By Janice Kew
July 29 (Bloomberg) -- The market value of Zimbabwe stocks may rise to $5 billion by the end 2009, a five-fold gain from an estimated $1 billion in February when trading resumed after a three-month closure, according to Renaissance Capital.
The market capitalization of shares on the Zimbabwe Stock Exchange has a 10 percent chance of reaching $5 billion by the end of this year and a 60 percent possibility of increasing to $4.5 billion, from $4.08 billion yesterday, analysts led by Harare-based Dzika Danha wrote in a research note today.
Reserve Bank of Zimbabwe Governor Gideon Gono ordered the shutdown of the exchange in November, alleging some traders were engaged in fraud, as President Robert Mugabe blamed pressure from western countries for pushing the economy toward collapse. The exchange resumed trading in U.S. dollars on Feb. 19, a week after a new coalition government was sworn in under a power- sharing agreement between Mugabe and opposition leader Morgan Tsvangirai.
Under the coalition agreement, which ended a decade-long political impasse, a new constitution must be agreed on and elections held within two years of that. Mugabe is delaying talks on a new constitution in a bid to scuttle the country’s coalition government and avoid elections in which he may not be allowed to compete, two members of his party’s decision-making body said earlier this month.
“Despite the noise, Zimbabwe’s political parties appear committed to a unity government” and an economic recovery is “under way,” according to the note.
African Sun
The market value may rise to $7.1 billion by the end of 2011, a 74 percent increase from yesterday’s closing value, the Renaissance analysts wrote.
African Sun Ltd., the hotel company with assets across the continent, Econet Wireless Holdings Ltd., the country’s biggest mobile-phone operator, and Delta Corp., Zimbabwe’s largest beer and beverages maker, are among Renaissance’s top 10 picks
Renaissance initiated coverage of Pearl Properties Ltd., Art Corp. Ltd., Dairibord Holdings Ltd. and PG Industries Ltd. with “buy” recommendations. The four stocks are also among the brokerage’s top 10 picks.
Pearl’s commercial properties should command “comparatively higher returns” because they are modern and situated in “key locations,” the brokerage wrote.
Art Corp., which manufactures and distributes paper and plastic products, benefits from “strong brand recognition,” it said.
To contact the reporters on this story: Janice Kew in Johannesburg at jkew1@bloomberg.net. Last Updated: July 29, 2009 06:56 EDT
Wednesday, July 29, 2009
Zimbabwe confident of returning onto the London Bullion market
By SARAH NCUBE
Published: July 28, 2009
ZIMBABWE – HARARE – Zimbabwe is confident of returning onto the London Bullion market within the next twelve months.
The country’s sole gold buyer at the time, Fidelity Printers and Refineries was de-listed from the London Bullion Market last year following numerous problems that affected gold production.
Chamber of Mines president, Victor Gapare, said the production of gold has been on a steady incresae since the deregulation of economy and the introduction of a raft of measures to spur economic activity.
“As far as trading on the London Bullion Market is concerned it’s an issue of producing 10 tonnes a year and there is need for us to show consistence for two years. At the moment gold production is picking up and since the beginning of the year to the month ending June one tonne has been delivered and if this trend continues within another year we will be exceeding 10 tonnes,” Gapare said.
The London Bullion market is a wholesale market for the trading of gold and silver. Trading is conducted among members of the LBMA, loosely overseen by the Bank of England.
Most of the members are major international banks or bullion dealers and refiners. Five members of the LBMA meet twice daily to “fix” the gold price in a process known as the London Gold Fixing.
The country’s bullion production nose-dived from 10 960 kilogrammes in 2006 to 3 072kg last year – a massive 40 percent drop in two years.
The main requirements to be considered for listing are normally that a refiner must have an established track record of at least three years of producing the refined metal for which the listing is being sought.
Gapare said the political dispensation in the country was favourable for production.
“For a start the de-regularisation of gold mining arrangement and also the political risk has been on the decrease as well, all this argues well for us to lure investors,” he said.
Gapare said mining stakeholders have been in talks with the Zimbabwe Electricity Supply Authority (ZESA) about the rampant load shedding which immensely impact negatively on production.
“Power plays an important part in any mining activity and it will be one of the major factors to determine investment. We do know that electricity problems are affecting the entire region but we are grateful that ZESA has since found some partners and hopefully the situation will improve,” he said.- The Zimbabwe Telegraph
Published: July 28, 2009
ZIMBABWE – HARARE – Zimbabwe is confident of returning onto the London Bullion market within the next twelve months.
The country’s sole gold buyer at the time, Fidelity Printers and Refineries was de-listed from the London Bullion Market last year following numerous problems that affected gold production.
Chamber of Mines president, Victor Gapare, said the production of gold has been on a steady incresae since the deregulation of economy and the introduction of a raft of measures to spur economic activity.
“As far as trading on the London Bullion Market is concerned it’s an issue of producing 10 tonnes a year and there is need for us to show consistence for two years. At the moment gold production is picking up and since the beginning of the year to the month ending June one tonne has been delivered and if this trend continues within another year we will be exceeding 10 tonnes,” Gapare said.
The London Bullion market is a wholesale market for the trading of gold and silver. Trading is conducted among members of the LBMA, loosely overseen by the Bank of England.
Most of the members are major international banks or bullion dealers and refiners. Five members of the LBMA meet twice daily to “fix” the gold price in a process known as the London Gold Fixing.
The country’s bullion production nose-dived from 10 960 kilogrammes in 2006 to 3 072kg last year – a massive 40 percent drop in two years.
The main requirements to be considered for listing are normally that a refiner must have an established track record of at least three years of producing the refined metal for which the listing is being sought.
Gapare said the political dispensation in the country was favourable for production.
“For a start the de-regularisation of gold mining arrangement and also the political risk has been on the decrease as well, all this argues well for us to lure investors,” he said.
Gapare said mining stakeholders have been in talks with the Zimbabwe Electricity Supply Authority (ZESA) about the rampant load shedding which immensely impact negatively on production.
“Power plays an important part in any mining activity and it will be one of the major factors to determine investment. We do know that electricity problems are affecting the entire region but we are grateful that ZESA has since found some partners and hopefully the situation will improve,” he said.- The Zimbabwe Telegraph
Tuesday, July 28, 2009
Zimbabwe Share Trading Surges, Surpassing Kenya
By Janice Kew
July 28 (Bloomberg) -- Zimbabwe share trading has surged to $1.3 million a day, surpassing Kenya, as the east African nation’s economy recovers from a decade-long recession, says Renaissance Capital.
Daily transactions have increased from $50,000 in March as foreign investors return, making the Zimbabwe Stock Exchange the third-biggest in sub-Saharan Africa by trading value, according to the Moscow-based brokerage with offices in Africa.
Reserve Bank of Zimbabwe Governor Gideon Gono ordered the shutdown of the exchange in November, alleging some traders were engaged in fraud, as President Robert Mugabe blamed pressure from western countries for pushing the economy toward collapse. Inflation soared to nearly 500 billion percent in September and the Zimbabwe dollar plummeted to 12.6 trillion per U.S. dollar.
“The gain in daily traded value is impressive considering where it had been,” Harare-based Dzika Danha, an analyst at the brokerage, said by phone today.
The exchange resumed trading in U.S. dollars on Feb. 19, a week after a new coalition government was sworn in under a power-sharing agreement between Mugabe and opposition leader Morgan Tsvangirai. The economy will probably expand by 3.7 percent this year, more than a previous estimate of 2.8 percent, Finance Minister Tendai Biti said in a telephone interview from Harare July 16.
The market value of shares listed on the exchange reached $4.03 billion yesterday, from an estimated $1 billion when the market reopened in February, Renaissance Capital said. That is more than its most bullish forecast made in April of $3.5 billion by the end of 2009.
Delta Corp., Zimbabwe’s largest beer and beverages maker, and Econet Wireless Holdings Ltd., the country’s biggest mobile- phone operator, have been among the most-heavily traded stocks, Dzika said.
To contact the reporters on this story: Janice Kew in Johannesburg at jkew1@bloomberg.net.
July 28 (Bloomberg) -- Zimbabwe share trading has surged to $1.3 million a day, surpassing Kenya, as the east African nation’s economy recovers from a decade-long recession, says Renaissance Capital.
Daily transactions have increased from $50,000 in March as foreign investors return, making the Zimbabwe Stock Exchange the third-biggest in sub-Saharan Africa by trading value, according to the Moscow-based brokerage with offices in Africa.
Reserve Bank of Zimbabwe Governor Gideon Gono ordered the shutdown of the exchange in November, alleging some traders were engaged in fraud, as President Robert Mugabe blamed pressure from western countries for pushing the economy toward collapse. Inflation soared to nearly 500 billion percent in September and the Zimbabwe dollar plummeted to 12.6 trillion per U.S. dollar.
“The gain in daily traded value is impressive considering where it had been,” Harare-based Dzika Danha, an analyst at the brokerage, said by phone today.
The exchange resumed trading in U.S. dollars on Feb. 19, a week after a new coalition government was sworn in under a power-sharing agreement between Mugabe and opposition leader Morgan Tsvangirai. The economy will probably expand by 3.7 percent this year, more than a previous estimate of 2.8 percent, Finance Minister Tendai Biti said in a telephone interview from Harare July 16.
The market value of shares listed on the exchange reached $4.03 billion yesterday, from an estimated $1 billion when the market reopened in February, Renaissance Capital said. That is more than its most bullish forecast made in April of $3.5 billion by the end of 2009.
Delta Corp., Zimbabwe’s largest beer and beverages maker, and Econet Wireless Holdings Ltd., the country’s biggest mobile- phone operator, have been among the most-heavily traded stocks, Dzika said.
To contact the reporters on this story: Janice Kew in Johannesburg at jkew1@bloomberg.net.
Friday, July 24, 2009
Zimbabwe: as close a fairytale ending as one could hope for
Zimbabwe: as close a fairytale ending as one could hope for http://www.newzimbabwe.com21/07/2009 00:00:00by Roelof HorneONE advantage of hitting rock bottom is that things are bound to get betterfrom there. The authoritative Washington publication Foreign Policy recentlyrated Zimbabwe as the second-worst failed state in the world (afterSomalia).After watching ten years of economic destruction in Zimbabwe, there are atlast clear signs of a turnaround.News flow from Zimbabwe does not always help to form a balanced view -between the shameful propaganda of the state-controlled media and thejaundiced eye of perpetual doom-mongers, there is a story which is not beingtold. Having visited Harare recently, here are some observations.The demise of the Zim dollar has solved many problemsI have a 100 trillion Zimbabwe dollar note in my wallet. I also have 2008company results for one of the bigger banks reported in quintillions ofdollars (that's 18 zeros!). The comparative column is blank - all zeros, asthe 2007 numbers, having been eroded away by hyperinflation, are too small afraction to count.Towards the end of 2008, prices were going up by 100% a day, so owning anycash or having a positive bank balance was ruinous. Employees were queuingfor days to get their salaries out of bank accounts while faced withrestrictive (government imposed) daily withdrawal limits.So what happened to the Zim dollar? The population spontaneously abandonedthe currency late last year, turning to barter, fuel coupons and (later)foreign currency instead. By the time the transitional government announcedthe demise of the Zim dollar, they were simply blessing what had alreadybecome the norm.The change to USA dollars (in Harare) and rands (the rest of the country)had two very important results. It launched a business revival and stoppedhyperinflation (by stopping the printing presses and thereby limiting theamount of money chasing goods and services).Business is boomingBusiness leaders are almost absurdly optimistic about conditions inZimbabwe. This should be seen in the context of conditions last year:Business time and personal time was consumed by one thing - keeping afloatin a fast deteriorating environment.Apart from banking, stock, pricing, energy and staff problems, they also hadto deal with price controls, legalised seizure of export proceeds, and aninability to import foreign maintenance components or productionrequirements.With the end of hyperinflation in 2009 and the scrapping of prohibitivecontrols, the captains of industry can, for the first time in years, focuson rebuilding their businesses. They now concentrate on recapturing lostmarket share and margins, refurbishing and restarting production capacityand finding capital for capex or working capital purposes - in short, thethings that a businessman should be doing.However, the banking system is wounded. Banks have "lost" their entirebalance sheets, except for hard assets that can now be revalued in USD. Thecapital base and deposit base of the banking system is severely depleted.There are signs of life: starting from virtually zero in January, thebanking system now has US$500m of deposits. There are only four banks (ofwhich three are multinationals) that clearly meet the new requirement ofUS$12.5m capital. The rest would need recapitalisation. For the moment,individuals are largely shunning the banks. Confidence has been eroded, andATMs and credit cards are not functioning.Government is functioning in spite of the 'shotgun wedding'The (MDC-controlled) Ministry of Finance has accomplished the seeminglyimpossible - running the government on a balanced budget since the beginningof the year. This is no mean feat, as the previous regime had for years beenprinting cash to finance their 50%+ budget deficits (and thereby causing theinevitable hyperinflation).Civil servants are paid a monthly allowance of $100 (increased to $150 lastweek) - sourced from who-knows-where. (President Mugabe publicly scoffed atthe idea, citing a lack of government funds). Fiscal revenues have climbedfrom $6m in February to almost $100m in June.Unbelievably soon, and in spite of a lack of funds, basic services arepicking up, streets are being cleaned and potholes being filled across thecountry.The quote of my visit? An (indigenous) businessman: "We should be pleasedthat the collapse came as soon as it did - the country has retained itscollective memory of the right way to do things. It means the recovery to adecent environment will be far quicker than in countries where the declinelasted 30 years".I had the opportunity to speak to Morgan Tsvangirai and his privatesecretary (in separate meetings). Their approach and attitude were bothadmirable and heartening. As the Prime Minister said in a recent speech: "Weare pursuing negotiation rather than confrontation, pursuing teamwork ratherthan dominance."In one word, I would describe the attitude of the MDC as "pragmatic". Itwould have been easy for the transitional government to become bogged downin power plays and petty squabbles. For example, the refusal of thepresident to replace Gideon Gono as head of the central bank could haveturned into a show-stopper.Instead, the MDC has, with a "Yes We Can" attitude, simply pulled allconstitutionally sanctioned fiscal and monetary functions into the Ministryof Finance. With no printing press and no local currency, there isn't muchfor a central bank governor to do.Anecdotal evidence of the way the business of government is conducted farexceeds current perception of two (or is it three?) parties at each other'sthroats. An off-site at Victoria Falls resulted in new bonds across partylines, cabinet meetings are productive, and - most of the time - energy isbeing directed at rebuilding the country.The road ahead is rocky, but we've seen the worstPredicting the future is setting oneself up for failure, but nonetheless,here are my expectations: December 2008 will be recorded as the low point ofthe "lost decade" in Zimbabwe.After a period of very rapid economic improvement, triggered by the removalof the serious impediments of hyperinflation and restrictive regulations,the real work of reconstruction will start. I predict a rapid "recovery"phase in 2009, followed by multiple years of high GDP growth.Zimbabwe was an economic poster-child of Southern Africa, and (politicianswilling) has all the ingredients to grow back to that position. The humancapital is still in my opinion the best Sub Saharan Africa has to offer on aper capita basis. Yes, it has been eroded by emigration, but we will seemany return as conditions improve.Already the top schools have long waiting lists for returnee children, andthe upswing has hardly started.How will the political scenario play out? I expect the transitionalgovernment to hold, in spite of public tiffs. The MDC will, through doggedperseverance, gradually work itself into a position where Zimbabweans willoverwhelmingly view non-Zanu PF involvement in government as a positive.The new constitution will mix direct and proportional politicalrepresentation, thereby removing much of the acrimony caused by the currentwinner-takes-all system.Financial policy will be pragmatic, growth-friendly and investor-friendly.With every month of growth and stability that passes, confidence in thegovernment and the country will grow.Foreign Direct Investment will pick up; donor and reconstruction capitalwill follow. By the time we have the next election (expected in two years'time), it will be orderly and truly democratic and the outcome will beaccepted by all Zimbabweans.And that would be as close to a fairytale ending as one could hope for.Roelof Horne is a portfolio manager for Investec Asset Management
Tuesday, July 21, 2009
After Months of Disinflation, Zimbabwe Monthly Inflation Ticks Up 0.6%
By Jonga Kandemiiri
Washington20 July 2009
Consumer prices in Zimbabwe rose 0.6% in June from their levels in May, the Central Statistical Office announced Monday, a rate of price increases which if continued for a full 12 months would result in an annual rate of inflation just over 7%.
This data however followed monthly price declines of 1% in May, 1.1% in April, 3% in March, 3.1% in February and 2.3% in January. Despite the increase in prices in June, prices based on official data released by the statistical office have fallen nearly 10% so far in 2009.
This disinflation followed the country's adoption of multiple hard currencies to replace the Zimbabwe dollar which had become worthless amidst inflation which on late 2008 soared to levels conservatively measured in trillions of percent, and fallen out of use.
Economist Prosper Chitambara of the Labor and Economic Research Institute of Zimbabwe told reporter Jonga Kandemiiri of VOA's Studio 7 for Zimbabwe that the price rise last month was mainly driven by fuel, whereas food prices continued to decline
Washington20 July 2009
Consumer prices in Zimbabwe rose 0.6% in June from their levels in May, the Central Statistical Office announced Monday, a rate of price increases which if continued for a full 12 months would result in an annual rate of inflation just over 7%.
This data however followed monthly price declines of 1% in May, 1.1% in April, 3% in March, 3.1% in February and 2.3% in January. Despite the increase in prices in June, prices based on official data released by the statistical office have fallen nearly 10% so far in 2009.
This disinflation followed the country's adoption of multiple hard currencies to replace the Zimbabwe dollar which had become worthless amidst inflation which on late 2008 soared to levels conservatively measured in trillions of percent, and fallen out of use.
Economist Prosper Chitambara of the Labor and Economic Research Institute of Zimbabwe told reporter Jonga Kandemiiri of VOA's Studio 7 for Zimbabwe that the price rise last month was mainly driven by fuel, whereas food prices continued to decline
Monday, July 20, 2009
Zimbabwe to post 3.7 percent growth
Zimbabwe to post 3.7 percent growth
by Adeline Teoh Monday 20 July 2009 9:52 am
Zimbabwe’s economy is set to grow by 3.7 percent according to its finance minister Tendai Biti at the presentation of the half-year national budget last week.
Biti said the country’s gross domestic product looks to grow by 3.7 percent, a figure he says is even “a very pessimistic one”.
The rise will hinge on a increase in global mineral prices and increased manufacturing production.
Biti warned, however, that Zimbabwe was not yet out of the woods and encouraged Prime Minister Morgan Tsvangirai and President Robert Mugabe to continue their power-sharing agreement.
by Adeline Teoh Monday 20 July 2009 9:52 am
Zimbabwe’s economy is set to grow by 3.7 percent according to its finance minister Tendai Biti at the presentation of the half-year national budget last week.
Biti said the country’s gross domestic product looks to grow by 3.7 percent, a figure he says is even “a very pessimistic one”.
The rise will hinge on a increase in global mineral prices and increased manufacturing production.
Biti warned, however, that Zimbabwe was not yet out of the woods and encouraged Prime Minister Morgan Tsvangirai and President Robert Mugabe to continue their power-sharing agreement.
Comments on The Mid-Term Supplementary Budget for 2009 - from John Robertson
I hope that you will find my attempts to summarise the economic aspects of Minister Biti's Budget presentation helpful. I find it hard to escape the feeling that he is overstating the extent and even the reasons for the improvements noted so far. Most of the improvements are not the result of government actions, but of government backing off and therefore allowing parts of the markets and the business sector to recapture the initiative.
This is certainly a huge improvement, but it has yet to translate into a recovery of capacity, specially among those who remain dispossessed.
The closing observations in the Minister of Finance’s mid-term budget statement were chosen well. Although he was forced to accept that severe constraints are still keeping many urgent needs beyond reach, he clearly intended to remove all doubt about his intentions:
“We are slowly liberating ourselves from the era of economic fascism and economic hedonism” was one of his remarks, and more thoughts were captured in, “We have a duty to rise above the mediocrity of subjectivities and the sterility of conflict. We have a duty to ignore the long sulk of godfathers.”
The first 130 pages of the Minister’s presentation examine the extensive range of economic handicaps he and the country have been bequeathed by a decade of appallingly bad economic mismanagement. He points out that the Global Political Agreement had to be signed because of the absence of a viable option to the “attrition, stalemate, conflict, violence, debilitating and dis-empowering effect of a decade-long political crisis”, and that “Zimbabwe is too valuable a dream to be squandered”.
Arguing that the crisis led to a “massive de-industrialisation of the economy, deep seated poverty, sustained periods of negative GDP growth rates, the collapse of social services, food shortages, and massive despondency in the country”, the Minister reminded Parliament that, “The fundamental reality that brought all the actors into an unhappy compromise has not gone away”, because, as he points out, “…there is little delivery and execution of agreed positions taken in the Global Political Agreement, particularly on matters around human rights and the rule of law…”, and, “The reality of the matter is that political factors need to be liquidated as a matter of urgency so that the country does not continue to be held hostage to the past.”
After the initial changes to the Former Minister of Finance’s budget had cut revenue and expenditure figures by half to US$1 billion, mid-course correction changes were inevitable and each ministry attempted to improve on the amount allocated. However, as this table from the Minister of Finance’s presentation to Parliament shows, the forecast revenue has been decreased and the total expenditure increase being provided for will have to be financed by the Vote of Credit. This is funded by donor contributions specifically earmarked for budget support. Of the total US$391 million shown in the table, US$117 million has been received already and the balance is expected by the end of the year.
Information shown in the Supplementary Estimates of Expenditure also tabled in Parliament on July 16th permits calculations to be made to show the extent to which cuts were made to the amounts applied for by each ministry and this table shows the extent of the changes for each ministry:
Together with cuts to the Constitutional and Statutory Appropriations, the total expenditure is reduced by US$220 million, but this amount is to be used to improve upon the US$100 a month allowance that has been given to public servants since dollarisation earlier this year.
To the US$34 million a month this has absorbed so far, a further US$14 million a month is now to be added and the Minister’s wording suggests that further sums will be provided to permit some differentiation between grades. At Zimbabwe’s depressed levels of activity, public sector salaries amount to 35% of total expenditure and 13% of GDP. With the forecast recovery of the economy and improvements in both the tax revenue and GDP, the Minister expressed his wish to see these percentages reduced to 30% of expenditure and 8% of GDP to prevent them from crowding out non-wage expenditures.
However, the prospects of the hoped-for recovery remain far less promising than the Minister suggested in his presentation. He appears to have been persuaded that capacity utilisation had already improved considerably in manufacturing, but the evidence strongly suggests that the severe power cuts alone will have made significant increases in output impossible for most.
To this problem must be added the inability of the banks to offer the overdraft facilities or the longer-term loans needed to rebuild stocks of materials, carry out long overdue maintenance and repairs or attract back the skilled personnel or experienced operators to staff production lines.
Although the extent of the recovery that does prove possible will be off a very low base, the constraints presently affecting output are certain to impose severe limitations and these will be reinforced by the reluctance of buyers on the domestic as well as export markets to place too much reliance on Zimbabwe’s suppliers at this stage.
Although some mineral prices are beginning to improve and the gold miners have at last been granted more acceptable marketing arrangements, the severely debilitating handicaps imposed on them in recent years have left them in need of more working capital than most can afford, or can obtain from the equally handicapped banks.
Government’s acceptance of the need to make far-reaching changes has not been enough to overcome the lingering effects of years of losses that eroded each company’s skills, physical capacity, standing with customers and suppliers and financial stamina. A few undoubted successes have been welcome and these have helped reduce the import bills for some goods, but these might not be sufficient to offset the continuing declines in other sectors.
Agriculture appears to have attracted the most exaggerated forecasts of recovery, but the sizes of this year’s crop deliveries were set by events and conditions in 2008, very few of which were favourable. For the hoped-for recovery in 2010, the disappearance of government’s capacity to offer subsidies has brought the financial realities home to previously generously supported farmers. Even though the quantities of local fertiliser are inadequate, unsold stocks are accumulating for lack of buying power; so next year’s harvests are already in doubt.
Hopes of a rapid improvement in the business outlook have not been realised mostly for reasons related to the recovery of confidence. Widely known political requirements have not been fulfilled and the pace of change is unlikely to improve before these receive the needed attention.
-------------------------
John Robertson
July 19 2009
This is certainly a huge improvement, but it has yet to translate into a recovery of capacity, specially among those who remain dispossessed.
The closing observations in the Minister of Finance’s mid-term budget statement were chosen well. Although he was forced to accept that severe constraints are still keeping many urgent needs beyond reach, he clearly intended to remove all doubt about his intentions:
“We are slowly liberating ourselves from the era of economic fascism and economic hedonism” was one of his remarks, and more thoughts were captured in, “We have a duty to rise above the mediocrity of subjectivities and the sterility of conflict. We have a duty to ignore the long sulk of godfathers.”
The first 130 pages of the Minister’s presentation examine the extensive range of economic handicaps he and the country have been bequeathed by a decade of appallingly bad economic mismanagement. He points out that the Global Political Agreement had to be signed because of the absence of a viable option to the “attrition, stalemate, conflict, violence, debilitating and dis-empowering effect of a decade-long political crisis”, and that “Zimbabwe is too valuable a dream to be squandered”.
Arguing that the crisis led to a “massive de-industrialisation of the economy, deep seated poverty, sustained periods of negative GDP growth rates, the collapse of social services, food shortages, and massive despondency in the country”, the Minister reminded Parliament that, “The fundamental reality that brought all the actors into an unhappy compromise has not gone away”, because, as he points out, “…there is little delivery and execution of agreed positions taken in the Global Political Agreement, particularly on matters around human rights and the rule of law…”, and, “The reality of the matter is that political factors need to be liquidated as a matter of urgency so that the country does not continue to be held hostage to the past.”
After the initial changes to the Former Minister of Finance’s budget had cut revenue and expenditure figures by half to US$1 billion, mid-course correction changes were inevitable and each ministry attempted to improve on the amount allocated. However, as this table from the Minister of Finance’s presentation to Parliament shows, the forecast revenue has been decreased and the total expenditure increase being provided for will have to be financed by the Vote of Credit. This is funded by donor contributions specifically earmarked for budget support. Of the total US$391 million shown in the table, US$117 million has been received already and the balance is expected by the end of the year.
Information shown in the Supplementary Estimates of Expenditure also tabled in Parliament on July 16th permits calculations to be made to show the extent to which cuts were made to the amounts applied for by each ministry and this table shows the extent of the changes for each ministry:
Together with cuts to the Constitutional and Statutory Appropriations, the total expenditure is reduced by US$220 million, but this amount is to be used to improve upon the US$100 a month allowance that has been given to public servants since dollarisation earlier this year.
To the US$34 million a month this has absorbed so far, a further US$14 million a month is now to be added and the Minister’s wording suggests that further sums will be provided to permit some differentiation between grades. At Zimbabwe’s depressed levels of activity, public sector salaries amount to 35% of total expenditure and 13% of GDP. With the forecast recovery of the economy and improvements in both the tax revenue and GDP, the Minister expressed his wish to see these percentages reduced to 30% of expenditure and 8% of GDP to prevent them from crowding out non-wage expenditures.
However, the prospects of the hoped-for recovery remain far less promising than the Minister suggested in his presentation. He appears to have been persuaded that capacity utilisation had already improved considerably in manufacturing, but the evidence strongly suggests that the severe power cuts alone will have made significant increases in output impossible for most.
To this problem must be added the inability of the banks to offer the overdraft facilities or the longer-term loans needed to rebuild stocks of materials, carry out long overdue maintenance and repairs or attract back the skilled personnel or experienced operators to staff production lines.
Although the extent of the recovery that does prove possible will be off a very low base, the constraints presently affecting output are certain to impose severe limitations and these will be reinforced by the reluctance of buyers on the domestic as well as export markets to place too much reliance on Zimbabwe’s suppliers at this stage.
Although some mineral prices are beginning to improve and the gold miners have at last been granted more acceptable marketing arrangements, the severely debilitating handicaps imposed on them in recent years have left them in need of more working capital than most can afford, or can obtain from the equally handicapped banks.
Government’s acceptance of the need to make far-reaching changes has not been enough to overcome the lingering effects of years of losses that eroded each company’s skills, physical capacity, standing with customers and suppliers and financial stamina. A few undoubted successes have been welcome and these have helped reduce the import bills for some goods, but these might not be sufficient to offset the continuing declines in other sectors.
Agriculture appears to have attracted the most exaggerated forecasts of recovery, but the sizes of this year’s crop deliveries were set by events and conditions in 2008, very few of which were favourable. For the hoped-for recovery in 2010, the disappearance of government’s capacity to offer subsidies has brought the financial realities home to previously generously supported farmers. Even though the quantities of local fertiliser are inadequate, unsold stocks are accumulating for lack of buying power; so next year’s harvests are already in doubt.
Hopes of a rapid improvement in the business outlook have not been realised mostly for reasons related to the recovery of confidence. Widely known political requirements have not been fulfilled and the pace of change is unlikely to improve before these receive the needed attention.
-------------------------
John Robertson
July 19 2009
Friday, July 17, 2009
Zimbabwe tops in software piracy
Posted on Thursday 16 July 2009 - 08:34
AfricaNews ICT desk
The Business Software Alliance (BSA) has revealed that software piracy on personal computers (PC) in Zimbabwe is the highest in Sub-Saharan Africa. Half of the 110 countries studied, according to BSA, saw piracy rates drop while only 15% increased.
The report also revealed that industry losses due to software piracy in Nigeria rose to USD132 million in 2008, Itnewsafrica.com reported.According to BSA, in sub-Saharan Africa the highest piracy countries were Zimbabwe 92%, Cameroon 83% and Nigeria 83%. Among the lowest piracy countries were Reunion- 40%, Mauritius- 57% and Senegal-79%.The sixth annual global PC software piracy study released by the BSA - an international association representing the global software industry covering 110 countries was conducted independently by IDC, the information technology (IT) industry’s leading global market research and forecasting firm.A recent study by the Industrial Development Corporation (IDC) also named Zimbabwe as one of seven countries with the highest rates of illegal software usage. The other six countries are Georgia , Bangladesh , Armenia , Sri Landa, Azerbaijan and Moldova .According to the report: “Software piracy grew last year, accounting for 41 percent of all PC software installed, with losses to companies estimated at $53 billion”.
AfricaNews ICT desk
The Business Software Alliance (BSA) has revealed that software piracy on personal computers (PC) in Zimbabwe is the highest in Sub-Saharan Africa. Half of the 110 countries studied, according to BSA, saw piracy rates drop while only 15% increased.
The report also revealed that industry losses due to software piracy in Nigeria rose to USD132 million in 2008, Itnewsafrica.com reported.According to BSA, in sub-Saharan Africa the highest piracy countries were Zimbabwe 92%, Cameroon 83% and Nigeria 83%. Among the lowest piracy countries were Reunion- 40%, Mauritius- 57% and Senegal-79%.The sixth annual global PC software piracy study released by the BSA - an international association representing the global software industry covering 110 countries was conducted independently by IDC, the information technology (IT) industry’s leading global market research and forecasting firm.A recent study by the Industrial Development Corporation (IDC) also named Zimbabwe as one of seven countries with the highest rates of illegal software usage. The other six countries are Georgia , Bangladesh , Armenia , Sri Landa, Azerbaijan and Moldova .According to the report: “Software piracy grew last year, accounting for 41 percent of all PC software installed, with losses to companies estimated at $53 billion”.
Zimbabwean government to buy out Zimdollar
By GETRUDE GUMEDE
Published: July 16, 2009
ZIMBABWE – HARARE – The Zimbabwean government would require at least US$6 million to mop the Zimbabwe dollar in the market in order to remove the uncertainty that had remained over the fate of the local currency.
Unveiling mid-term fiscal review budget statement yesterday, Minister of Finance, Tendai Biti said the current state of the economy could not sustain the re-introduction of the local currency.
He said formal demonetisation should allow for settlement of all remaining Zimbabwe dollar transactions and obligations prior to the introduction of the multiple currency system as well as the revaluation of all other Zimbabwe dollar balances for accounting purposes.
“At the present moment, estimates indicate that about US$6 million will be required to purchase the entire stock of Zimbabwe dollar balances with banks as well as cash outside the banking system.
“However, current capacity to raise the required US$6 million is limited. I am, therefore, proposing that Zimbabwe’s debt to the economy arising out of demonetisation be handled on the same terms and legal framework that I will propose to govern some of the debt obligations of the Reserve Bank,” he said.
The Minister said implementation details, which will take into account the necessity of protecting holders of small balances would be announced at an appropriate time.
“The conclusion of this process will officially bring to an end claims on the use of the Zimbabwe dollar as a unit of account, medium of exchange and store of value,” Biti said.
Biti said the conversion rate of US$1 to $20 would apply.
He said only when the country has increased production capacity to the envisaged levels of 60 percent and exports had risen top contributing at least 15 percent of the Gross Domestic Product would talk of the re-introduction be entertained.
“What has emerged are just green shoots. They need to be watered for them to growth. The economy is too fragile to support the re-introduction of the local currency,” he said.
He said the hyper inflationary environment that prevailed over the past decade resulted in the loss of value of the local currency, rendering it unacceptable as a medium of exchange by most traders.
The minister said in order to facilitate business transactions, Government formalised the use of multiple currencies.
He noted that some of the balances brought forward as at 31December 2008 are derived from transactions denominated in Zimbabwean dollars.“It is, thus, necessary to denominate such balances in foreign currency. The challenge that arises is to determine an appropriate exchange rate to convert the local currency balances into foreign currency.
“The exchange rate of 1US$:ZW20 that was applied before the adoption of the multiple currency system may be used to convert balances arising from transactions in local currency to foreign currency.
“However, in some instances, it is unrealistic as it results in nil balances for assets that still have a residual value, for tax purposes.
“In cases where taxpayers have prepared balance sheets in foreign currency and have documentary evidence to prove that transactions were conducted in foreign currency, I propose that the Commissioner General approves such financial statements for tax purposes.
“In respect of other cases where carried over balances from 2008 are denominated in local currency, taxpayers will be obliged to convert such balances to foreign currency. The Commissioner General will provide guidelines on the conversion factor of these Balances,” the minister said.- The Zimbabwe Telegraph.
Published: July 16, 2009
ZIMBABWE – HARARE – The Zimbabwean government would require at least US$6 million to mop the Zimbabwe dollar in the market in order to remove the uncertainty that had remained over the fate of the local currency.
Unveiling mid-term fiscal review budget statement yesterday, Minister of Finance, Tendai Biti said the current state of the economy could not sustain the re-introduction of the local currency.
He said formal demonetisation should allow for settlement of all remaining Zimbabwe dollar transactions and obligations prior to the introduction of the multiple currency system as well as the revaluation of all other Zimbabwe dollar balances for accounting purposes.
“At the present moment, estimates indicate that about US$6 million will be required to purchase the entire stock of Zimbabwe dollar balances with banks as well as cash outside the banking system.
“However, current capacity to raise the required US$6 million is limited. I am, therefore, proposing that Zimbabwe’s debt to the economy arising out of demonetisation be handled on the same terms and legal framework that I will propose to govern some of the debt obligations of the Reserve Bank,” he said.
The Minister said implementation details, which will take into account the necessity of protecting holders of small balances would be announced at an appropriate time.
“The conclusion of this process will officially bring to an end claims on the use of the Zimbabwe dollar as a unit of account, medium of exchange and store of value,” Biti said.
Biti said the conversion rate of US$1 to $20 would apply.
He said only when the country has increased production capacity to the envisaged levels of 60 percent and exports had risen top contributing at least 15 percent of the Gross Domestic Product would talk of the re-introduction be entertained.
“What has emerged are just green shoots. They need to be watered for them to growth. The economy is too fragile to support the re-introduction of the local currency,” he said.
He said the hyper inflationary environment that prevailed over the past decade resulted in the loss of value of the local currency, rendering it unacceptable as a medium of exchange by most traders.
The minister said in order to facilitate business transactions, Government formalised the use of multiple currencies.
He noted that some of the balances brought forward as at 31December 2008 are derived from transactions denominated in Zimbabwean dollars.“It is, thus, necessary to denominate such balances in foreign currency. The challenge that arises is to determine an appropriate exchange rate to convert the local currency balances into foreign currency.
“The exchange rate of 1US$:ZW20 that was applied before the adoption of the multiple currency system may be used to convert balances arising from transactions in local currency to foreign currency.
“However, in some instances, it is unrealistic as it results in nil balances for assets that still have a residual value, for tax purposes.
“In cases where taxpayers have prepared balance sheets in foreign currency and have documentary evidence to prove that transactions were conducted in foreign currency, I propose that the Commissioner General approves such financial statements for tax purposes.
“In respect of other cases where carried over balances from 2008 are denominated in local currency, taxpayers will be obliged to convert such balances to foreign currency. The Commissioner General will provide guidelines on the conversion factor of these Balances,” the minister said.- The Zimbabwe Telegraph.
Monday, July 13, 2009
Zimbabwe tobacco price pushed up
Bangkok News.NetSunday 12th July, 2009
Zimbabwe has had an excellent season for tobacco prices if not for the actual crop. It has been the second smallest crop in more than 50 years. Tobacco auctions in Zimbabwe this year have been notable for record prices due to land seizures and thousands of smaller-scale tobacco farmers not growing tobacco this season due to lack of ability to borrow from the banks. Zimbabwe's 2009 tobacco crop will earn about $160 million this selling season with the average price at about US$3.60 a kilogram. Most tobacco will be exported to Europe with China now also an important buyer.
Zimbabwe has had an excellent season for tobacco prices if not for the actual crop. It has been the second smallest crop in more than 50 years. Tobacco auctions in Zimbabwe this year have been notable for record prices due to land seizures and thousands of smaller-scale tobacco farmers not growing tobacco this season due to lack of ability to borrow from the banks. Zimbabwe's 2009 tobacco crop will earn about $160 million this selling season with the average price at about US$3.60 a kilogram. Most tobacco will be exported to Europe with China now also an important buyer.
Zimbabwe tobacco price pushed up
Bangkok News.NetSunday 12th July, 2009
Zimbabwe has had an excellent season for tobacco prices if not for the actual crop. It has been the second smallest crop in more than 50 years. Tobacco auctions in Zimbabwe this year have been notable for record prices due to land seizures and thousands of smaller-scale tobacco farmers not growing tobacco this season due to lack of ability to borrow from the banks. Zimbabwe's 2009 tobacco crop will earn about $160 million this selling season with the average price at about US$3.60 a kilogram. Most tobacco will be exported to Europe with China now also an important buyer.
Zimbabwe has had an excellent season for tobacco prices if not for the actual crop. It has been the second smallest crop in more than 50 years. Tobacco auctions in Zimbabwe this year have been notable for record prices due to land seizures and thousands of smaller-scale tobacco farmers not growing tobacco this season due to lack of ability to borrow from the banks. Zimbabwe's 2009 tobacco crop will earn about $160 million this selling season with the average price at about US$3.60 a kilogram. Most tobacco will be exported to Europe with China now also an important buyer.
Saturday, July 11, 2009
Political Risk Deters International Investors From Taking Zimbabwean Stakes
By Studio 7 Staff Harare & Washington10 July 2009
Investors attending a two-day conference in Harare on investing in the country following the installation of a national unity government after long instability expressed skepticism about the government's ability to provide an environment conducive to doing business.
Not only is there legislation on the books that says Zimbabweans may demand a 51% stake in strategic sectors, but there is considerable uncertainty as to how long the current unity government will last and whether the transition to a new government will be orderly.
Under a so-called Global Political Agreement signed in September 2008, President Robert Mugabe and his long-ruling ZANU-PF party share power with the former opposition party of Prime Minister Morgan Tsvangirai. Two MDC formations - the other is led by Deputy Prime Minister Arthur Mutambara - hold a majority in the House of Assembly.
Correspondent Thomas Chiripasi of VOA's Studio 7 for Zimbabwe reported from Harare.
Political analyst Glen Mpani of the Center for the Study of Violence and Reconciliation in Cape Town, South Africa, said Harare must do more to draw foreign direct investment.
Zimbabwe Stock Exchange chief executive officer Emmanuel Munyukwi confirmed global investors remain worried about political risk despite their interest in taking a stake in the country, telling reporter Patience Rusere it is up to the politicians to boost confidence.
Organizers of the Mine Entra mining conference coming up later this month said just three foreign firms have registered – two of them from neighboring South Africa – compared with 37 in 2008, blaming legislating mandating local control for the drop in participation.
The Indigenization Act signed into law by President Robert Mugabe in early 2008 in advance of elections says Zimbabweans must hold a 51% stake in mines in particular.
Africa Resources Limited Chairman Mutumwa Mawere told VOA reporter Chris Gande that the unity government has failed to chart a clear course to reassure foreign investors
Investors attending a two-day conference in Harare on investing in the country following the installation of a national unity government after long instability expressed skepticism about the government's ability to provide an environment conducive to doing business.
Not only is there legislation on the books that says Zimbabweans may demand a 51% stake in strategic sectors, but there is considerable uncertainty as to how long the current unity government will last and whether the transition to a new government will be orderly.
Under a so-called Global Political Agreement signed in September 2008, President Robert Mugabe and his long-ruling ZANU-PF party share power with the former opposition party of Prime Minister Morgan Tsvangirai. Two MDC formations - the other is led by Deputy Prime Minister Arthur Mutambara - hold a majority in the House of Assembly.
Correspondent Thomas Chiripasi of VOA's Studio 7 for Zimbabwe reported from Harare.
Political analyst Glen Mpani of the Center for the Study of Violence and Reconciliation in Cape Town, South Africa, said Harare must do more to draw foreign direct investment.
Zimbabwe Stock Exchange chief executive officer Emmanuel Munyukwi confirmed global investors remain worried about political risk despite their interest in taking a stake in the country, telling reporter Patience Rusere it is up to the politicians to boost confidence.
Organizers of the Mine Entra mining conference coming up later this month said just three foreign firms have registered – two of them from neighboring South Africa – compared with 37 in 2008, blaming legislating mandating local control for the drop in participation.
The Indigenization Act signed into law by President Robert Mugabe in early 2008 in advance of elections says Zimbabweans must hold a 51% stake in mines in particular.
Africa Resources Limited Chairman Mutumwa Mawere told VOA reporter Chris Gande that the unity government has failed to chart a clear course to reassure foreign investors
No money to pay for farms: Tsvangirai
Prime Minister Morgan Tsvangirai on Thursday told those attending the Investors’ Conference that government has no money to compensate former white commercial farmers whose farms were grabbed under the controversial land reform program.
Tsvangirai addressing the Zimbabwe International InvestmentConference in Harare said:“Government has no money to compensate white farmers whose land was taken under the land reform. It is now time to move to the next phase of the land reform programme and focus on increasing productivity and output”
This is mostly likely to anger affected farmers who last month through the Commercial Farmers Union (CFU) said they now need compensation that is close to US$15billion.
CFU president Trevor Gilford said the new but temporary inclusive government will have to pay close to US$15 billion in compensation for the improvements made on their properties. He is quoted saying:
“The Zimbabwe constitution says the government should pay for pay full compensation for improvements, damages and interest. It will be better off if the government pays farmers US$15 billion as compensation for the improvements on the farms so that they leave farms voluntarily.
The 400 remaining white farmers face persecution for continuing to farm. The compensation needed by the farmers is almost double what the cash-starved coalition needs in the next three years to fix the economy shattered by Mugabe’s disastrous policies that include the chaotic land reform exercise.
At the same meeting President Robert Mugabe repeated his stance that former colonial ruler Britain was responsible for paying owners who were stripped of their farms.
He blames Western sanctions for Zimbabwe’s economic decline. The Zimbabwe International Investment Conference, which is being held under the theme “Zimbabwe: Redefining Business and Investment Environment” is aimed at projecting Zimbabwe as a conducive investment destination in sub-Saharan Africa.
The conference is also meant to entice investment to increase output and employment and facilitate sustainable economic growth, exports and poverty reduction. The Zimbabwe Telegraph.
Tsvangirai addressing the Zimbabwe International InvestmentConference in Harare said:“Government has no money to compensate white farmers whose land was taken under the land reform. It is now time to move to the next phase of the land reform programme and focus on increasing productivity and output”
This is mostly likely to anger affected farmers who last month through the Commercial Farmers Union (CFU) said they now need compensation that is close to US$15billion.
CFU president Trevor Gilford said the new but temporary inclusive government will have to pay close to US$15 billion in compensation for the improvements made on their properties. He is quoted saying:
“The Zimbabwe constitution says the government should pay for pay full compensation for improvements, damages and interest. It will be better off if the government pays farmers US$15 billion as compensation for the improvements on the farms so that they leave farms voluntarily.
The 400 remaining white farmers face persecution for continuing to farm. The compensation needed by the farmers is almost double what the cash-starved coalition needs in the next three years to fix the economy shattered by Mugabe’s disastrous policies that include the chaotic land reform exercise.
At the same meeting President Robert Mugabe repeated his stance that former colonial ruler Britain was responsible for paying owners who were stripped of their farms.
He blames Western sanctions for Zimbabwe’s economic decline. The Zimbabwe International Investment Conference, which is being held under the theme “Zimbabwe: Redefining Business and Investment Environment” is aimed at projecting Zimbabwe as a conducive investment destination in sub-Saharan Africa.
The conference is also meant to entice investment to increase output and employment and facilitate sustainable economic growth, exports and poverty reduction. The Zimbabwe Telegraph.
Thursday, July 9, 2009
Zimbabwe to Use rand?
JOHANNESBURG – Zimbabwe’s Industry Minister Welshman Ncube on Tuesday said the southern African country would explore the possibility of joining the rand monetary union to end use of multiple currencies.
Harare instituted the use of multiple foreign currencies alongside the Zimbabwe dollar in January in a move analysts said was an acknowledgement of the collapse of the local currency due to hyperinflation – the most visible sign of a severe economic crisis blamed on President Robert Mugabe's controversial policies.
In March the new unity government’s Finance Minister Tendai Biti announced the death of the Zimbabwe dollar. Since then debate on whether to return the local currency has intensified because the US dollar was unavailable to a majority of people in the countryside.
Mugabe has said the local currency should be brought back but Biti told reporters on Monday that a return to the Zimbabwe dollar was a "very long way" off.
"We cannot re-enter the Zimbabwe dollar without the economy to support that, we need another solution. We cannot continue forever with multiple currencies," Ncube told the international media at an Africa forum in London.
"If we can at least join the rand monetary union, we will have money allocated to Zimbabwe through that system. No decision has been made, we will debate it and see what the best alternative is."
The rand monetary union is currently made up of Namibia, Swaziland and Lesotho who all use the South African rand alongside their own currencies.
Ncube said Biti’s mid-term monetary review, due on July 14, would include a report on the implications of joining the rand monetary union.
* Zimonline
Harare instituted the use of multiple foreign currencies alongside the Zimbabwe dollar in January in a move analysts said was an acknowledgement of the collapse of the local currency due to hyperinflation – the most visible sign of a severe economic crisis blamed on President Robert Mugabe's controversial policies.
In March the new unity government’s Finance Minister Tendai Biti announced the death of the Zimbabwe dollar. Since then debate on whether to return the local currency has intensified because the US dollar was unavailable to a majority of people in the countryside.
Mugabe has said the local currency should be brought back but Biti told reporters on Monday that a return to the Zimbabwe dollar was a "very long way" off.
"We cannot re-enter the Zimbabwe dollar without the economy to support that, we need another solution. We cannot continue forever with multiple currencies," Ncube told the international media at an Africa forum in London.
"If we can at least join the rand monetary union, we will have money allocated to Zimbabwe through that system. No decision has been made, we will debate it and see what the best alternative is."
The rand monetary union is currently made up of Namibia, Swaziland and Lesotho who all use the South African rand alongside their own currencies.
Ncube said Biti’s mid-term monetary review, due on July 14, would include a report on the implications of joining the rand monetary union.
* Zimonline
Tuesday, July 7, 2009
Zimbabwe dollar return a “very long way” off
REUTERS
July 7, 2009 01:11AMT
Zimbabwe will not return to using its own currency in the near future, and any move back to the Zimbabwe dollar will be linked to export strength, Zimbabwe’s finance minister Tendai Biti said on Monday.
“It is not our intention to depart in a hurry from the regime of multiple currencies that we are using at the present moment,” Biti said in an interview with Reuters television.
“There is no reversion to the Zimbabwe dollar at all. If it happens, it will depend on the performance of our economy, the performance of our exports. We are still a very, very long way to the return of the Zimbabwean dollar.”
Zimbabwe has allowed the use of multiple foreign currencies since January to stem hyperinflation which has left the Zimbabwe dollar almost worthless in the midst of a severe economic crisis.
President Robert Mugabe has said Zimbabwe may revive the use of its own currency because the U.S. dollar was unavailable to a majority of people in the countryside.
Biti also told Reuters that inflation would reach 3-4 percent this year, after averaging 2.0 percent over the January-June period. He said Zimbabwe needed budgetary support.
“We expect our 2009 budget to be $1 billion, I expect to collect $800 million by the end of the year. This will leave us a shortfall of $200 million.”
Zimbabwe recorded a monthly inflation rate of one percent in May.
The last inflation figure announcement before the country permitted the use of foreign currencies was in October, which showed prices racing along at a record 231 million percent.
July 7, 2009 01:11AMT
Zimbabwe will not return to using its own currency in the near future, and any move back to the Zimbabwe dollar will be linked to export strength, Zimbabwe’s finance minister Tendai Biti said on Monday.
“It is not our intention to depart in a hurry from the regime of multiple currencies that we are using at the present moment,” Biti said in an interview with Reuters television.
“There is no reversion to the Zimbabwe dollar at all. If it happens, it will depend on the performance of our economy, the performance of our exports. We are still a very, very long way to the return of the Zimbabwean dollar.”
Zimbabwe has allowed the use of multiple foreign currencies since January to stem hyperinflation which has left the Zimbabwe dollar almost worthless in the midst of a severe economic crisis.
President Robert Mugabe has said Zimbabwe may revive the use of its own currency because the U.S. dollar was unavailable to a majority of people in the countryside.
Biti also told Reuters that inflation would reach 3-4 percent this year, after averaging 2.0 percent over the January-June period. He said Zimbabwe needed budgetary support.
“We expect our 2009 budget to be $1 billion, I expect to collect $800 million by the end of the year. This will leave us a shortfall of $200 million.”
Zimbabwe recorded a monthly inflation rate of one percent in May.
The last inflation figure announcement before the country permitted the use of foreign currencies was in October, which showed prices racing along at a record 231 million percent.
Zimbabwe Can’t Repay and Won’t Repay Loans; Insisting on “Debt Strategy”
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The Zimbabwean coalition government cannot afford to repay debts incurred when President Robert Mugabe’s ZANU-PF was ruling on its own and will not repay those debts.
Zimbabwe’s finance minister, Tendai Biti, told debt cancellation campaigners at a conference that “Zimbabwe does not have the capacity to pay the debt and we will not pay this debt.”
The minister was responding to growing calls from civil society organisations for a comprehensive debt audit. The organisations want the audit to determine the extent to which the country’s debts have become illegitimate and odious.
Debt becomes illegitimate when contracted by corrupt governments outside legal frameworks and when there is no public consultation. Debts become odious if they are not used to benefit the citizenry but rather to oppress them.
Civil society groups have demanded to know how the money was used before the debts are repaid.
Biti was speaking at a conference with the theme “Economy in Transition – Towards Sustainable Public Debt for Zimbabwe”, hosted by the Zimbabwe Coalition on Debt and Development (ZIMCODD) in Harare last week. ZIMCODD is a socio-economic justice coalition established in 2000 to facilitate citizens’ involvement in making public policy and practice pro-people.
According to the latest ministry of finance and Reserve Bank of Zimbabwe statistics, released on Jun 30, Zimbabwe is sitting on a total external debt of 4.6 billion dollars. Approximately 65 percent of these external obligations are in arrears.
To compound matters, Zimbabwe requires 8.4 billion dollars for its Short Term Emergency Recovery Programme (STERP), an economic blueprint launched by the government in April this year.
The huge external debt may extinguish whatever possibility exists of an economic recovery. Although the country is starting to register slight improvement in general economic performance, the huge debt stock remains an impediment.
Revenue collections have steadily risen from 4.7 million dollars in January to 28.7 million dollars in February, climbing further to 41.7 million dollars in March. The upward trend continued in April and May when 51.6 and 66.8 million dollars was collected respectively. These amounts are, however, a drop in the ocean considering the huge recovery work that the country needs.
The country’s industrial base still operates at 20 percent capacity while hospitals remain without essential equipment and medicine. The International Labour Organisation (ILO) puts the unemployment rate at 95 percent, a reflection of an economy which is far from ticking.
Against this background, Biti told the conference that it would be an “obscene” act for him to attempt repayment of debt.
He reiterated this in an interview with IPS: “It would be obscene for me as the minister of finance to direct that we pay when 90 percent of our people are living below the poverty datum line, surviving on less than 20 dollar cents a day.”
The international financial institutions (IFIs), the International Monetary Fund (IMF) and the World Bank, have demanded the repayment of past loans before new lines of credit can be opened.
Biti responded that this kind of approach will only leave Zimbabwe with a “debt overhang”. He suggested the formulation of a sustainable debt strategy which will enable the country to meet its obligations without abandoning national development.
“It is this debt strategy which will form the basis upon which government will re-engage the international capital market players,” Biti told IPS.
Biti further argued that Zimbabwe’s economic indicators now reflect that of a low income country and therefore Zimbabwe should qualify for the Heavily Indebted Poor Countries Initiative (HIPC). Countries that fall under the classification of HIPC benefit from exceptional arrears clearance support from the IFIs and the African Development Bank (ADB).
The civil society groups are arguing that the colossal debt that the country has accumulated is largely illegitimate. An example is the decision by the ZANU-PF government to send soldiers into the Democratic Republic of Congo (DRC), an unbudgeted expenditure.
In the book “Zimbabwe‘s Plunge – Neo-Colonialism and Exhausted Nationalism”, Patrick Bond and Masimba Manyanya wrote that Zimbabwe was using one million dollars a day to fight in the DRC.
Dakarayi Matanga, ZIMCODD director, told IPS that it is important to determine the legitimacy of public debt because it affects the realisation of people’s social and economic rights. “We should analyse the legitimacy of the debt in order to separate what ought to be paid and what not. Public debt is one of the major hindrances to the realisation of sustainable development,” argued Matanga.
“Countries spend huge amounts of national resources servicing debt at the expense of development projects and the provision of basic services such as health and education,” he added.
Debt cancellation campaigner Sarah Bracking, a senior lecturer at the University of Manchester’s School of Environment and Development, argued for a debt audit. “The Zimbabwean debt is politically related. Citizens did not take part when decisions to contract loans were made,” Bracking told IPS.
Betty Nyamupinga, a ZIMCODD debt campaigner, indicated to IPS that the debt audit should have a gender dimension. “Let’s look at the impact of debt on gender. It is us women who are supposed to take children to hospital and give birth in a dilapidated facility but when decisions are made we are not consulted,” Nyamupinga stated.
Vitalis Meja of the African Forum on Debt and Development (AFRODAD) called for the total cancellation of debt. “Let’s cancel the damn debt. (Repayment) is like being given a rope to go and hang yourself and you do just that,” said Meja.
Obert Gutu, a senator in the Zimbabwe parliament speaking in his own capacity, declared that by asking for loan payments, the IFIs are issuing a death warrant for Zimbabweans: “They are simply saying, ‘we want you to die’.”
Written By: By Stanley Kwenda IPS News
The Zimbabwean coalition government cannot afford to repay debts incurred when President Robert Mugabe’s ZANU-PF was ruling on its own and will not repay those debts.
Zimbabwe’s finance minister, Tendai Biti, told debt cancellation campaigners at a conference that “Zimbabwe does not have the capacity to pay the debt and we will not pay this debt.”
The minister was responding to growing calls from civil society organisations for a comprehensive debt audit. The organisations want the audit to determine the extent to which the country’s debts have become illegitimate and odious.
Debt becomes illegitimate when contracted by corrupt governments outside legal frameworks and when there is no public consultation. Debts become odious if they are not used to benefit the citizenry but rather to oppress them.
Civil society groups have demanded to know how the money was used before the debts are repaid.
Biti was speaking at a conference with the theme “Economy in Transition – Towards Sustainable Public Debt for Zimbabwe”, hosted by the Zimbabwe Coalition on Debt and Development (ZIMCODD) in Harare last week. ZIMCODD is a socio-economic justice coalition established in 2000 to facilitate citizens’ involvement in making public policy and practice pro-people.
According to the latest ministry of finance and Reserve Bank of Zimbabwe statistics, released on Jun 30, Zimbabwe is sitting on a total external debt of 4.6 billion dollars. Approximately 65 percent of these external obligations are in arrears.
To compound matters, Zimbabwe requires 8.4 billion dollars for its Short Term Emergency Recovery Programme (STERP), an economic blueprint launched by the government in April this year.
The huge external debt may extinguish whatever possibility exists of an economic recovery. Although the country is starting to register slight improvement in general economic performance, the huge debt stock remains an impediment.
Revenue collections have steadily risen from 4.7 million dollars in January to 28.7 million dollars in February, climbing further to 41.7 million dollars in March. The upward trend continued in April and May when 51.6 and 66.8 million dollars was collected respectively. These amounts are, however, a drop in the ocean considering the huge recovery work that the country needs.
The country’s industrial base still operates at 20 percent capacity while hospitals remain without essential equipment and medicine. The International Labour Organisation (ILO) puts the unemployment rate at 95 percent, a reflection of an economy which is far from ticking.
Against this background, Biti told the conference that it would be an “obscene” act for him to attempt repayment of debt.
He reiterated this in an interview with IPS: “It would be obscene for me as the minister of finance to direct that we pay when 90 percent of our people are living below the poverty datum line, surviving on less than 20 dollar cents a day.”
The international financial institutions (IFIs), the International Monetary Fund (IMF) and the World Bank, have demanded the repayment of past loans before new lines of credit can be opened.
Biti responded that this kind of approach will only leave Zimbabwe with a “debt overhang”. He suggested the formulation of a sustainable debt strategy which will enable the country to meet its obligations without abandoning national development.
“It is this debt strategy which will form the basis upon which government will re-engage the international capital market players,” Biti told IPS.
Biti further argued that Zimbabwe’s economic indicators now reflect that of a low income country and therefore Zimbabwe should qualify for the Heavily Indebted Poor Countries Initiative (HIPC). Countries that fall under the classification of HIPC benefit from exceptional arrears clearance support from the IFIs and the African Development Bank (ADB).
The civil society groups are arguing that the colossal debt that the country has accumulated is largely illegitimate. An example is the decision by the ZANU-PF government to send soldiers into the Democratic Republic of Congo (DRC), an unbudgeted expenditure.
In the book “Zimbabwe‘s Plunge – Neo-Colonialism and Exhausted Nationalism”, Patrick Bond and Masimba Manyanya wrote that Zimbabwe was using one million dollars a day to fight in the DRC.
Dakarayi Matanga, ZIMCODD director, told IPS that it is important to determine the legitimacy of public debt because it affects the realisation of people’s social and economic rights. “We should analyse the legitimacy of the debt in order to separate what ought to be paid and what not. Public debt is one of the major hindrances to the realisation of sustainable development,” argued Matanga.
“Countries spend huge amounts of national resources servicing debt at the expense of development projects and the provision of basic services such as health and education,” he added.
Debt cancellation campaigner Sarah Bracking, a senior lecturer at the University of Manchester’s School of Environment and Development, argued for a debt audit. “The Zimbabwean debt is politically related. Citizens did not take part when decisions to contract loans were made,” Bracking told IPS.
Betty Nyamupinga, a ZIMCODD debt campaigner, indicated to IPS that the debt audit should have a gender dimension. “Let’s look at the impact of debt on gender. It is us women who are supposed to take children to hospital and give birth in a dilapidated facility but when decisions are made we are not consulted,” Nyamupinga stated.
Vitalis Meja of the African Forum on Debt and Development (AFRODAD) called for the total cancellation of debt. “Let’s cancel the damn debt. (Repayment) is like being given a rope to go and hang yourself and you do just that,” said Meja.
Obert Gutu, a senator in the Zimbabwe parliament speaking in his own capacity, declared that by asking for loan payments, the IFIs are issuing a death warrant for Zimbabweans: “They are simply saying, ‘we want you to die’.”
Written By: By Stanley Kwenda IPS News
Monday, July 6, 2009
Investment Conference, 10 July
Investment Conference, 10 July • Jul 5th, 2009 • The Minister of Economic Planning and Investment Promotion, Hon Elton Mangoma MP, on behalf of the Government of Zimbabwe, invites you to come and join international fund managers, and financiers, sectoral investors, leading entrepreneurs, leading business experts and policy makers as they chat a new course for Africa’s sleeping giant at the inaugural ZimbabweInvestment Conference 2009, which will be held under the theme:
Zimbabwe; *Redefining The Business and Investment Environment.*
Speakers will include, H.E. President Robert Mugabe and Prime Minister Morgan Tsvangirai.
Discussions will centre around investment opportunities in mining, agriculture, infrastructure development and tourism.
Dates: 9-10 July 2009
Venue: Celebration Centre, 162 Swan Drive, Borrowdale, Harare,Zimbabwe.
Zimbabwe; *Redefining The Business and Investment Environment.*
Speakers will include, H.E. President Robert Mugabe and Prime Minister Morgan Tsvangirai.
Discussions will centre around investment opportunities in mining, agriculture, infrastructure development and tourism.
Dates: 9-10 July 2009
Venue: Celebration Centre, 162 Swan Drive, Borrowdale, Harare,Zimbabwe.
Fly540 goes to Zimbabwe
Jul 05, 2009
London Stock Exchange-listed LonZim Plc has announced that its Fly540 “low cost” airline will enter the Zimbabwean market in September.
The company said the airline, most prominent in Kenya, Zanzibar, Uganda and Tanzania, will service domestic and regional markets.
In a statement posted on its website, LonZim said: “Fly540 is a Lonrho Plc owned airline operating in Africa and to international standards. The company provides local and regional distribution for international flights coming into Africa with a safe, reliable and punctual service.”
David Lenigas, Executive Chairman of LonZim said: “We are delighted to be able to launch Fly540 in Zimbabwe. Not only does it make sound commercial logic, but it is an important step forward for Zimbabwe and helps stimulate economic recovery.
“Good transport networks are essential for the growth of Africa, and Fly540 is delivering an international standard, quality aviation service connecting the continent."
Lenigas said Fly540 will be flying in nine African countries by the end of 2009.
The company added: “The launch of Fly540 Zimbabwe is central to LonZim's investment strategy of identifying current market opportunities in Zimbabwe and establishing companies that will benefit from the economic recovery of the country.
“The potential aviation market on a domestic and regional basis is significant and currently underserved. For Zimbabwe to rebuild its economic base and attract investment, it is essential that it has a first world transport capability.
“Having observed the market opportunity for over a year, Fly540 Zimbabwe believes that now is the right time to commence operations.”
Fly540 Zimbabwe will service the Harare-Bulawayo-Victoria Falls routes on the domestic market as well as regional flights to Lubumbashi, Lilongwe, Lusaka and Beira. “Once established, the route network will be expanded,” it said.
London Stock Exchange-listed LonZim Plc has announced that its Fly540 “low cost” airline will enter the Zimbabwean market in September.
The company said the airline, most prominent in Kenya, Zanzibar, Uganda and Tanzania, will service domestic and regional markets.
In a statement posted on its website, LonZim said: “Fly540 is a Lonrho Plc owned airline operating in Africa and to international standards. The company provides local and regional distribution for international flights coming into Africa with a safe, reliable and punctual service.”
David Lenigas, Executive Chairman of LonZim said: “We are delighted to be able to launch Fly540 in Zimbabwe. Not only does it make sound commercial logic, but it is an important step forward for Zimbabwe and helps stimulate economic recovery.
“Good transport networks are essential for the growth of Africa, and Fly540 is delivering an international standard, quality aviation service connecting the continent."
Lenigas said Fly540 will be flying in nine African countries by the end of 2009.
The company added: “The launch of Fly540 Zimbabwe is central to LonZim's investment strategy of identifying current market opportunities in Zimbabwe and establishing companies that will benefit from the economic recovery of the country.
“The potential aviation market on a domestic and regional basis is significant and currently underserved. For Zimbabwe to rebuild its economic base and attract investment, it is essential that it has a first world transport capability.
“Having observed the market opportunity for over a year, Fly540 Zimbabwe believes that now is the right time to commence operations.”
Fly540 Zimbabwe will service the Harare-Bulawayo-Victoria Falls routes on the domestic market as well as regional flights to Lubumbashi, Lilongwe, Lusaka and Beira. “Once established, the route network will be expanded,” it said.
Zimbabwean company eyes Ghana’s tourism industry
Zimbabwean company eyes Ghana’s tourism industry
A Zimbabwean hospitality company is upbeat about setting up in Ghana to serve the country’s tourism sector, citing political stability as the reason.
The CEO of Harare-based African Sun Ltd., which is listed on the Zimbabwe Stock Exchange (ZSE) has said his company is seeking to get listed on the Johannesburg Stock Exchange (JSE), to raise funding for its planned investments in Ghana, according to a report by the Zimbabwe Independent.
Mr. Shingi Munyeza was quoted as saying that, the company will float 20% of its issued share capital on the JSE to raise funds for investments in Ghana.
Meanwhile, he said already, 27% of the company’s revenue comes from Ghana. He was optimistic that the economic stability in Ghana and the increased tourism activities in the country make it conducive for his company to invest in Ghana. African Sun’s destination hotel in Ghana is the Holiday Inn Hotel.
“That is why we want to pursue this market, Ghana will remain an attractive business hub for West Africa due to increased investor confidence and political stability,” he said.
Apart from Ghana, the company is also pursuing opportunities in Nigeria and South Africa hoping to tap into the 2010 FIFA World Cup.
Its main business area, it says will be to pursue management contracts in Ghana.
Ghana’s tourism industry is rated third in West Africa after Nigeria and Senegal. Ghana’s Minister of Tourism was recently quoted as saying that, the sector is the fourth highest foreign exchange earner for Ghana, and the country earned a total of $1.3 billion from tourism in 2008.
By Emmanuel K. Dogbevi
A Zimbabwean hospitality company is upbeat about setting up in Ghana to serve the country’s tourism sector, citing political stability as the reason.
The CEO of Harare-based African Sun Ltd., which is listed on the Zimbabwe Stock Exchange (ZSE) has said his company is seeking to get listed on the Johannesburg Stock Exchange (JSE), to raise funding for its planned investments in Ghana, according to a report by the Zimbabwe Independent.
Mr. Shingi Munyeza was quoted as saying that, the company will float 20% of its issued share capital on the JSE to raise funds for investments in Ghana.
Meanwhile, he said already, 27% of the company’s revenue comes from Ghana. He was optimistic that the economic stability in Ghana and the increased tourism activities in the country make it conducive for his company to invest in Ghana. African Sun’s destination hotel in Ghana is the Holiday Inn Hotel.
“That is why we want to pursue this market, Ghana will remain an attractive business hub for West Africa due to increased investor confidence and political stability,” he said.
Apart from Ghana, the company is also pursuing opportunities in Nigeria and South Africa hoping to tap into the 2010 FIFA World Cup.
Its main business area, it says will be to pursue management contracts in Ghana.
Ghana’s tourism industry is rated third in West Africa after Nigeria and Senegal. Ghana’s Minister of Tourism was recently quoted as saying that, the sector is the fourth highest foreign exchange earner for Ghana, and the country earned a total of $1.3 billion from tourism in 2008.
By Emmanuel K. Dogbevi
Thursday, July 2, 2009
The legitimacy of Zimbabwe:The case for a debt audit
The unpalatable fact is that the Republic of Zimbabwe is virtually bankrupt. As at December 1, 2008, Zimbabwe’s external debt stood at US$ 5,255 billion, with a current account balance of – US$597 million. As at May 31, 2009, Zimbabwe owed the International Monetary Fund (IMF) US$138 million and the World Bank US$676 million.
As at April 30, 2009, Zimbabwe owed the African Development Bank US$438 million. These statistics are startling and there is, therefore, an urgent need to interrogate Zimbabwe’s debt crisis and firstly ascertain how such a colossal debt was incurred and then strategise the way forward as to how this debt crisis is to be resolved. Put alternatively, the legitimacy or lack of it, of Zimbabwe’s debt has to be placed under the microscope if our country is to avoid being perpetually placed under a debt trap.
The main thrust of this paper is therefore to attempt to provide an objective analysis of Zimbabwe’s debt situation and then to propagate the need to have an apolitical, scientific and objective debt audit as a way of charting a new dispensation regarding how the debt crisis has to be handled henceforth. Odious debts are defined as those debts, incurred by the State, which debts are not for the needs or interest of the State but merely to strengthen the State’s despotic power as well as to repress the population that fights against despotism. The legal doctrine of odious debts is essentially derived from the writings of Alexander Nahum Sack, the world’s pre-eminent legal scholar on public debts. Sack authored two major works on the obligations of successor states and these are: “THE EFFECTS OF STATE TRANSFORMATIONS ON THEIR PUBLIC DEBTS AND OTHER FINANCIAL OBLIGATIONS” and “THE SUCCESSION OF THE PUBLIC DEBTS OF THE STATE.” The doctrine of odious debts is not per se favourable to the interests of emerging economies and also to the developing countries (hitherto contemptuously referred to as the Third World.) This is so because the doctrine of odious debts was created to further the interests of international finance by limiting the ability of governments to repudiate debts. Under this doctrine, three conditions must be present before a State can repudiate a debt: i) the debt must have been incurred without the consent of the people of the State; ii) the debt cannot have benefited the public in that State and; iii) the tenderer must have been aware of these two conditions. The overwhelming majority of the developing world’s foreign debts are odious in law. Being part of the developing world, Zimbabwe is thus inevitably caught up in this odious debts fiasco. My earlier humble submission was that Zimbabwe is bankrupt. This is mainly so because Zimbabwe has no capacity to service the afore-mentioned debt. In his inaugural address after being sworn into office on Wednesday, February 11, 2009 , Prime Minister Morgan Tsvangirai advised the nation that the inclusive government’s main priority was to heal the broken economy and supply food to the hungry millions of Zimbabweans. He stated that: “For too long, our people’s hopes for a bright and prosperous future have been betrayed. Instead of hope, their days have been filled with starvation, disease and fear. A culture of entitlement and impunity has brought our nation to the brink of a dark abyss. This must end today.” It is, without doubt, obvious that Prime Minister Tsvangirai was acutely aware of the state of despair, poverty, destitution and hopelessness that prevailed throughout the Zimbabwean society immediately prior to the formation of the inclusive government in February, 2009. At its formation in February, 2009, the inclusive government inherited approximately US$ 4,7 billion external debts owed to bilateral, multilateral and commercial creditors. This paper adopts the view that by the time the inclusive government was formed, Zimbabwe was virtually a failed State. The de facto government had ceased to operate as a normal functional authority. The economic challenges facing the country were such that the de facto government was clearly unable to meet essential State obligations such as the payment of civil servants’ salaries as well as the general running of public institutions such as government ministries, public schools and public hospitals. Zimbabwe’s economic collapse is not to be solely located in and restricted to the ineptitude, corruption and misgovernance of the previous government coupled with the chaotic and violent “land reform” program that began in earnest in February, 2000. There is a combination of several factors that eventually led to Zimbabwe becoming a failed state by the time the inclusive government was formed in February, 2009.The reasons behind Zimbabwe’s economic decline are numerous, complex and historical. The general assumption that the land distribution program that gained momentum from the year 2000 is the sole reason for the country’s economic decline and food insecurity is flatly inaccurate. According to a study by the Trans Africa Forum, there are several factors that brought about Zimbabwe’s economic collapse. In a Congressional Testimony to the United States House of Representatives Committee on Foreign Affairs Subcommittee on Africa and Global Health on Thursday, May 7, 2009 submitted by Nicole C. Lee, Esq; the Executive Director of the Trans Africa Forum, many political economists identify Zimbabwe’s unresolved structural weaknesses and systematic inequality built into the apartheid -like system constructed by the Rhodesian settlers as the primary root cause. A South African-based scholar, Patrick Bond, points to the related crises of Rhodesia’s “over-consumption” of the early 1970s.Analysts agree that at the time of Zimbabwe’s independence in 1980,the country’s economy was skewed, for example: i) The entire national economy was designed to support the maintenance and enrichment of a small white minority. At independence in 1980, fewer than 7000 white farmers each owned, on average, more than 100 times the land available to the average African peasant.; ii) Industry, mining and the manufacturing sector were in the hands of multinational corporations and the white settler economy: iii) The majority of the population had been systematically excluded from the pool of skilled labour as well as the formal economy through a variety of legal and abusive measures. In present-day Zimbabwe, economic distortions continue. Mining, manufacturing and most industry remain in the hands of external corporations, the white minority and a small clique of black indigenous Zimbabweans.Zimbabwe is at the crossroads. The country is caught up in a debt trap. Zimbabwe is burdened by both short and long-term external debts that inevitably militate against the inclusive government’s concerted efforts to jump-start the economy. Zimbabwe has no choice but to adopt the modern approach to international relations; which approach essentially dictates that developing countries should be given a platform where they can challenge the legitimacy of their debts to creditors with a view to ensuring that their development is not stifled by otherwise odious and/or illegitimate debts which militate against sustainable development. The inclusive government should come out clearly in the open and join the global voice that seeks the establishment of an international debt arbitration mechanism. The Zimbabwe government should promptly utilize the doctrine of odious debts by establishing a judicial debt arbitration panel, preferably composed of respected and eminent Zimbabwean and international jurists. This panel would then invite creditors to submit claims, including documentation that the loans were indeed used in the interests of the Zimbabwean people and, not, in the words of the US Deputy Secretary of State Paul Wolforito, “to buy weapons and to build palaces and to build instruments of repression.” It is pointless to take the alternative route of going to the Paris Club. The Paris Club is composed of die-hard capitalists whose major interest is to remain the world’s economic giants at the expense of the developing world. Put bluntly, the Paris Club will never push the agenda of developing and highly-indebted countries. The Paris Club is an informal grouping of the world’s largest creditor nations. This club uses Western taxpayer dollars to rescue misplaced loans by public lenders. Zimbabwe should never approach the Paris Club; at least before establishing the legitimacy or otherwise of its colossal external debt. Recent news reports are to the effect that France is mulling the possibility of cancelling Zimbabwe’s debt to that country which is in the region of €400 million. This is a very encouraging starting point. The World Bank’s article of agreement imposes a fiduciary duty on the bank to ensure that the proceeds of any loan are used only for the purposes for which the loan is granted. If the World Bank breaches this fiduciary duty it should be held liable and the debtor nation must be entitled to challenge the odious debt at international law. In his paper: “CRIMINAL DEBT IN THE INDONESIA CONTEXT”, Northwestern University Professor Jeffrey Winters provides shocking insight into the World Bank’s weak supervisory practices. Winters presents overwhelming evidence that the World Bank breached its fiduciary duty to Indonesia by granting loans which, it knew, would be used for corrupt purposes. As a result, Indonesian legislators have since asked the International Monetary Fund (IMF), to write off the country’s foreign debts, including those to other donors recommended by the IMF. The Indonesian government had a foreign debt of around US$67 billion as at July 13, 2001. The breach of its fiduciary duty by the World Bank is ordinarily a legal basis to challenge the legitimacy of the debts. The hurdle to be encountered by the inclusive government in Zimbabwe is to prove that the lending institutions knew or ought to have known that the funds would not be used in the interest of the people but solely for the benefit of the ruling regime’s members in their personal capacities. A classic scenario on odious debts is demonstrated when officials are indicted on corruption charges relating to funds from the multilateral lending institutions. Examples are cases like CROWN v HAHMEYER INTERNATIONAL CIMBA where a Lesotho senior public servant was bribed to influence his decision on a major construction project undertaken by the appellant corporation. There was ”reasonably sufficient” evidence to indicate that Acres International engaged in a corrupt practice by paying monies to Mr. Mosupha Sole to influence him in connection with the work performed by Acres International for the Lesotho Highlands Water Project. This trial is important because it may open the door for the government of Lesotho to challenge the legitimacy of loans tainted by corruption. Another case involves an action by the International Centre for the Settlement of Investment Disputes (ICSID) tribunal to strike out a lawsuit against the Kenyan government over a contract after it discovered that the contract had been secured illegally through a US$2 million bribe paid to the former President Daniel Arap Moi. Although the complainant alleges that the payment was a “personal donation” made to Mr. Moi for public purposes, the ICSID tribunal ruled that this constituted a breach of international public policy as well as both English and Kenyan public policy. Mr. Ali, the complainant, could, therefore, not turn to a legal body as a means to enforce his rights secured through a breach of international public policy or in the tribunal’s words, he could not “found a cause of action on an immoral or illegal act.” The tribunal ruled that “claims based on contracts of corruption or on contracts obtained by corruption cannot be upheld by this arbitral tribunal.” As aptly noted by Jeffy King of the Canadian Centre for International Sustainable Development Law (CISDL), the tribunal’s ruling is an important one for the global campaign and “adds to precedent such as the Tinoco Arbitration (1924) and numerous international conventions in clarifying that contracts for personal enrichment, or those procured by bribery, are against international public policy and are thus, unenforceable.” By distinguishing between the acts of the Kenyan President and those of the Republic of Kenya, the ruling contributes an important precedent to the odious debts jurisprudence. The decision by the World Bank-established tribunal upheld the principle that the President of Kenya was acting as an agent of the state and thus, his actions are automatically deemed to be the acts of Kenya. This decision thus, dissolves the fiction that a head of state is capable of binding the state to any sort of contract. In July 2000, the Argentine Federal Court set out a landmark ruling that is supposed to have far-reaching repercussions for odious debt campaigners worldwide. The court held that a substantial portion of Argentina’s foreign debt is rooted in fraudulent and illegitimate loans abused during the military period. In his decision, Judge Jorge Ballestro held that many loans to Argentina were part of “a damaging economic policy that forced Argentina to its knees through various methods….and which tended to benefit and support private companies- national and foreign-to the detriment of society and state companies.” Judge Ballestro’s ruling puts blame on the shoulders of corrupt civil servants as well as international financial institutions such as the IMF. In his speech to the International Jubilee 2000 Conference in Bamako, Mali, debt activist Alejandro Olmos Gaona, argues that the court’s decision exposes how international creditors helped ensure that money lent to Argentina was not used in the interest of the state. As such, the court’s ruling is an invaluable resource for campaigners in other countries who are trying to challenge the legality of their own odious debts. It is, therefore, imperative for the inclusive government in Zimbabwe to urgently institute a debt audit as suggested in this paper. It would be pointless for the inclusive government to move around with a begging bowl, asking for about US$8, 2 billion to jump-start Zimbabwe’s comatose economy whilst remaining deafeningly silent about the need to interrogate the country’s colossal external debt. Zimbabwe should not honour any debts that have not been properly audited and proved to be lawful and legitimate. Honouring debts that are clearly odious will be the inclusive government’s kiss of death.
As at April 30, 2009, Zimbabwe owed the African Development Bank US$438 million. These statistics are startling and there is, therefore, an urgent need to interrogate Zimbabwe’s debt crisis and firstly ascertain how such a colossal debt was incurred and then strategise the way forward as to how this debt crisis is to be resolved. Put alternatively, the legitimacy or lack of it, of Zimbabwe’s debt has to be placed under the microscope if our country is to avoid being perpetually placed under a debt trap.
The main thrust of this paper is therefore to attempt to provide an objective analysis of Zimbabwe’s debt situation and then to propagate the need to have an apolitical, scientific and objective debt audit as a way of charting a new dispensation regarding how the debt crisis has to be handled henceforth. Odious debts are defined as those debts, incurred by the State, which debts are not for the needs or interest of the State but merely to strengthen the State’s despotic power as well as to repress the population that fights against despotism. The legal doctrine of odious debts is essentially derived from the writings of Alexander Nahum Sack, the world’s pre-eminent legal scholar on public debts. Sack authored two major works on the obligations of successor states and these are: “THE EFFECTS OF STATE TRANSFORMATIONS ON THEIR PUBLIC DEBTS AND OTHER FINANCIAL OBLIGATIONS” and “THE SUCCESSION OF THE PUBLIC DEBTS OF THE STATE.” The doctrine of odious debts is not per se favourable to the interests of emerging economies and also to the developing countries (hitherto contemptuously referred to as the Third World.) This is so because the doctrine of odious debts was created to further the interests of international finance by limiting the ability of governments to repudiate debts. Under this doctrine, three conditions must be present before a State can repudiate a debt: i) the debt must have been incurred without the consent of the people of the State; ii) the debt cannot have benefited the public in that State and; iii) the tenderer must have been aware of these two conditions. The overwhelming majority of the developing world’s foreign debts are odious in law. Being part of the developing world, Zimbabwe is thus inevitably caught up in this odious debts fiasco. My earlier humble submission was that Zimbabwe is bankrupt. This is mainly so because Zimbabwe has no capacity to service the afore-mentioned debt. In his inaugural address after being sworn into office on Wednesday, February 11, 2009 , Prime Minister Morgan Tsvangirai advised the nation that the inclusive government’s main priority was to heal the broken economy and supply food to the hungry millions of Zimbabweans. He stated that: “For too long, our people’s hopes for a bright and prosperous future have been betrayed. Instead of hope, their days have been filled with starvation, disease and fear. A culture of entitlement and impunity has brought our nation to the brink of a dark abyss. This must end today.” It is, without doubt, obvious that Prime Minister Tsvangirai was acutely aware of the state of despair, poverty, destitution and hopelessness that prevailed throughout the Zimbabwean society immediately prior to the formation of the inclusive government in February, 2009. At its formation in February, 2009, the inclusive government inherited approximately US$ 4,7 billion external debts owed to bilateral, multilateral and commercial creditors. This paper adopts the view that by the time the inclusive government was formed, Zimbabwe was virtually a failed State. The de facto government had ceased to operate as a normal functional authority. The economic challenges facing the country were such that the de facto government was clearly unable to meet essential State obligations such as the payment of civil servants’ salaries as well as the general running of public institutions such as government ministries, public schools and public hospitals. Zimbabwe’s economic collapse is not to be solely located in and restricted to the ineptitude, corruption and misgovernance of the previous government coupled with the chaotic and violent “land reform” program that began in earnest in February, 2000. There is a combination of several factors that eventually led to Zimbabwe becoming a failed state by the time the inclusive government was formed in February, 2009.The reasons behind Zimbabwe’s economic decline are numerous, complex and historical. The general assumption that the land distribution program that gained momentum from the year 2000 is the sole reason for the country’s economic decline and food insecurity is flatly inaccurate. According to a study by the Trans Africa Forum, there are several factors that brought about Zimbabwe’s economic collapse. In a Congressional Testimony to the United States House of Representatives Committee on Foreign Affairs Subcommittee on Africa and Global Health on Thursday, May 7, 2009 submitted by Nicole C. Lee, Esq; the Executive Director of the Trans Africa Forum, many political economists identify Zimbabwe’s unresolved structural weaknesses and systematic inequality built into the apartheid -like system constructed by the Rhodesian settlers as the primary root cause. A South African-based scholar, Patrick Bond, points to the related crises of Rhodesia’s “over-consumption” of the early 1970s.Analysts agree that at the time of Zimbabwe’s independence in 1980,the country’s economy was skewed, for example: i) The entire national economy was designed to support the maintenance and enrichment of a small white minority. At independence in 1980, fewer than 7000 white farmers each owned, on average, more than 100 times the land available to the average African peasant.; ii) Industry, mining and the manufacturing sector were in the hands of multinational corporations and the white settler economy: iii) The majority of the population had been systematically excluded from the pool of skilled labour as well as the formal economy through a variety of legal and abusive measures. In present-day Zimbabwe, economic distortions continue. Mining, manufacturing and most industry remain in the hands of external corporations, the white minority and a small clique of black indigenous Zimbabweans.Zimbabwe is at the crossroads. The country is caught up in a debt trap. Zimbabwe is burdened by both short and long-term external debts that inevitably militate against the inclusive government’s concerted efforts to jump-start the economy. Zimbabwe has no choice but to adopt the modern approach to international relations; which approach essentially dictates that developing countries should be given a platform where they can challenge the legitimacy of their debts to creditors with a view to ensuring that their development is not stifled by otherwise odious and/or illegitimate debts which militate against sustainable development. The inclusive government should come out clearly in the open and join the global voice that seeks the establishment of an international debt arbitration mechanism. The Zimbabwe government should promptly utilize the doctrine of odious debts by establishing a judicial debt arbitration panel, preferably composed of respected and eminent Zimbabwean and international jurists. This panel would then invite creditors to submit claims, including documentation that the loans were indeed used in the interests of the Zimbabwean people and, not, in the words of the US Deputy Secretary of State Paul Wolforito, “to buy weapons and to build palaces and to build instruments of repression.” It is pointless to take the alternative route of going to the Paris Club. The Paris Club is composed of die-hard capitalists whose major interest is to remain the world’s economic giants at the expense of the developing world. Put bluntly, the Paris Club will never push the agenda of developing and highly-indebted countries. The Paris Club is an informal grouping of the world’s largest creditor nations. This club uses Western taxpayer dollars to rescue misplaced loans by public lenders. Zimbabwe should never approach the Paris Club; at least before establishing the legitimacy or otherwise of its colossal external debt. Recent news reports are to the effect that France is mulling the possibility of cancelling Zimbabwe’s debt to that country which is in the region of €400 million. This is a very encouraging starting point. The World Bank’s article of agreement imposes a fiduciary duty on the bank to ensure that the proceeds of any loan are used only for the purposes for which the loan is granted. If the World Bank breaches this fiduciary duty it should be held liable and the debtor nation must be entitled to challenge the odious debt at international law. In his paper: “CRIMINAL DEBT IN THE INDONESIA CONTEXT”, Northwestern University Professor Jeffrey Winters provides shocking insight into the World Bank’s weak supervisory practices. Winters presents overwhelming evidence that the World Bank breached its fiduciary duty to Indonesia by granting loans which, it knew, would be used for corrupt purposes. As a result, Indonesian legislators have since asked the International Monetary Fund (IMF), to write off the country’s foreign debts, including those to other donors recommended by the IMF. The Indonesian government had a foreign debt of around US$67 billion as at July 13, 2001. The breach of its fiduciary duty by the World Bank is ordinarily a legal basis to challenge the legitimacy of the debts. The hurdle to be encountered by the inclusive government in Zimbabwe is to prove that the lending institutions knew or ought to have known that the funds would not be used in the interest of the people but solely for the benefit of the ruling regime’s members in their personal capacities. A classic scenario on odious debts is demonstrated when officials are indicted on corruption charges relating to funds from the multilateral lending institutions. Examples are cases like CROWN v HAHMEYER INTERNATIONAL CIMBA where a Lesotho senior public servant was bribed to influence his decision on a major construction project undertaken by the appellant corporation. There was ”reasonably sufficient” evidence to indicate that Acres International engaged in a corrupt practice by paying monies to Mr. Mosupha Sole to influence him in connection with the work performed by Acres International for the Lesotho Highlands Water Project. This trial is important because it may open the door for the government of Lesotho to challenge the legitimacy of loans tainted by corruption. Another case involves an action by the International Centre for the Settlement of Investment Disputes (ICSID) tribunal to strike out a lawsuit against the Kenyan government over a contract after it discovered that the contract had been secured illegally through a US$2 million bribe paid to the former President Daniel Arap Moi. Although the complainant alleges that the payment was a “personal donation” made to Mr. Moi for public purposes, the ICSID tribunal ruled that this constituted a breach of international public policy as well as both English and Kenyan public policy. Mr. Ali, the complainant, could, therefore, not turn to a legal body as a means to enforce his rights secured through a breach of international public policy or in the tribunal’s words, he could not “found a cause of action on an immoral or illegal act.” The tribunal ruled that “claims based on contracts of corruption or on contracts obtained by corruption cannot be upheld by this arbitral tribunal.” As aptly noted by Jeffy King of the Canadian Centre for International Sustainable Development Law (CISDL), the tribunal’s ruling is an important one for the global campaign and “adds to precedent such as the Tinoco Arbitration (1924) and numerous international conventions in clarifying that contracts for personal enrichment, or those procured by bribery, are against international public policy and are thus, unenforceable.” By distinguishing between the acts of the Kenyan President and those of the Republic of Kenya, the ruling contributes an important precedent to the odious debts jurisprudence. The decision by the World Bank-established tribunal upheld the principle that the President of Kenya was acting as an agent of the state and thus, his actions are automatically deemed to be the acts of Kenya. This decision thus, dissolves the fiction that a head of state is capable of binding the state to any sort of contract. In July 2000, the Argentine Federal Court set out a landmark ruling that is supposed to have far-reaching repercussions for odious debt campaigners worldwide. The court held that a substantial portion of Argentina’s foreign debt is rooted in fraudulent and illegitimate loans abused during the military period. In his decision, Judge Jorge Ballestro held that many loans to Argentina were part of “a damaging economic policy that forced Argentina to its knees through various methods….and which tended to benefit and support private companies- national and foreign-to the detriment of society and state companies.” Judge Ballestro’s ruling puts blame on the shoulders of corrupt civil servants as well as international financial institutions such as the IMF. In his speech to the International Jubilee 2000 Conference in Bamako, Mali, debt activist Alejandro Olmos Gaona, argues that the court’s decision exposes how international creditors helped ensure that money lent to Argentina was not used in the interest of the state. As such, the court’s ruling is an invaluable resource for campaigners in other countries who are trying to challenge the legality of their own odious debts. It is, therefore, imperative for the inclusive government in Zimbabwe to urgently institute a debt audit as suggested in this paper. It would be pointless for the inclusive government to move around with a begging bowl, asking for about US$8, 2 billion to jump-start Zimbabwe’s comatose economy whilst remaining deafeningly silent about the need to interrogate the country’s colossal external debt. Zimbabwe should not honour any debts that have not been properly audited and proved to be lawful and legitimate. Honouring debts that are clearly odious will be the inclusive government’s kiss of death.
Zimbabwe Says China Is Giving It Loans — New York Times
JOHANNESBURG — Zimbabwe’s prime minister, Morgan Tsvangirai, said Tuesday that an official he had appointed had secured lines of credit worth $950 million from China, President Robert Mugabe’s longtime ally.
Mr. Mugabe’s party has mocked Mr. Tsvangirai for failing to bring home much aid from his three-week tour of the United States and Europe. Zimbabwe’s government — a virtually bankrupt contraption led by Mr. Mugabe and his rival, Mr. Tsvangirai — needs an estimated $8 billion to rebuild the country’s ruined economy.
The West has been leery of giving the government a large infusion of money until Mr. Mugabe stops the human rights abuses that have been a fixture of his 29 years in power. China, however, has maintained its close relationship with Zimbabwe as it has extended its financial ties to other nations in Africa.
Mr. Mugabe’s party has mocked Mr. Tsvangirai for failing to bring home much aid from his three-week tour of the United States and Europe. Zimbabwe’s government — a virtually bankrupt contraption led by Mr. Mugabe and his rival, Mr. Tsvangirai — needs an estimated $8 billion to rebuild the country’s ruined economy.
The West has been leery of giving the government a large infusion of money until Mr. Mugabe stops the human rights abuses that have been a fixture of his 29 years in power. China, however, has maintained its close relationship with Zimbabwe as it has extended its financial ties to other nations in Africa.
Wednesday, July 1, 2009
Zimbabwe Says China Is Giving It Loans
Associated Press
By CELIA W. DUGGER and MICHAEL WINES
Published: June 30, 2009
JOHANNESBURG — Zimbabwe’s prime minister, Morgan Tsvangirai, said Tuesday that an official he had appointed had secured lines of credit worth $950 million from China, President Robert Mugabe’s longtime ally.
Mr. Mugabe’s party has mocked Mr. Tsvangirai for failing to bring home much aid from his three-week tour of the United States and Europe. Zimbabwe’s government — a virtually bankrupt contraption led by Mr. Mugabe and his rival, Mr. Tsvangirai — needs an estimated $8 billion to rebuild the country’s ruined economy.
The West has been leery of giving the government a large infusion of money until Mr. Mugabe stops the human rights abuses that have been a fixture of his 29 years in power. China, however, has maintained its close relationship with Zimbabwe as it has extended its financial ties to other nations in Africa.
Mr. Tsvangirai said Tuesday that the finance minister he had appointed, Tendai Biti, had negotiated the loan package with China. Details of the deal were scant, and Chinese officials could not be reached to confirm the deal or to comment on it.
Officials close to Mr. Tsvangirai said they believed that at least some of the financing would be provided on the condition that the money was spent on Chinese goods, like fertilizer.
“It is available for the procurement of goods from China — that is my understanding,” said Ian Makone, an aide to Mr. Tsvangirai.
Eddie Cross, a senior official in Mr. Tsvangirai’s party, said he dined with the Chinese ambassador last week and was told the lines of credit would include favorable terms for infrastructure projects and commercial ones to buy Chinese goods.
Mr. Tsvangirai, who won more votes than Mr. Mugabe in last year’s presidential election but was forced out of a runoff by brutal, state-sponsored attacks on his supporters, reluctantly agreed to share power with Mr. Mugabe five months ago. The two men and their parties are now jockeying for political advantage ahead of an election still to be scheduled.
Defense Minister Emmerson Mnangagwa, who ran Mr. Mugabe’s violent re-election campaign last year, was himself leading a delegation of officials from the governing party, ZANU-PF, in Beijing on Tuesday. An official in China’s Politburo assured the delegation that China’s longstanding policy of investing in Zimbabwe was unchanged.
“We will encourage and facilitate more Chinese companies to seek development in Zimbabwe,” said Zhou Yongkang, the Politburo member.
China and Zimbabwe have been close since Beijing supported Mr. Mugabe’s military campaign against white rule in the 1970s. In recent years, China has helped prop up the country’s economy as other foreign investors fled. Chinese firms have contributed, sold or bartered arms, airplanes, buses, hydroelectric generators and other goods to Zimbabwe, including equipment to eavesdrop on telephone conversations. China also supplied an elaborate blue tile ceiling for Mr. Mugabe’s mansion in Harare, the capital.
The warm greetings Mr. Tsvangirai received from leaders in the United States and Europe, including President Obama and Prime Minister Gordon Brown of Britain, rankled Mr. Mugabe, who is blocked from traveling to the West by sanctions, along with most of his ruling clique.
The Herald, the state-run newspaper that is Mr. Mugabe’s mouthpiece, reported in June that the government had considered recalling Mr. Tsvangirai, but that Mr. Mugabe had decided that doing so would be too drastic. The ZANU-PF Politburo condemned Western countries for refusing to lift the sanctions and said national unity was “worth more than the conditional financial pittances from the West.”
Mr. Tsvangirai said Tuesday that his trip had netted pledges of almost $500 million in assistance from Western nations. The details “will be released in due course,” he said.
Some analysts were skeptical of the amount he said he had raised in new aid. Zimbabwe, racked by hunger and disease in recent years, has received hundreds of millions of dollars annually in humanitarian assistance from the West, almost all of it dispensed through international organizations and charities, not the government.
Mr. Tsvangirai’s trip seems to have aggravated tensions between the two political parties — and even within Mr. Tsvangirai’s party, the Movement for Democratic Change. Mr. Tsvangirai himself was relatively mild in his criticism of Mr. Mugabe while he was abroad, insisting that the 85-year-old president was an essential part of the solution to Zimbabwe’s political crisis, as well as part of the problem.
Celia W. Dugger reported from Johannesburg, and Michael Wines from Beijing.
By CELIA W. DUGGER and MICHAEL WINES
Published: June 30, 2009
JOHANNESBURG — Zimbabwe’s prime minister, Morgan Tsvangirai, said Tuesday that an official he had appointed had secured lines of credit worth $950 million from China, President Robert Mugabe’s longtime ally.
Mr. Mugabe’s party has mocked Mr. Tsvangirai for failing to bring home much aid from his three-week tour of the United States and Europe. Zimbabwe’s government — a virtually bankrupt contraption led by Mr. Mugabe and his rival, Mr. Tsvangirai — needs an estimated $8 billion to rebuild the country’s ruined economy.
The West has been leery of giving the government a large infusion of money until Mr. Mugabe stops the human rights abuses that have been a fixture of his 29 years in power. China, however, has maintained its close relationship with Zimbabwe as it has extended its financial ties to other nations in Africa.
Mr. Tsvangirai said Tuesday that the finance minister he had appointed, Tendai Biti, had negotiated the loan package with China. Details of the deal were scant, and Chinese officials could not be reached to confirm the deal or to comment on it.
Officials close to Mr. Tsvangirai said they believed that at least some of the financing would be provided on the condition that the money was spent on Chinese goods, like fertilizer.
“It is available for the procurement of goods from China — that is my understanding,” said Ian Makone, an aide to Mr. Tsvangirai.
Eddie Cross, a senior official in Mr. Tsvangirai’s party, said he dined with the Chinese ambassador last week and was told the lines of credit would include favorable terms for infrastructure projects and commercial ones to buy Chinese goods.
Mr. Tsvangirai, who won more votes than Mr. Mugabe in last year’s presidential election but was forced out of a runoff by brutal, state-sponsored attacks on his supporters, reluctantly agreed to share power with Mr. Mugabe five months ago. The two men and their parties are now jockeying for political advantage ahead of an election still to be scheduled.
Defense Minister Emmerson Mnangagwa, who ran Mr. Mugabe’s violent re-election campaign last year, was himself leading a delegation of officials from the governing party, ZANU-PF, in Beijing on Tuesday. An official in China’s Politburo assured the delegation that China’s longstanding policy of investing in Zimbabwe was unchanged.
“We will encourage and facilitate more Chinese companies to seek development in Zimbabwe,” said Zhou Yongkang, the Politburo member.
China and Zimbabwe have been close since Beijing supported Mr. Mugabe’s military campaign against white rule in the 1970s. In recent years, China has helped prop up the country’s economy as other foreign investors fled. Chinese firms have contributed, sold or bartered arms, airplanes, buses, hydroelectric generators and other goods to Zimbabwe, including equipment to eavesdrop on telephone conversations. China also supplied an elaborate blue tile ceiling for Mr. Mugabe’s mansion in Harare, the capital.
The warm greetings Mr. Tsvangirai received from leaders in the United States and Europe, including President Obama and Prime Minister Gordon Brown of Britain, rankled Mr. Mugabe, who is blocked from traveling to the West by sanctions, along with most of his ruling clique.
The Herald, the state-run newspaper that is Mr. Mugabe’s mouthpiece, reported in June that the government had considered recalling Mr. Tsvangirai, but that Mr. Mugabe had decided that doing so would be too drastic. The ZANU-PF Politburo condemned Western countries for refusing to lift the sanctions and said national unity was “worth more than the conditional financial pittances from the West.”
Mr. Tsvangirai said Tuesday that his trip had netted pledges of almost $500 million in assistance from Western nations. The details “will be released in due course,” he said.
Some analysts were skeptical of the amount he said he had raised in new aid. Zimbabwe, racked by hunger and disease in recent years, has received hundreds of millions of dollars annually in humanitarian assistance from the West, almost all of it dispensed through international organizations and charities, not the government.
Mr. Tsvangirai’s trip seems to have aggravated tensions between the two political parties — and even within Mr. Tsvangirai’s party, the Movement for Democratic Change. Mr. Tsvangirai himself was relatively mild in his criticism of Mr. Mugabe while he was abroad, insisting that the 85-year-old president was an essential part of the solution to Zimbabwe’s political crisis, as well as part of the problem.
Celia W. Dugger reported from Johannesburg, and Michael Wines from Beijing.
Zimbabwe loses £3bn in investment opportunities
ZIMBABWE-HARARE-The Zimbabwean government lost more than 3 billion pounds in potential investments after some British companies failed to trash out how they can pump in the money following aborted consultations when Zanu Pf Minister of Mines and Mining Development Obert Mpofu was denied a visa to travel to Britain for a mining conference last week.
Mpofu was meant to attend the 6th Mining in Africa symposium on Zimbabwe in London last week where he was also scheduled to give a key address but the British embassy in Harare denied him a visa into the country.
In an interview on Tuesday, Mpofu said he had received calls from potential investors willing to invest into the mining sector but indicated that they could not go ahead since they could not get the correct Government position after the minister was denied the chance to meet them in Britain.
“I had previously received calls from potential investors who had mobilised 3 billion pounds towards the mining sector. The Investors indicated that it will now be difficult to go ahead since they did not meet the minister as was planned,” he said.
He said after he had been denied a UK visa the same investors called him expressing regret on the country’s stance on Zimbabwe.
A number of investors are concerned over the move by the Government to offer 51% stake of any mining concesssions to Zimbabweans .
Mpofu accused Britain of ignoring Zimbabwe’s extended hand of friendship through Prime Minister Morgan Tsvangirai’s recent six-week tour of the west explaining the GPA and trying to mobilise resources for the country.
“We do not know how they want us to engage them with the attitude they displayed. It is up to them to make up their minds,” he said.
Mpofu however said the British stance would not affect government relations with big British companies already operating in the country.
“As government, we are a responsible authority and would not be guided by the forces of negation. We will continue working with those who have already invested in Zimbabwe,” he said.
Companies already operating in the country are exempt from the bill government intends to craft on ownership percentages.
“The bill is going to affect new companies that have interests in investing in the mining sector,” he said.
Mpofu was meant to attend the 6th Mining in Africa symposium on Zimbabwe in London last week where he was also scheduled to give a key address but the British embassy in Harare denied him a visa into the country.
In an interview on Tuesday, Mpofu said he had received calls from potential investors willing to invest into the mining sector but indicated that they could not go ahead since they could not get the correct Government position after the minister was denied the chance to meet them in Britain.
“I had previously received calls from potential investors who had mobilised 3 billion pounds towards the mining sector. The Investors indicated that it will now be difficult to go ahead since they did not meet the minister as was planned,” he said.
He said after he had been denied a UK visa the same investors called him expressing regret on the country’s stance on Zimbabwe.
A number of investors are concerned over the move by the Government to offer 51% stake of any mining concesssions to Zimbabweans .
Mpofu accused Britain of ignoring Zimbabwe’s extended hand of friendship through Prime Minister Morgan Tsvangirai’s recent six-week tour of the west explaining the GPA and trying to mobilise resources for the country.
“We do not know how they want us to engage them with the attitude they displayed. It is up to them to make up their minds,” he said.
Mpofu however said the British stance would not affect government relations with big British companies already operating in the country.
“As government, we are a responsible authority and would not be guided by the forces of negation. We will continue working with those who have already invested in Zimbabwe,” he said.
Companies already operating in the country are exempt from the bill government intends to craft on ownership percentages.
“The bill is going to affect new companies that have interests in investing in the mining sector,” he said.
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