill thousands of fans but be a big public relations boost for Harare, given the former colonial ruler's strident opposition to Mugabe.
Zimbabwe has also invited Germany and the United States -- both which have now removed travel warnings -- and several other teams from Africa and Asia.
"This place is so beautiful and I do not see anyone not wanting to come here," said Anne Nielsen, a 29-year-old Danish tourist as the Victoria Falls, known locally as Mosi-oa-Tunya or "Smoke That Thunders" roared behind her.
Apart from the falls, Zimbabwe can offer safari hunting, some of Africa's largest game reserves, scenic resorts and the ancient Great Zimbabwe ruins, one of the most important archeological sites on the continent.
German Ambassador Albrecht Cronze said he was hopeful his country's national team and supporters would visit Zimbabwe on their way to South Africa.
"We now see a bright future in Zimbabwe and as we prepare for 2010, we expect German soccer players and fans not only to see the Victoria Falls but the animals in Hwange (game reserve) and the beautiful scenery throughout the country," Cronze told a local travel magazine.
Source: guardian.co.uk
Zimbabwe, its economy in ruins, is dreaming of millions of tourist dollars and even training visits by international soccer stars when the World Cup comes to South Africa next year. Scottish explorer David Livingstone is said to have written after first seeing the Victoria Falls in 1855: "On sights as beautiful as this, angels in their flight must have gazed."
The magnificent waterfalls were once one of Africa's biggest tourist attractions, but Zimbabwe's political violence and economic collapse have reduced visitors to a trickle both here and at the country's other attractions. Tourist income has slumped from $360 million at its 1999 peak to $29 million last year.
An influx of soccer fans before or after the tournament would be a godsend for this once prosperous nation and visits by teams like Brazil, Germany or even England would offer a rare morale boost for millions of impoverished but soccer-mad fans.
The sight of David Beckham marvelling at the Victoria Falls or bending a trademark free kick on a local pitch would be a huge coup for a nation battling to shake-off its bad-boy image.
Tourism officials believe Zimbabwe could reap as much as $100 million from the World Cup, a windfall for a government which is broke and continues to be shunned by foreign donors.
The country has made international headlines for all the wrong reasons in the past decade, from violent seizures of white-owned farms, to election violence and political repression to the world's highest rate of hyper-inflation."This would be the perfect opportunity to showcase the other side of Zimbabwe by cleaning up our pariah image and showing the world that we have much to offer especially to tourists," said economist John Robertson.
UNREALISTIC DREAM?
But while the dream is almost painfully enticing for long-suffering Zimbabweans, it may well be unrealistic.
Teams looking for high altitude training to acclimatise for the June 11-July 11 World Cup may feel more comfortable in countries like Angola, Botswana, Namibia and Zambia, who do not have the baggage of an economy in ruins and a new power-sharing government that still has not won wide recognition.
A decade of crisis has wrecked infrastructure, including soccer stadiums and roads.
The 55,000-seater National Sports Stadium in Harare has been under repair for the past two years with no indication it will be ready in time.
Only one other stadium is up to scratch while plans to construct new ones were abandoned last year.
"When you look at the state of the pitch (at the national stadium), it is deplorable. We are a bit worried with the rate at which construction is going," said Henrietta Rushwaya, chief executive of the Zimbabwe Football Association (ZIFA).
Zimbabwe needs $2 billion to revamp decaying infrastructure, according to Public Works Minister Theresa Makone, and the dangerous state of the crumbling roads is another major concern.
But Western governments, who distrust President Robert Mugabe, are holding back on direct aid pending political and economic reforms.
Paul Matamisa, the tourist authority's 2010 coordinator, also cited a patchy telecommunications network, the slow upgrade of airports and the parlous state of loss-making Air Zimbabwe.
The Victoria Falls airport is too small to handle larger aircraft, even though Zimbabwe is only 90 minutes from Johannesburg, heart of the World Cup matches next year.
A decade ago nearly a dozen airlines flew to Zimbabwe but only four remain on the route.
"Those are the issues that Zimbabwe needs to address if we are to say we are ready to receive our visitors for the 2010 World Cup," Matamisa told Reuters.There are also deep concerns over the country's health services after the biggest cholera outbreak in Africa in recent times left more than 4,200 dead and close to 100,000 infected.
ODDS
But while the odds seem stacked against Zimbabwe, officials are not giving up on winning some benefit from the World Cup. They personally handed Brazilian President Lula da Silva an invitation for the five-time world champions to train in Zimbabwe.
ZIFA has formally invited the English FA and is still awaiting a response.The Premier League is enthusiastically followed in Zimbabwe, like much of the rest of Africa, and if England accepted it would not only thrill thousands of fans but be a big public relations boost for Harare, given the former colonial ruler's strident opposition to Mugabe.
Zimbabwe has also invited Germany and the United States -- both which have now removed travel warnings -- and several other teams from Africa and Asia.
"This place is so beautiful and I do not see anyone not wanting to come here," said Anne Nielsen, a 29-year-old Danish tourist as the Victoria Falls, known locally as Mosi-oa-Tunya or "Smoke That Thunders" roared behind her.
Apart from the falls, Zimbabwe can offer safari hunting, some of Africa's largest game reserves, scenic resorts and the ancient Great Zimbabwe ruins, one of the most important archeological sites on the continent.
German Ambassador Albrecht Cronze said he was hopeful his country's national team and supporters would visit Zimbabwe on their way to South Africa.
"We now see a bright future in Zimbabwe and as we prepare for 2010, we expect German soccer players and fans not only to see the Victoria Falls but the animals in Hwange (game reserve) and the beautiful scenery throughout the country," Cronze told a local travel magazine.
Source: guardian.co.uk
Wednesday, June 17, 2009
Market Movements and Outlook - John Robertson - Zimbabwe
June 2009
The International Monetary Fund’s recent Executive Board decision to lift the suspension on technical assistance to Zimbabwe resulted in an eleven-day visit by IMF finance experts. Having gathered the needed information, the team has now returned to Washington to prepare their report, which will be mainly on payments systems, lender-of-last-resort operations, banking supervision and central banking governance and accounting.
As all of these Reserve Bank functions had been compromised by policies that impacted directly on production, employment, export earnings, savings, investment and government’s tax revenues, we have to hope that the IMF’s recommendations will go further than offers of advice on central banking procedures. The country needs desperately to get back to work, but essential as the administrative functions of the monetary authorities might be, they will serve little purpose if the country fails to re-engage its producers.
The IMF’s Executive Board will review the technical assistance decision when it next reviews Zimbabwe’s overdue financial obligations to the Poverty Reduction and Growth Facility-Exogenous Shock Facility (PRGF-ESF) Trust,
Meanwhile, in taking the decision to offer some help, the Executive Board appears to have been fairly generous in its assessments of progress made and it has repeated some of these sentiments in the Article IV Consultation Assessment, which has now been released.
In these comments, the IMF claims to have taken into account “a significant improvement in Zimbabwe’s cooperation on economic policies to address its arrears problems and severe capacity constraints” and it “welcomed the authorities’ commitment to refrain from quasi-fiscal activities”.
These can be considered generous because, as for the similarly welcomed adoption of hard currencies in place of the Zimbabwe dollar, Zimbabwe’s authorities had no option but to meet basic economic requirements once their conduct had made the Zimbabwe dollar useless. Congratulatory comments will be more appropriate when government announces the reversal of the policy decisions that did the damage, but this has yet to happen.
A new team of IMF officials has now arrived to continue with work already started in areas of banking supervision and payments procedures. Hopefully, it will insist upon the adoption of practical measures that will actually strengthen the country’s prospects of attracting productive investors and actually restore productive capacity.
Going further than recognising the existence of problems calls for the use of leverage to force into place policies that actually work. Government – even the new coalition government – continues to exhibit a belief that the policy mix now in place can be made to work if enough money can be found.
Regrettably, those who are being pressured to supply the money seem never to respond with a blunt rejection. Too many aid and development agencies seem content to offer funding as well as advice on how policies chosen for their political effects might be coaxed into delivering slightly better economic results, even though very much more suitable and successful policies could have been chosen.
The IMF is clearly in no doubt that Zimbabwe’s economy is severely crippled and that its debt burden is more than big enough to discourage all those who have the option to choose other places to invest. However, it appears to have decided that for the limited IMF support on offer, given Zimbabwe’s long-standing arrears, it will be enough if government keeps its promises about property rights and the rule of law in the future.
Questions about government’s abuse of these in the past and whether anything should be done to restore productive assets to those from whom they were confiscated appear to be off limits. This could prove to be the most severe weakness in the IMF’s approach.
What views might be exchanged in closed meetings with the Zimbabwean authorities can only be guessed at, but the message between the published lines appears to be that if government wants to break highly efficient, capital-intensive large farming enterprises into small, inefficient family allotments, no outside agency should presume the right to challenge that decision.
Many of the outside agencies go further to suggest that the rich countries should generously contribute aid to make up for the very poor results yielded by ineffective policies. Various campaigners for this aid have generated beliefs among the leaders in the poorer countries that aid is an entitlement.
Zimbabwe’s Deputy Prime Minister showed himself to one of these believers when, in his presentation at the launch of the 100-Day Plan, he expounded on the costs of meeting its targets. Waving his hands at the assembled diplomats, he shouted, “Pay up! Pay up!”
Zimbabwe has been in continuous arrears to the IMF since February 2001 and the amount outstanding is now about US$133 million. By failing to meet the repayment terms, Zimbabwe disqualified itself from receiving more financial assistance. This response has been described as “sanctions” by the Zimbabwe government. When this so-called “non-cooperation” had persisted for too long, even the technical assistance was suspended.
The technical assistance suspension has now been party lifted, but Zimbabwe is still not eligible for financial help from the IMF. The views now being expressed by many donor countries and other development agencies suggest that only when Zimbabwe re-qualifies for IMF assistance will the country be given serious consideration. Until then, the only aid that should be expected will be in the form of humanitarian or social services support.
Business environment
Zimbabwe’s business prospects remain under the severe constraints of limited liquidity as well as continuing political uncertainty. However, a slow build-up of bank deposits is being supported by highly conditional lines of credit that are being offered from banks abroad. A number of producers of consumer goods are beginning to offer consignments of goods to retailers, but the imported goods on the shelves are still thought to be occupying 80% of the space.
Inflows to meet health and education, funded partly by donor countries, are also making a difference to the quality of social services being delivered. As much of this money finds its way into pay packets, it has helped to stimulate demand and to support business activities in some productive sectors.
However, many of businesses concerned are working against severe competition from imported goods and are facing many challenges as they try to match prices and quality after being held back by years of price controls and shrinking supplies of local inputs.
The IMF commended the Zimbabwean authorities for removing price controls, but a more helpful response would have been more strenuous efforts to talk them out of the ideas when they were imposed. The efforts made by locals fell on deaf ears, but their warnings have all proved to be painfully accurate: the controlled prices soon became the prices at which the goods ceased to be available, the businesses were forced to cut back on investment because of their declining ability to service debt, maintenance programmes had to be abandoned and many produces were able to continue only by cannibalising their own equipment for needed spares.
Through this decline, many skilled people left the country in search of better career development prospects and in those external markets, new production methods were being developed and perfected. Now, Zimbabwe’s producers have to recover lost ground while having to contend with inadequate supplies of raw materials, particularly from the farming sector, shortages of skilled workers, low income flows with which to meet recurrent costs and shortages of the capital needed to re-equip and restock their businesses.
In the financial services sector, funding levels have not been sufficient to meet the needs of borrowers or to bring down the cost of borrowing. Overdraft rates, when the money can be found, are therefore likely to remain relatively high while banks have to continue competing for fixed deposits. Continuing uncertainties about the security of foreign exchange balances still appear to be discouraging investors from taking advantage of the very much higher interest rates available from Zimbabwean banks. Many of the banks are hoping that the right assurances will be offered to persuade fund managers and others to take advantage of the rates on offer, but another concern often expressed is about the size of Zimbabwe’s banking sector and which of the banks would be likely to survive if the sector restructures to a size more in keeping with the size of the economy.
To further confuse the issues, the instability and uncertainties that continue to affect the western world have generated pressures on the US dollar, which is the currency of choice in Zimbabwe. Although the rand was given more prominence in the early statements from Zimbabwe’s new Ministry of Finance, South Africa’s direct involvement seems not to have translated into the levels of funding expected. However, many Zimbabwean exporters are pleased not to have incurred debts in rands, considering the degree to which it has strengthened. The graph shows a comparison of the trends against the US dollar, which is represented by the horizontal line at 100.
The signs to watch for in the developed world under these conditions will be interest rates, metal prices and LME stocks. Some importers seem to be trying to build up stocks now while prices and interest rates are low, but decisions to slow or suspend mine output might have a bigger bearing on stocks than purchase orders. The Chinese are the ones to watch, but they face the possibility of more protracted demand declines after they saturate their own markets with the goods that cannot be so easily exported.
No matter how much the big economies argue against protectionism, it is likely to come back in various disguised forms. Zimbabwe’s chances of getting its own factories back to work are going to be affected by whether schemes, exhortations or private sector campaigns to “Buy Zimbabwean” are brought to bear on consumers and retailers to offer support to local suppliers, even if their prices are not yet competitive.
The May figures should be out by now, but have not yet been released. However, the April Consumer Price Index percentage change, shown in this table at minus 1,1%, together with the strengthening rand and the fact that more than half Zimbabwe consumer goods are presently being sourced from South Africa, suggests that the costs will start moving up again in June. Zimbabwe must expect the cost of sourcing things from South Africa to move up if the traders have only US dollars to spend.
Further upward price movements seem likely to be a continuing trend through the rest of the year, but the very rough forecasts shown will take the index to only about the same level as in December 2008. By that date we will have the first opportunity to calculate a reasonably accurate year-on-year inflation rate from the new index series and it will hopefully show that Zimbabwe has experienced a very modest increase over the year.
---------------
John Robertson
June 16 2009
The International Monetary Fund’s recent Executive Board decision to lift the suspension on technical assistance to Zimbabwe resulted in an eleven-day visit by IMF finance experts. Having gathered the needed information, the team has now returned to Washington to prepare their report, which will be mainly on payments systems, lender-of-last-resort operations, banking supervision and central banking governance and accounting.
As all of these Reserve Bank functions had been compromised by policies that impacted directly on production, employment, export earnings, savings, investment and government’s tax revenues, we have to hope that the IMF’s recommendations will go further than offers of advice on central banking procedures. The country needs desperately to get back to work, but essential as the administrative functions of the monetary authorities might be, they will serve little purpose if the country fails to re-engage its producers.
The IMF’s Executive Board will review the technical assistance decision when it next reviews Zimbabwe’s overdue financial obligations to the Poverty Reduction and Growth Facility-Exogenous Shock Facility (PRGF-ESF) Trust,
Meanwhile, in taking the decision to offer some help, the Executive Board appears to have been fairly generous in its assessments of progress made and it has repeated some of these sentiments in the Article IV Consultation Assessment, which has now been released.
In these comments, the IMF claims to have taken into account “a significant improvement in Zimbabwe’s cooperation on economic policies to address its arrears problems and severe capacity constraints” and it “welcomed the authorities’ commitment to refrain from quasi-fiscal activities”.
These can be considered generous because, as for the similarly welcomed adoption of hard currencies in place of the Zimbabwe dollar, Zimbabwe’s authorities had no option but to meet basic economic requirements once their conduct had made the Zimbabwe dollar useless. Congratulatory comments will be more appropriate when government announces the reversal of the policy decisions that did the damage, but this has yet to happen.
A new team of IMF officials has now arrived to continue with work already started in areas of banking supervision and payments procedures. Hopefully, it will insist upon the adoption of practical measures that will actually strengthen the country’s prospects of attracting productive investors and actually restore productive capacity.
Going further than recognising the existence of problems calls for the use of leverage to force into place policies that actually work. Government – even the new coalition government – continues to exhibit a belief that the policy mix now in place can be made to work if enough money can be found.
Regrettably, those who are being pressured to supply the money seem never to respond with a blunt rejection. Too many aid and development agencies seem content to offer funding as well as advice on how policies chosen for their political effects might be coaxed into delivering slightly better economic results, even though very much more suitable and successful policies could have been chosen.
The IMF is clearly in no doubt that Zimbabwe’s economy is severely crippled and that its debt burden is more than big enough to discourage all those who have the option to choose other places to invest. However, it appears to have decided that for the limited IMF support on offer, given Zimbabwe’s long-standing arrears, it will be enough if government keeps its promises about property rights and the rule of law in the future.
Questions about government’s abuse of these in the past and whether anything should be done to restore productive assets to those from whom they were confiscated appear to be off limits. This could prove to be the most severe weakness in the IMF’s approach.
What views might be exchanged in closed meetings with the Zimbabwean authorities can only be guessed at, but the message between the published lines appears to be that if government wants to break highly efficient, capital-intensive large farming enterprises into small, inefficient family allotments, no outside agency should presume the right to challenge that decision.
Many of the outside agencies go further to suggest that the rich countries should generously contribute aid to make up for the very poor results yielded by ineffective policies. Various campaigners for this aid have generated beliefs among the leaders in the poorer countries that aid is an entitlement.
Zimbabwe’s Deputy Prime Minister showed himself to one of these believers when, in his presentation at the launch of the 100-Day Plan, he expounded on the costs of meeting its targets. Waving his hands at the assembled diplomats, he shouted, “Pay up! Pay up!”
Zimbabwe has been in continuous arrears to the IMF since February 2001 and the amount outstanding is now about US$133 million. By failing to meet the repayment terms, Zimbabwe disqualified itself from receiving more financial assistance. This response has been described as “sanctions” by the Zimbabwe government. When this so-called “non-cooperation” had persisted for too long, even the technical assistance was suspended.
The technical assistance suspension has now been party lifted, but Zimbabwe is still not eligible for financial help from the IMF. The views now being expressed by many donor countries and other development agencies suggest that only when Zimbabwe re-qualifies for IMF assistance will the country be given serious consideration. Until then, the only aid that should be expected will be in the form of humanitarian or social services support.
Business environment
Zimbabwe’s business prospects remain under the severe constraints of limited liquidity as well as continuing political uncertainty. However, a slow build-up of bank deposits is being supported by highly conditional lines of credit that are being offered from banks abroad. A number of producers of consumer goods are beginning to offer consignments of goods to retailers, but the imported goods on the shelves are still thought to be occupying 80% of the space.
Inflows to meet health and education, funded partly by donor countries, are also making a difference to the quality of social services being delivered. As much of this money finds its way into pay packets, it has helped to stimulate demand and to support business activities in some productive sectors.
However, many of businesses concerned are working against severe competition from imported goods and are facing many challenges as they try to match prices and quality after being held back by years of price controls and shrinking supplies of local inputs.
The IMF commended the Zimbabwean authorities for removing price controls, but a more helpful response would have been more strenuous efforts to talk them out of the ideas when they were imposed. The efforts made by locals fell on deaf ears, but their warnings have all proved to be painfully accurate: the controlled prices soon became the prices at which the goods ceased to be available, the businesses were forced to cut back on investment because of their declining ability to service debt, maintenance programmes had to be abandoned and many produces were able to continue only by cannibalising their own equipment for needed spares.
Through this decline, many skilled people left the country in search of better career development prospects and in those external markets, new production methods were being developed and perfected. Now, Zimbabwe’s producers have to recover lost ground while having to contend with inadequate supplies of raw materials, particularly from the farming sector, shortages of skilled workers, low income flows with which to meet recurrent costs and shortages of the capital needed to re-equip and restock their businesses.
In the financial services sector, funding levels have not been sufficient to meet the needs of borrowers or to bring down the cost of borrowing. Overdraft rates, when the money can be found, are therefore likely to remain relatively high while banks have to continue competing for fixed deposits. Continuing uncertainties about the security of foreign exchange balances still appear to be discouraging investors from taking advantage of the very much higher interest rates available from Zimbabwean banks. Many of the banks are hoping that the right assurances will be offered to persuade fund managers and others to take advantage of the rates on offer, but another concern often expressed is about the size of Zimbabwe’s banking sector and which of the banks would be likely to survive if the sector restructures to a size more in keeping with the size of the economy.
To further confuse the issues, the instability and uncertainties that continue to affect the western world have generated pressures on the US dollar, which is the currency of choice in Zimbabwe. Although the rand was given more prominence in the early statements from Zimbabwe’s new Ministry of Finance, South Africa’s direct involvement seems not to have translated into the levels of funding expected. However, many Zimbabwean exporters are pleased not to have incurred debts in rands, considering the degree to which it has strengthened. The graph shows a comparison of the trends against the US dollar, which is represented by the horizontal line at 100.
The signs to watch for in the developed world under these conditions will be interest rates, metal prices and LME stocks. Some importers seem to be trying to build up stocks now while prices and interest rates are low, but decisions to slow or suspend mine output might have a bigger bearing on stocks than purchase orders. The Chinese are the ones to watch, but they face the possibility of more protracted demand declines after they saturate their own markets with the goods that cannot be so easily exported.
No matter how much the big economies argue against protectionism, it is likely to come back in various disguised forms. Zimbabwe’s chances of getting its own factories back to work are going to be affected by whether schemes, exhortations or private sector campaigns to “Buy Zimbabwean” are brought to bear on consumers and retailers to offer support to local suppliers, even if their prices are not yet competitive.
The May figures should be out by now, but have not yet been released. However, the April Consumer Price Index percentage change, shown in this table at minus 1,1%, together with the strengthening rand and the fact that more than half Zimbabwe consumer goods are presently being sourced from South Africa, suggests that the costs will start moving up again in June. Zimbabwe must expect the cost of sourcing things from South Africa to move up if the traders have only US dollars to spend.
Further upward price movements seem likely to be a continuing trend through the rest of the year, but the very rough forecasts shown will take the index to only about the same level as in December 2008. By that date we will have the first opportunity to calculate a reasonably accurate year-on-year inflation rate from the new index series and it will hopefully show that Zimbabwe has experienced a very modest increase over the year.
---------------
John Robertson
June 16 2009
Monday, June 15, 2009
New IMF mission in Zimbabwe
New IMF mission in Zimbabwe
2 hours ago
HARARE (AFP) — The head of an International Monetary Fund team arrived in Zimbabwe on Monday to assess the coalition government's economic policies and the country's still enormous humantarian needs, officials said.
"The IMF staff mission will look into the country's economic performance since the setting up of the incluisve government in February," an official close to the delegation told AFP.
"The delegation will, among other things, hold meetings with government officials and representatives of industry."
The IMF mission is the third since the start of the year, and follows the fund's decision last month to resume technical aid to Zimbabwe, which for years had been barred any assistance.
The rest of the IMF team will arrive within a week, and the mission is set to wrap up its work on June 29, officials said.
According to the IMF, the team will assess foreign exchange inflows and the state of international reserves and will meet with the World Food Programme about the country's food needs.
The mission will also discuss the United Nation's 718-million-dollar humanitarian appeal that includes food aid for six million Zimbabweans -- about half the population.
In February, long-time rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai formed an inclusive government following a deal brokered by former South African president Thabo Mbeki.
The new government is seeking 8.5 billion dollars to revive the shattered economy and the civil service, including schools and hospitals, but major Western nations have withheld aid demanding to see more significant political reforms.
Tsvangirai met on Friday with US President Barack Obama at the White House, but left with little new aid.
To date, the new government has raised over one billion dollars mostly coming from African organisations, but that includes little direct financial support of the government.
The southern African country currently owes the IMF 133 million US dollars.
According to the IMF, Zimbabwe's economy has been shrinking for years, contracting by 6.1 percent in 2007. This year, the finance ministry predicts the economy will grow by at least four percent.
2 hours ago
HARARE (AFP) — The head of an International Monetary Fund team arrived in Zimbabwe on Monday to assess the coalition government's economic policies and the country's still enormous humantarian needs, officials said.
"The IMF staff mission will look into the country's economic performance since the setting up of the incluisve government in February," an official close to the delegation told AFP.
"The delegation will, among other things, hold meetings with government officials and representatives of industry."
The IMF mission is the third since the start of the year, and follows the fund's decision last month to resume technical aid to Zimbabwe, which for years had been barred any assistance.
The rest of the IMF team will arrive within a week, and the mission is set to wrap up its work on June 29, officials said.
According to the IMF, the team will assess foreign exchange inflows and the state of international reserves and will meet with the World Food Programme about the country's food needs.
The mission will also discuss the United Nation's 718-million-dollar humanitarian appeal that includes food aid for six million Zimbabweans -- about half the population.
In February, long-time rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai formed an inclusive government following a deal brokered by former South African president Thabo Mbeki.
The new government is seeking 8.5 billion dollars to revive the shattered economy and the civil service, including schools and hospitals, but major Western nations have withheld aid demanding to see more significant political reforms.
Tsvangirai met on Friday with US President Barack Obama at the White House, but left with little new aid.
To date, the new government has raised over one billion dollars mostly coming from African organisations, but that includes little direct financial support of the government.
The southern African country currently owes the IMF 133 million US dollars.
According to the IMF, Zimbabwe's economy has been shrinking for years, contracting by 6.1 percent in 2007. This year, the finance ministry predicts the economy will grow by at least four percent.
Saturday, June 13, 2009
From John Robertson
My apologies for not being available in the past week. I had to make a presentation at a very interesting Conference on African Studies in Leipzig, Germany and was able to attend a good number of the lectures given by other presenters. It was an extremely wide-ranging affair, with 154 discussion panels that brought together academics, researchers and commentators on a staggering number of subjects. I have attached a synopsis of my own paper, which I am pleased to say did not generate any hostile reactions.
I was hoping that by now the inflation figures for May would be ready, but nothing is yet ready for publication. I will keep trying and will send the new table as soon as I can.
However, the IMF has now released its detailed Article IV assessment of Zimbabwe. It is available in PDF form, but as it is 828 kb. I feel I should send it only if you request it.
If you wish, you can download it from www.imf.org/external/pubs/cat/longres.cfm?sk=22925.0 It is very revealing in its critical detail. The tables of Economic Indicators and the IMF's own forecasts will be of special interest.
Kindest regards,
John
European Conference on African Studies
Third meeting, Leipzig, June 2009
Paper by John Robertson, Zimbabwe
For Panel 127, Panel Organised Dr Beatrice Schlee
Synopsis
All the intricately balanced linkages and business relationships that used to help deliver success and food security to Zimbabwe’s population were damaged or broken by the land reform programme. Today, Zimbabwe’s agricultural sector consists largely of small farms that have no market value and no collateral value.
Despite subsidies and state funding, very few farmers have been able to move away from peasant farming methods and since land reform, every harvest has been extremely disappointing. Every year since land acquisitions started in earnest, Zimbabwe has had to import food.
Now, in any efforts that are made to restore productive capacity, government and all those international bodies that wish to assist the country will have to acknowledge that the country adopted policies that do not meet the requirements of a larger, better educated, more urbanised and much more demanding population.
Zimbabweans are fully capable of dealing with the challenges of commerce and a wide range manufacturing and service industries, but the country has need of efficient and dependable agricultural production. The population therefore has good reason to hope that large-scale capital-intensive cultivation methods will be reinstated, and that the need to rely on the small-scale subsistence methods brought back by Land Reform will fall away.
While small-scale subsistence farming might remain an important income source for the large communities that still follow traditional life-styles, this system cannot be relied upon to meet the needs of Zimbabwe’s large urban population. The subsistence methods are far too unreliable in Zimbabwe’s uncertain tropical climate and today the overall population is far too big.
The policies introduced to initiate the Land Reform Programme, which amounted to the nationalisation of land, are also incapable of attracting the investment needed for development in agriculture and every other economic sector. Important requirements for all forms of investment are secure and marketable individual property rights.
In trying to bring about the needed changes, Zimbabwe should not be looking for advice on how to make its badly chosen policies work a little better. Donor countries and development agencies should ensure that they are not trying to offer such advice, but should require the adoption of ideas with a proven track record.
In essence, the disbursal of assistance in any form should be made conditional upon Zimbabwe showing the needed willingness and determination to make radical changes and to adopt acceptable policies.
It is my contention that primary conditions, which should be declared non-negotiable, should include the empowerment of ordinary citizens through the acceptance and promotion of individual property rights, and that these rights should be given absolute protection in the proposed new Constitution.
Economic success empowers individuals, but as this success can dilute the powers of the ruling elites, many African governments seeking aid also seek the means to decide who will benefit. All those who try to assist Zimbabwe will have to remain alert to signs that the authorities are unwilling to permit success to be achieved by people other than those selected by the leadership.
This problem is common throughout the continent. Not all, but still too many African leaders are trying to recover for themselves the powers of feudal kings, claiming their sovereign right to do so, but then claiming it is the obligation of wealthier countries to supply aid to make up for the poor investment climate generated by feudal controls.
If they permitted individual land ownership and accepted the changes that would then affect their own status, they would usher in real development that would make aid unnecessary within a very short period.
Political leaders would lose their traditional advantages, but their countries would begin to prosper. People who at present feel the need to take their ideas out of Africa and develop them in countries where ownership rights are automatically recognised and respected would stay in their home countries and contribute their skills and talents to their own nations.
When political leaders cease to be the dispensers of patronage, they will have to become better leaders if they want to retain power. The benefits will flow to almost everybody, but of course the few people who previously had rights to assets, incomes and the people’s respect without having to work for them will have to adapt to a more demanding lifestyle.
For those elsewhere in the world, who are in a position to help Africa, the focus should be on why aid seems to be necessary only in countries that do not respect property rights.
The help Africa really needs should take the form of arguments for the adoption of economic policies that work, and for the assistance needed to build the institutional infrastructure that is required to deliver bankable collateral value to the land on which they live and work.
I do accept that deeply entrenched traditions would have to be set aside to accommodate such ideas, but it has to be said that Europe also had to permit deep-seated traditions to be extensively amended or changed beyond recognition to provide for the demands of rapidly changing production and transport methods, financing challenges and population growth.
I also accept that, as a way to earn a living, modern business requirements are vastly more challenging to the politically privileged than is the exercise of their entitlement to tributes from thousands of subjects. But it is this very aspect of contemporary life that sets Africa apart from Europe and North America.
In graduating from their status as subjects to the status of individuals with rights, the populations of most European countries were increasingly empowered. Their most effective form of empowerment developed with their increasing ability to acquire property, and when this began to encompass intellectual property as well as fixed assets, the development process was able to draw upon the previously almost untapped resourcefulness, imagination, and initiative of thousands of ambitious and inventive people.
It is worth noting that these still evolving ideals were among the driving forces that inspired the people who moved from Northern Europe to colonise North America. Property rights and the owners’ ability to access development finance from the banks soon accounted for the growing prosperity of the United States and Canada.
No such advantage was enjoyed by South America. This was colonised by the remaining feudal states in Europe, so feudalism was transplanted into the Spanish and Portuguese colonies. Even now, hundreds of years later, the remnants of this burden are still very much in evidence, but the empowerment of ordinary citizens is at last gathering momentum.
In Africa, the economic empowerment of the populations of many countries is precisely the process that many governments are trying to prevent. In most cases, aid offered to such governments has not been permitted to empower anyone other than the authorities.
I am arguing that, while Africa certainly needs help, the help it needs should impose upon these authorities the requirement that they too accept the need for cultural change. The concept of property rights has to be accepted so that the very specific needs of local as well as foreign investors will not be frustrated by issues of no relevance to meeting business challenges that are already more than sufficiently exacting, demanding and unforgiving.
These are also the characteristics of the market place. Aid should be offered on condition that permit market forces to determine the distribution of resources, the prices and the levels of success achieved. By relinquishing their claimed rights to impose controls, the governments of most African countries will far more successfully retain their own talented business people and far more successfully attract new investment.
Basically, by backing off, these governments would start tapping the deep and powerful emotional commitment of the people most capable of taking initiatives. This form of energy is even more important than the money they can bring with them.
After very few years of the levels of development that would be made possible by accepting these measures, very nearly all the countries that are now claiming dependence on aid would become self-sufficient and their people would become considerably more prosperous. That, surely, should be the primary objective of the very generous institutions that stage conferences such as this one.
--------------------
John Robertson
Harare, May 28 2009
I was hoping that by now the inflation figures for May would be ready, but nothing is yet ready for publication. I will keep trying and will send the new table as soon as I can.
However, the IMF has now released its detailed Article IV assessment of Zimbabwe. It is available in PDF form, but as it is 828 kb. I feel I should send it only if you request it.
If you wish, you can download it from www.imf.org/external/pubs/cat/longres.cfm?sk=22925.0 It is very revealing in its critical detail. The tables of Economic Indicators and the IMF's own forecasts will be of special interest.
Kindest regards,
John
European Conference on African Studies
Third meeting, Leipzig, June 2009
Paper by John Robertson, Zimbabwe
For Panel 127, Panel Organised Dr Beatrice Schlee
Synopsis
All the intricately balanced linkages and business relationships that used to help deliver success and food security to Zimbabwe’s population were damaged or broken by the land reform programme. Today, Zimbabwe’s agricultural sector consists largely of small farms that have no market value and no collateral value.
Despite subsidies and state funding, very few farmers have been able to move away from peasant farming methods and since land reform, every harvest has been extremely disappointing. Every year since land acquisitions started in earnest, Zimbabwe has had to import food.
Now, in any efforts that are made to restore productive capacity, government and all those international bodies that wish to assist the country will have to acknowledge that the country adopted policies that do not meet the requirements of a larger, better educated, more urbanised and much more demanding population.
Zimbabweans are fully capable of dealing with the challenges of commerce and a wide range manufacturing and service industries, but the country has need of efficient and dependable agricultural production. The population therefore has good reason to hope that large-scale capital-intensive cultivation methods will be reinstated, and that the need to rely on the small-scale subsistence methods brought back by Land Reform will fall away.
While small-scale subsistence farming might remain an important income source for the large communities that still follow traditional life-styles, this system cannot be relied upon to meet the needs of Zimbabwe’s large urban population. The subsistence methods are far too unreliable in Zimbabwe’s uncertain tropical climate and today the overall population is far too big.
The policies introduced to initiate the Land Reform Programme, which amounted to the nationalisation of land, are also incapable of attracting the investment needed for development in agriculture and every other economic sector. Important requirements for all forms of investment are secure and marketable individual property rights.
In trying to bring about the needed changes, Zimbabwe should not be looking for advice on how to make its badly chosen policies work a little better. Donor countries and development agencies should ensure that they are not trying to offer such advice, but should require the adoption of ideas with a proven track record.
In essence, the disbursal of assistance in any form should be made conditional upon Zimbabwe showing the needed willingness and determination to make radical changes and to adopt acceptable policies.
It is my contention that primary conditions, which should be declared non-negotiable, should include the empowerment of ordinary citizens through the acceptance and promotion of individual property rights, and that these rights should be given absolute protection in the proposed new Constitution.
Economic success empowers individuals, but as this success can dilute the powers of the ruling elites, many African governments seeking aid also seek the means to decide who will benefit. All those who try to assist Zimbabwe will have to remain alert to signs that the authorities are unwilling to permit success to be achieved by people other than those selected by the leadership.
This problem is common throughout the continent. Not all, but still too many African leaders are trying to recover for themselves the powers of feudal kings, claiming their sovereign right to do so, but then claiming it is the obligation of wealthier countries to supply aid to make up for the poor investment climate generated by feudal controls.
If they permitted individual land ownership and accepted the changes that would then affect their own status, they would usher in real development that would make aid unnecessary within a very short period.
Political leaders would lose their traditional advantages, but their countries would begin to prosper. People who at present feel the need to take their ideas out of Africa and develop them in countries where ownership rights are automatically recognised and respected would stay in their home countries and contribute their skills and talents to their own nations.
When political leaders cease to be the dispensers of patronage, they will have to become better leaders if they want to retain power. The benefits will flow to almost everybody, but of course the few people who previously had rights to assets, incomes and the people’s respect without having to work for them will have to adapt to a more demanding lifestyle.
For those elsewhere in the world, who are in a position to help Africa, the focus should be on why aid seems to be necessary only in countries that do not respect property rights.
The help Africa really needs should take the form of arguments for the adoption of economic policies that work, and for the assistance needed to build the institutional infrastructure that is required to deliver bankable collateral value to the land on which they live and work.
I do accept that deeply entrenched traditions would have to be set aside to accommodate such ideas, but it has to be said that Europe also had to permit deep-seated traditions to be extensively amended or changed beyond recognition to provide for the demands of rapidly changing production and transport methods, financing challenges and population growth.
I also accept that, as a way to earn a living, modern business requirements are vastly more challenging to the politically privileged than is the exercise of their entitlement to tributes from thousands of subjects. But it is this very aspect of contemporary life that sets Africa apart from Europe and North America.
In graduating from their status as subjects to the status of individuals with rights, the populations of most European countries were increasingly empowered. Their most effective form of empowerment developed with their increasing ability to acquire property, and when this began to encompass intellectual property as well as fixed assets, the development process was able to draw upon the previously almost untapped resourcefulness, imagination, and initiative of thousands of ambitious and inventive people.
It is worth noting that these still evolving ideals were among the driving forces that inspired the people who moved from Northern Europe to colonise North America. Property rights and the owners’ ability to access development finance from the banks soon accounted for the growing prosperity of the United States and Canada.
No such advantage was enjoyed by South America. This was colonised by the remaining feudal states in Europe, so feudalism was transplanted into the Spanish and Portuguese colonies. Even now, hundreds of years later, the remnants of this burden are still very much in evidence, but the empowerment of ordinary citizens is at last gathering momentum.
In Africa, the economic empowerment of the populations of many countries is precisely the process that many governments are trying to prevent. In most cases, aid offered to such governments has not been permitted to empower anyone other than the authorities.
I am arguing that, while Africa certainly needs help, the help it needs should impose upon these authorities the requirement that they too accept the need for cultural change. The concept of property rights has to be accepted so that the very specific needs of local as well as foreign investors will not be frustrated by issues of no relevance to meeting business challenges that are already more than sufficiently exacting, demanding and unforgiving.
These are also the characteristics of the market place. Aid should be offered on condition that permit market forces to determine the distribution of resources, the prices and the levels of success achieved. By relinquishing their claimed rights to impose controls, the governments of most African countries will far more successfully retain their own talented business people and far more successfully attract new investment.
Basically, by backing off, these governments would start tapping the deep and powerful emotional commitment of the people most capable of taking initiatives. This form of energy is even more important than the money they can bring with them.
After very few years of the levels of development that would be made possible by accepting these measures, very nearly all the countries that are now claiming dependence on aid would become self-sufficient and their people would become considerably more prosperous. That, surely, should be the primary objective of the very generous institutions that stage conferences such as this one.
--------------------
John Robertson
Harare, May 28 2009
Thursday, June 11, 2009
Cost of Living for Zimbabwe Households Up 2% in May
By Patience Rusere 10 June 2009
The Consumer Council of Zimbabwe said Wednesday that the monthly cost of basic goods and services for a family of six rose 2% in May to US$437 from US$427 in April driven by strong rises in rents and charges for basic utilities and services.
Consumer Council Regional Officer for Matebeleland Comfort Muchekeza said food prices have declined, but water, electricity and transport charges meanwhile have surged.
Muchekeza told reporter Patience Rusere of VOA's Studio 7 for Zimbabwe that the government should regulate rates for services which enjoy a monopoly
The Consumer Council of Zimbabwe said Wednesday that the monthly cost of basic goods and services for a family of six rose 2% in May to US$437 from US$427 in April driven by strong rises in rents and charges for basic utilities and services.
Consumer Council Regional Officer for Matebeleland Comfort Muchekeza said food prices have declined, but water, electricity and transport charges meanwhile have surged.
Muchekeza told reporter Patience Rusere of VOA's Studio 7 for Zimbabwe that the government should regulate rates for services which enjoy a monopoly
Saturday, June 6, 2009
Transparency International Says Corruption Widespread in Zimbabwe Police, Judi
Transparency International Says Corruption Widespread in Zimbabwe Police, Judiciary
By Patience Rusere Washington05 June 2009
Zimbabwe's police and judiciary are perceived by many in the country to be unreliable and corrupt, according to the advocacy group Transparency International.
Transparency International Zimbabwe said that of 312 reported cases of corruption, 38% concerned the police, Web news agency ZimOnline reported.
VOA was unable to immediately obtain a copy of the report.
Transparency International Zimbabwe's former chairman, University of Zimbabwe Professor John Makumbe, told reporter Patience Rusere of VOA's Studio 7 for Zimbabwe that police and judicial corruption reflect a breakdown of the rule of law over the past decade
By Patience Rusere Washington05 June 2009
Zimbabwe's police and judiciary are perceived by many in the country to be unreliable and corrupt, according to the advocacy group Transparency International.
Transparency International Zimbabwe said that of 312 reported cases of corruption, 38% concerned the police, Web news agency ZimOnline reported.
VOA was unable to immediately obtain a copy of the report.
Transparency International Zimbabwe's former chairman, University of Zimbabwe Professor John Makumbe, told reporter Patience Rusere of VOA's Studio 7 for Zimbabwe that police and judicial corruption reflect a breakdown of the rule of law over the past decade
Trade Block Finds Zimbabwe in Contempt Over Farm Seizures
By Peta Thornycroft Harare05 June 2009
Zimbabwe's beleaguered farming community received some good news Friday after a tribunal of the Southern African Development Community (SADC) in Namibia upheld their application seeking protection from future land invasions by the Zimbabwean government.
The tribunal of the 15-nation trade bloc SADC has ruled that Zimbabwean farmers had been victimized because of their race and ordered they be left alone.
The tribunal, which is based in the Namibian capital Windhoek, last year ordered the then government of President Robert Mugabe to stop evicting and harassing 77 white farmers. In it's ruling, the tribunal barred the government from further repossessing white-owned farms, saying the applicants had been discriminated against on the grounds of race.
The ruling was meant to protect farmers from future land invasions, with the government guaranteeing their safety and the right to their land.
The farmers had challenged their eviction under Mr. Mugabe's controversial land reform program, which has seen thousands of white farmers and farmworkers thrown off the land since 2000. Despite last year's ruling, authorities in Zimbabwe have continued harassment of farmers.
The Commercial Farmers' Union said the situation deteriorated sharply after the establishment of an inclusive government in February.
The government of Zimbabwe was represented in court on Friday by Deputy Attorney-General Prince Machaya who did said in court that he had just received instructions from Harare to seek a postponement of the hearing.
But, the tribunal rejected his application and instead, proceeded to hear detailed evidence of the continued persecution of white farmers.
Finding the Zimbabwean government "in breach and contempt" of last year's ruling, on the basis of statements by government officials and the continued "invasions and harassment", the tribunal ordered that the case be reported to the next SADC summit for action.
Advocate Jeremy Gauntlett who in Windhoek in support of the farmers said the ruling was powerful and a triumph for justice in Africa. He said the SADC summit will be tested to see if member states had a commitment to the rule of law.
He said a delegation of senior legal officers from Zimbabwe and farmers' representatives would attend the next SADC summit in Kinshasa.
Several senior western diplomats attended the hearing in Windhoek.
More than 4,000 white farmers and tens of thousands of farm worker families lost their homes and incomes since Mr. Mugabe ordered the first invasions in 2000.
Economists say that Zimbabwe's white farmers produced 40 percent of annual foreign exchange earnings until commercial agriculture was largely destroyed. Now nearly half the population is dependent on food hand outs and Zimbabwe's economy has crashed. (SIGNED)
Zimbabwe's beleaguered farming community received some good news Friday after a tribunal of the Southern African Development Community (SADC) in Namibia upheld their application seeking protection from future land invasions by the Zimbabwean government.
The tribunal of the 15-nation trade bloc SADC has ruled that Zimbabwean farmers had been victimized because of their race and ordered they be left alone.
The tribunal, which is based in the Namibian capital Windhoek, last year ordered the then government of President Robert Mugabe to stop evicting and harassing 77 white farmers. In it's ruling, the tribunal barred the government from further repossessing white-owned farms, saying the applicants had been discriminated against on the grounds of race.
The ruling was meant to protect farmers from future land invasions, with the government guaranteeing their safety and the right to their land.
The farmers had challenged their eviction under Mr. Mugabe's controversial land reform program, which has seen thousands of white farmers and farmworkers thrown off the land since 2000. Despite last year's ruling, authorities in Zimbabwe have continued harassment of farmers.
The Commercial Farmers' Union said the situation deteriorated sharply after the establishment of an inclusive government in February.
The government of Zimbabwe was represented in court on Friday by Deputy Attorney-General Prince Machaya who did said in court that he had just received instructions from Harare to seek a postponement of the hearing.
But, the tribunal rejected his application and instead, proceeded to hear detailed evidence of the continued persecution of white farmers.
Finding the Zimbabwean government "in breach and contempt" of last year's ruling, on the basis of statements by government officials and the continued "invasions and harassment", the tribunal ordered that the case be reported to the next SADC summit for action.
Advocate Jeremy Gauntlett who in Windhoek in support of the farmers said the ruling was powerful and a triumph for justice in Africa. He said the SADC summit will be tested to see if member states had a commitment to the rule of law.
He said a delegation of senior legal officers from Zimbabwe and farmers' representatives would attend the next SADC summit in Kinshasa.
Several senior western diplomats attended the hearing in Windhoek.
More than 4,000 white farmers and tens of thousands of farm worker families lost their homes and incomes since Mr. Mugabe ordered the first invasions in 2000.
Economists say that Zimbabwe's white farmers produced 40 percent of annual foreign exchange earnings until commercial agriculture was largely destroyed. Now nearly half the population is dependent on food hand outs and Zimbabwe's economy has crashed. (SIGNED)
Friday, June 5, 2009
Mutambara to lead delegation to World Economic Forum
By SCREECH MATANDAPublished: June 5, 2009
Harare, Zimbabwe - Logistics for a trip by a Zimbabwean delegation to attend the World Economic Forum in South Africa are almost complete, says Deputy Prime Minister, Professor Arthur Mutambara.
The delegation which will be led by the Deputy PM will comprise government officials and captains of industry.
The team will participate at the economic forum set to draw private investors and government officials from different countries around the world.
The World Economic Forum begins on Tuesday next week in South Africa.
Zimbabwe’s Finance Minister, Tendai Biti said logistics for the trip are almost complete and the delegation is ready to participate at the international business forum.
Biti said the team will take the opportunity to push for foreign direct investment into the country by marketing the country to potential investors.
The World Economic Forum will focus on the impact of the current global financial crisis on Africa’s traditional drivers of growth including foreign capital flows, demand for oil and commodities, and infrastructure development.
Focus will be on Africa’s investment climate and identifying practical solutions to foster better business practices across the continent.
Harare, Zimbabwe - Logistics for a trip by a Zimbabwean delegation to attend the World Economic Forum in South Africa are almost complete, says Deputy Prime Minister, Professor Arthur Mutambara.
The delegation which will be led by the Deputy PM will comprise government officials and captains of industry.
The team will participate at the economic forum set to draw private investors and government officials from different countries around the world.
The World Economic Forum begins on Tuesday next week in South Africa.
Zimbabwe’s Finance Minister, Tendai Biti said logistics for the trip are almost complete and the delegation is ready to participate at the international business forum.
Biti said the team will take the opportunity to push for foreign direct investment into the country by marketing the country to potential investors.
The World Economic Forum will focus on the impact of the current global financial crisis on Africa’s traditional drivers of growth including foreign capital flows, demand for oil and commodities, and infrastructure development.
Focus will be on Africa’s investment climate and identifying practical solutions to foster better business practices across the continent.
Thursday, June 4, 2009
Zimbabwe Abandons 'Look East' Economic Policy, Seeks FDI
By Thomas Chiripasi Harare
03 June 2009
The Zimbabwean government is abandoning the "Look East" international economic strategy enunciated by President Robert Mugabe several years ago in response to Western sanctions, Deputy Prime Minister Arthur Mutambara said on Wednesday.
Instead Harare will seek foreign direct investment from the private sector, Mutambara told journalists in releasing a report on public-private partnerships for development based on a workshop on the investment approach held recently in the capital.
Faced with Western sanctions introduced early this decade, President Mugabe looked to China and other Asian countries for commercial ties and aid leading to an expansion of the Chinese economic presence in the country but to little apparent effect on the sinking economy.
He said the country would look neither east nor west but in all directions for potential investment partners to help revive the shattered economy.
"Look west, look east, look north, look south, and look at yourself," Mutambara declared at a news conference called to launch the report on the workshop. "That is the paradigm shift we are pushing in this government. For us to survive under globalization we must look everywhere for opportunity."
Correspondent Thomas Chiripasi of VOA's Studio 7 for Zimbabwe reported.
03 June 2009
The Zimbabwean government is abandoning the "Look East" international economic strategy enunciated by President Robert Mugabe several years ago in response to Western sanctions, Deputy Prime Minister Arthur Mutambara said on Wednesday.
Instead Harare will seek foreign direct investment from the private sector, Mutambara told journalists in releasing a report on public-private partnerships for development based on a workshop on the investment approach held recently in the capital.
Faced with Western sanctions introduced early this decade, President Mugabe looked to China and other Asian countries for commercial ties and aid leading to an expansion of the Chinese economic presence in the country but to little apparent effect on the sinking economy.
He said the country would look neither east nor west but in all directions for potential investment partners to help revive the shattered economy.
"Look west, look east, look north, look south, and look at yourself," Mutambara declared at a news conference called to launch the report on the workshop. "That is the paradigm shift we are pushing in this government. For us to survive under globalization we must look everywhere for opportunity."
Correspondent Thomas Chiripasi of VOA's Studio 7 for Zimbabwe reported.
Wednesday, June 3, 2009
DEAR FINANCE MINISTER,
I think it's high time you look for a possible solution and take possible measures to deal with the RBZ issue. I suggest that while the Governor is trying his best to defend his personality as well as his job, there is need to talk to him and the nation at large to really understand the importance of economic revival. In this manner I think it was wise to highlight some of the real issues such that the RBZ job is not a political thing. Since the governor was working in favor of one party as he was instructed to do this time there is need to consider national building issues and not one group. Therefore it is clear that the governor does not qualify for the job. This was seen from what he was doing before.
Secondly, the governor cannot easily implement the expected policies for he is bound to revert back to the failed policies before the formation of the inclusive government. Issues that we need to closely watch are that, why do some people feel they are more special than others? The Governor should just accept he has failed. We need to move forward as a nation and not individuals. Truly RBZ job is not a political thing. I believe if we politicize it that's clear abuse of this national office.
Thank you JAG for publishing my letter.
S Magadzire
Secondly, the governor cannot easily implement the expected policies for he is bound to revert back to the failed policies before the formation of the inclusive government. Issues that we need to closely watch are that, why do some people feel they are more special than others? The Governor should just accept he has failed. We need to move forward as a nation and not individuals. Truly RBZ job is not a political thing. I believe if we politicize it that's clear abuse of this national office.
Thank you JAG for publishing my letter.
S Magadzire
Tuesday, June 2, 2009
Zimbabwe May Yet Defeat Inflation
By Richard Giedroyc, World Coin NewsJune 01, 2009
Other News & Articles
What do you do with obsolete coins or bank notes even collectors don't want? If you live in the United States you hawk them to unsophisticated buyers who fancy themselves as investors or collectors, selling them through television home shopping networks, Sunday newspaper ads, or via telemarketing. If you live in the African nation of Zimbabwe, where television, newspapers, and telephones are a luxury, you sell your obsolete coins or bank notes to tourists.That, according to the March 23 The Globe and Mail newspaper, is exactly what Zimbabwe's street hawkers are doing. The now defunct Z$100-trillion bank notes are being sold to foreign tourists for Z$2 each - in some foreign currency rather than in Zimbabwe dollars, of course!Obsolete coins for sale, you ask? Don't count on it. Since the coins have metal content they will likely sell for their scrap value, even if their face value is so low the coins won't buy anything. According to The Globe and Mail, "The currency with the never-ending string of zeroes is quickly fading into history, just two months after the latest notes were printed by the inexhaustible central bank. Also disappearing is Zimbabwe's phenomenal level of hyperinflation, which last year reached a stunning 89.7 sextillion percent (a number expressed with 21 zeroes), making it the most extreme hyperinflation crisis of any country in modern times."After a number of currency reforms that ended in failure it appears the government may have finally found a formula that works. According to the newspaper account, "Zimbabwe's new coalition government has cracked both problems with an absurdly simple solution: It has abruptly switched to foreign currencies, allowing customers to pay for products with U.S. dollars or South African rand or Botswana pula. The entire economy, almost overnight, has switched to a unique system of multiple foreign currencies.""The dollarization (and rand-ization and pula-ization) of the Zimbabwean economy," The Globe and Mail article continues, "has finally slain the dragon of hyperinflation, providing the first fragile signs of hope for a devastated country. While the junking of the Zimbabwean dollar was a blow to the ego and power of Zimbabwe's bloated central bank, the radical move to adopt foreign currencies is still one of the fastest ways to kick-start any economy that is ruined by inflation and money-printing excesses. Empty shelves have been filled. Prices of staples such as milk and eggs are still twice as expensive as in neighboring South Africa, but they are half as expensive as they were in January."This dollarization, randization, and pulaization has created another situation as well. There is a shortage of US dollars, South African rands, and of Botswana pula bank notes (and presumably coins) in circulation in Zimbabwe. Currency speculators, for this reason, will likely flourish. They aren't alone, however. Caledonia Mining Corporation, based in Toronto, Canada, may soon re-open its Blanket gold mine which closed in October 2008 due to Zimbabwe's currency crisis. This mine could produce as much as 40,000 ounces annually. Regarding the shortage of foreign currency, shop keepers are already finding ways around this. There are reports of locally issued credit notes on small scraps of paper being provided as change. If customers won't trust these credit notes the merchants then offer their clients candy as change as an alternative. Even the Zimbabwe Stock Exchange has re-opened. It had been closed for three months, having a total capitalization of less than $1.3 billion US, about half what it had one month earlier. The fate of Nigeria Central Bank Governor Gideon Gono is now in question, with the recent move to dump the Nigerian dollar in favor of foreign currencies. After all, it was Gono who was responsible for the 100-trillion-dollar bank notes now selling to tourists for the bargain price of $2 each. John Robertson, an outspoken economist living in the Zimbabwe capitol of Harare, said "The process of change is irreversible. The wedge will be driven harder and harder."
Other News & Articles
What do you do with obsolete coins or bank notes even collectors don't want? If you live in the United States you hawk them to unsophisticated buyers who fancy themselves as investors or collectors, selling them through television home shopping networks, Sunday newspaper ads, or via telemarketing. If you live in the African nation of Zimbabwe, where television, newspapers, and telephones are a luxury, you sell your obsolete coins or bank notes to tourists.That, according to the March 23 The Globe and Mail newspaper, is exactly what Zimbabwe's street hawkers are doing. The now defunct Z$100-trillion bank notes are being sold to foreign tourists for Z$2 each - in some foreign currency rather than in Zimbabwe dollars, of course!Obsolete coins for sale, you ask? Don't count on it. Since the coins have metal content they will likely sell for their scrap value, even if their face value is so low the coins won't buy anything. According to The Globe and Mail, "The currency with the never-ending string of zeroes is quickly fading into history, just two months after the latest notes were printed by the inexhaustible central bank. Also disappearing is Zimbabwe's phenomenal level of hyperinflation, which last year reached a stunning 89.7 sextillion percent (a number expressed with 21 zeroes), making it the most extreme hyperinflation crisis of any country in modern times."After a number of currency reforms that ended in failure it appears the government may have finally found a formula that works. According to the newspaper account, "Zimbabwe's new coalition government has cracked both problems with an absurdly simple solution: It has abruptly switched to foreign currencies, allowing customers to pay for products with U.S. dollars or South African rand or Botswana pula. The entire economy, almost overnight, has switched to a unique system of multiple foreign currencies.""The dollarization (and rand-ization and pula-ization) of the Zimbabwean economy," The Globe and Mail article continues, "has finally slain the dragon of hyperinflation, providing the first fragile signs of hope for a devastated country. While the junking of the Zimbabwean dollar was a blow to the ego and power of Zimbabwe's bloated central bank, the radical move to adopt foreign currencies is still one of the fastest ways to kick-start any economy that is ruined by inflation and money-printing excesses. Empty shelves have been filled. Prices of staples such as milk and eggs are still twice as expensive as in neighboring South Africa, but they are half as expensive as they were in January."This dollarization, randization, and pulaization has created another situation as well. There is a shortage of US dollars, South African rands, and of Botswana pula bank notes (and presumably coins) in circulation in Zimbabwe. Currency speculators, for this reason, will likely flourish. They aren't alone, however. Caledonia Mining Corporation, based in Toronto, Canada, may soon re-open its Blanket gold mine which closed in October 2008 due to Zimbabwe's currency crisis. This mine could produce as much as 40,000 ounces annually. Regarding the shortage of foreign currency, shop keepers are already finding ways around this. There are reports of locally issued credit notes on small scraps of paper being provided as change. If customers won't trust these credit notes the merchants then offer their clients candy as change as an alternative. Even the Zimbabwe Stock Exchange has re-opened. It had been closed for three months, having a total capitalization of less than $1.3 billion US, about half what it had one month earlier. The fate of Nigeria Central Bank Governor Gideon Gono is now in question, with the recent move to dump the Nigerian dollar in favor of foreign currencies. After all, it was Gono who was responsible for the 100-trillion-dollar bank notes now selling to tourists for the bargain price of $2 each. John Robertson, an outspoken economist living in the Zimbabwe capitol of Harare, said "The process of change is irreversible. The wedge will be driven harder and harder."
Zimbabwe’s Tobacco Industry reacts positively to the inclusive government
Zimbabwe’s Tobacco Industry reacts positively to the inclusive government
By Fortune-Galangwe
for ZimEye.org
Published: June 1, 2009
Comment
Harare(ZimEye)Deliveries of flue-cured tobacco have reached an unprecedented amount of US$30 Million in contrast to last year's U.S$23,4 Million. Last year farmers were reluctant to sell their produce due the use of the Zimbabwe dollar and preferred to hold on to their tobacco until conditions were right.
A total of 93112 bales were laid and of these 81904 went under the hammer as compared to last season of which 90417 bales were laid while 86445 bales went under the hammer.
Most farmers throughout tobacco farming areas in Zimbabwe are satisfied with the new payment system in United States dollars, a scenario that has led to increased revenue for the inclusive government as exports will increase.
China is on record as being Zimbabwe's biggest importer of tobacco.
More tobacco has been sold under the contract system of which 6.6 Million
kilograms have been sold and a total of U.S$18.5Million has been realized.
According to expectations, more than 75% of the 2009 crop is expected to be sold through the contract system. (ZimEye, Zimbabwe
By Fortune-Galangwe
for ZimEye.org
Published: June 1, 2009
Comment
Harare(ZimEye)Deliveries of flue-cured tobacco have reached an unprecedented amount of US$30 Million in contrast to last year's U.S$23,4 Million. Last year farmers were reluctant to sell their produce due the use of the Zimbabwe dollar and preferred to hold on to their tobacco until conditions were right.
A total of 93112 bales were laid and of these 81904 went under the hammer as compared to last season of which 90417 bales were laid while 86445 bales went under the hammer.
Most farmers throughout tobacco farming areas in Zimbabwe are satisfied with the new payment system in United States dollars, a scenario that has led to increased revenue for the inclusive government as exports will increase.
China is on record as being Zimbabwe's biggest importer of tobacco.
More tobacco has been sold under the contract system of which 6.6 Million
kilograms have been sold and a total of U.S$18.5Million has been realized.
According to expectations, more than 75% of the 2009 crop is expected to be sold through the contract system. (ZimEye, Zimbabwe
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