Shoprite Holdings Ltd., South Africa’s biggest food retailer, said it will “consider” buying businesses in Zimbabwe to expand its operations on the rest of the continent.
Shoprite was responding to a report in Zimbabwe’s Herald newspaper today that said the company is seeking a controlling stake in OK Zimbabwe Ltd. OK, which has a market value of $230.6 million, is Zimbabwe’s second-biggest supermarket chain after Kingdom Meikles Africa Ltd.-owned TM Supermarkets (Pvt) Ltd.
Cape Town-based Shoprite will “consider such opportunities in Zimbabwe if the economic conditions in the country prove to be conducive to the expansion of its operations,” Marketing Director Brian Weyers said in an e-mailed response to questions. The retailer is “constantly looking at opportunities to expand its business across the continent.”
Calls to OK Zimbabwe’s offices in the capital Harare didn’t connect.
Shoprite, which posted a 27 percent jump in profit in the year through June, operates 102 stores in 16 countries outside of South Africa, including a grocer in Zimbabwe’s second-biggest city, Bulawayo. Chief Executive Officer Whitey Basson said on Aug. 25 the retailer is in talks to open 14 stores in Nigeria and two in Angola, and is considering investing in Mauritius and Madagascar.
Zimbabwean President Robert Mugabe signed a power-sharing agreement with opposition leader Morgan Tsvangirai in February, with the aim of drawing up a new constitution and holding elections within two years of that. Zimbabwe’s economy has been in recession for a decade after Mugabe seized white-owned commercial farms to give to black subsistence farmers.
Source: Bloomberg
Sunday, August 30, 2009
Thursday, August 27, 2009
Statistics
Robertson
After a gap of several months, the Central Statistical Office has updated its Poverty Datum Line survey to June, which has enabled me to update my own version of the tables. The data are drawn from the major cities and regions of the country and averaged to permit the calculation of the trends for the country. Only US dollar figures are recorded in the tables.
The Poverty Datum Line is said to represent the cost of supporting a standard of living that must be achieved ³if a person is deemed not to be poor². The amount that must be spent on food is said to cover the cost of 2100 kilo-calories per person and if an individual¹s consumption does not exceed the food poverty line, that person would be deemed to be very poor.
The tables show the food and total consumption figures for individuals and for families of five, the average size of households that was established by the 2002 Population Census. However, the items and proportions in the non-food index are based on surveys concluded in 1996, so their validity now might be questionable.
Between January and June this year, the cost of the basic food requirements per person are said to have fallen from about $36 to $26 a month, while the cost of the food as a proportion of total spending has fallen from about 32% to just under 30%.
To establish the needs for a family of five, the amounts calculated for one person have been simply multiplied by five. This seems to lack the sophistication needed to deflect criticism, but the CSO claims that the totals, which reflect fixed quantities of items that are not disclosed in the tables, are the costs of minimum needs that are ³consistent with the preferences of poor individuals and households².
As the June totals reached $429,55 per household, and as average incomes are believed to be below $250 a month for most employees, and well below that figure for many of them, the figures confirm observations that more than one income is needed per household. Contributions from informal activities almost certainly close a large part of the gap, but remittances from relatives working abroad and rents received from lodgers are probably very important sources for many families.
I hope the tables will prove helpful and that the figures needed to update them will now become available regularly.
Kindest regards,
John
After a gap of several months, the Central Statistical Office has updated its Poverty Datum Line survey to June, which has enabled me to update my own version of the tables. The data are drawn from the major cities and regions of the country and averaged to permit the calculation of the trends for the country. Only US dollar figures are recorded in the tables.
The Poverty Datum Line is said to represent the cost of supporting a standard of living that must be achieved ³if a person is deemed not to be poor². The amount that must be spent on food is said to cover the cost of 2100 kilo-calories per person and if an individual¹s consumption does not exceed the food poverty line, that person would be deemed to be very poor.
The tables show the food and total consumption figures for individuals and for families of five, the average size of households that was established by the 2002 Population Census. However, the items and proportions in the non-food index are based on surveys concluded in 1996, so their validity now might be questionable.
Between January and June this year, the cost of the basic food requirements per person are said to have fallen from about $36 to $26 a month, while the cost of the food as a proportion of total spending has fallen from about 32% to just under 30%.
To establish the needs for a family of five, the amounts calculated for one person have been simply multiplied by five. This seems to lack the sophistication needed to deflect criticism, but the CSO claims that the totals, which reflect fixed quantities of items that are not disclosed in the tables, are the costs of minimum needs that are ³consistent with the preferences of poor individuals and households².
As the June totals reached $429,55 per household, and as average incomes are believed to be below $250 a month for most employees, and well below that figure for many of them, the figures confirm observations that more than one income is needed per household. Contributions from informal activities almost certainly close a large part of the gap, but remittances from relatives working abroad and rents received from lodgers are probably very important sources for many families.
I hope the tables will prove helpful and that the figures needed to update them will now become available regularly.
Kindest regards,
John
Wednesday, August 26, 2009
Mobile phone industry in Zimbabwe to grow by 40%
Mobile phone industry in Zimbabwe to grow by 40%
By SARAH NCUBE
Published: August 25, 2009
ZIMBABWE – HARARE The country’s three mobile phone operators are expected to reach a market perpetration of 40 percent within the next five years up from 10 percent.
The penetration rates is one of the lowest in the world.
The sector is described as still being in the high growth phase.According to a report compiled by Mopane Advisory Services, there had been intensifying competition among the three mobile network providers with Telecel Zimbabwe in the process of recapitalising its operations.
To demonstrate the huge untapped potential in the market, Mopane Advisory Services said Econet Wireless registered a nine percent growth in its subscriber base in three months starting March 2009.
“Other mobile operators, Telecel and Net One, have also started releasing new lines into the market, though not as aggressively as Econet. Government-owned Tel One has introduced fixed mobile lines and this is a segment of the market that has huge growth prospects.
“With the advent of internet calling services through VoIP such as Skype that enable internet users to make international calls at cheaper rates; Zimbabwe’s mobile sector is set to lose potential revenue from its highly priced international calls,” said Mopane.
Zimbabwe’s macro-economic environment has shown remarkable signs of stability since the formation of an inclusive government in February. The operating environment has largely been liberalised and market forces are now the key determinants of prices.
The advisory firm said the possible introduction of 3G mobile services in Zimbabwe was set to increase the revenue base of mobile operators in the country.
Mopane said the growth prospects of the sector were being affected by power cuts but companies have begun investing in additional power back-up equipment.
“Businesses have also continued to invest in additional back-up power equipment to cushion themselves from power outages that tend to disrupt network performance and affect service quality,” said Mopane.
Strong barriers to entry owing to the huge capital investment needed to set up a network were also noted as one of the key factors favouring local companies to register significant growth.
Competition amongst the mobile network providers has seen new and innovative products being launched for the benefit of the communicating public.
Net One, the country’s second largest mobile operator recently unveiled a package dubbed Your Big 5 that allow subscribers to phone at a discount of between 10 and 15 percent while Econet continues to introduce low cost mobile hand sets. The Zimbabwe Telegraph
By SARAH NCUBE
Published: August 25, 2009
ZIMBABWE – HARARE The country’s three mobile phone operators are expected to reach a market perpetration of 40 percent within the next five years up from 10 percent.
The penetration rates is one of the lowest in the world.
The sector is described as still being in the high growth phase.According to a report compiled by Mopane Advisory Services, there had been intensifying competition among the three mobile network providers with Telecel Zimbabwe in the process of recapitalising its operations.
To demonstrate the huge untapped potential in the market, Mopane Advisory Services said Econet Wireless registered a nine percent growth in its subscriber base in three months starting March 2009.
“Other mobile operators, Telecel and Net One, have also started releasing new lines into the market, though not as aggressively as Econet. Government-owned Tel One has introduced fixed mobile lines and this is a segment of the market that has huge growth prospects.
“With the advent of internet calling services through VoIP such as Skype that enable internet users to make international calls at cheaper rates; Zimbabwe’s mobile sector is set to lose potential revenue from its highly priced international calls,” said Mopane.
Zimbabwe’s macro-economic environment has shown remarkable signs of stability since the formation of an inclusive government in February. The operating environment has largely been liberalised and market forces are now the key determinants of prices.
The advisory firm said the possible introduction of 3G mobile services in Zimbabwe was set to increase the revenue base of mobile operators in the country.
Mopane said the growth prospects of the sector were being affected by power cuts but companies have begun investing in additional power back-up equipment.
“Businesses have also continued to invest in additional back-up power equipment to cushion themselves from power outages that tend to disrupt network performance and affect service quality,” said Mopane.
Strong barriers to entry owing to the huge capital investment needed to set up a network were also noted as one of the key factors favouring local companies to register significant growth.
Competition amongst the mobile network providers has seen new and innovative products being launched for the benefit of the communicating public.
Net One, the country’s second largest mobile operator recently unveiled a package dubbed Your Big 5 that allow subscribers to phone at a discount of between 10 and 15 percent while Econet continues to introduce low cost mobile hand sets. The Zimbabwe Telegraph
ZIMBABWE: Burial societies a barometer of economic growth
Posted by africanpress on August 26, 2009
Photo: IRIN
Burial societies making a comeback
BULAWAYO, – On the last Sunday of every month, Zwodwa Mpika, 52, puts on her blue dress and matching brimless cap, the uniform of the burial society she belongs to, and sets off for the meeting.
She has rarely missed a gathering since her husband died in 2006, and her regular attendance has earned her the position of secretary of the Zibuthe Burial Society, located in Sizinda, a suburb of Bulawayo, Zimbabwe’s second city.
“I don’t want this association to collapse, which could easily happen if I do not attend and pay my dues, because without it my late husband’s funeral would have been little more than that of a pauper [burial],” she told IRIN.
Burial societies, to which most low-income families in urban centres belong as an alternative to buying conventional funeral insurance, are beginning to show signs of revival after tottering on the brink of collapse in the country’s decade-long recession.
“A conventional funeral assurance policy does not bring mourners to your funeral to mitigate grief and provide a resounding send-off,” Zibuthe Burial Society chairman Ntandazo Banda told IRIN.
Zimbabwe’s economic malaise has witnessed hyperinflation, shortages of basics foodstuffs that saw nearly 7 million people requiring food assistance in the first quarter of 2009, and an unemployment rate of more than 90 percent.
Burial societies charge monthly subscriptions of as little as US$5 per family and pay the funeral costs of their members, whether they were born in the city or are rural migrants; some even pay if the member comes from a neighbouring country like Zambia or Malawi. Local Zimbabwean traditions dictate that whenever possible the dead should be buried in their ancestral burial grounds at their rural home.
Most burial societies in Bulawayo draw their membership from working-class Zimbabweans, unlike Zibuthe, whose membership consists of a small community of pensioners and a sprinkling of young families of Malawian origin.
“We are trying hard to breathe life into our society but people have little or no disposable income,” Banda said. “We aim to preserve our unique burial traditions as Malawians, hence the small membership, but that does not bar other nationalities from joining us.”
HIV/AIDS and hyperinflationBefore Zimbabwe’s steep economic decline set in, most members could easily afford the monthly subscription of Z$20, but the society’s problems really began when the official annual inflation rate began spiralling towards 230 million percent. “We had to battle to keep the society afloat,” Banda said.
Members are slowly coming forward to update their subscriptions, and that is a good sign
The Kusile Burial Society in the neighbouring Bulawayo suburb of Tshabalala also experienced dwindling contributions and the society of 250 members almost collapsed, but “Members are slowly coming forward to update their subscriptions, and that is a good sign,” Admiral Ncube, treasurer of Kusile Burial Society, told IRIN.
Members defaulted on their dues because of financial hardships. “We barely had 30 fully subscribed members on our register at the end of last year [2008], with the rest unable to pay. Now, less than five are in arrears,” he said.
The attempts by the government to reign in rampant inflation also came at a cost. “Our other major setback [apart from HIV/AIDS] was the central bank’s decision to set an arbitrary exchange rate that almost wiped out the society’s savings,” Ncube said. In January 2009 Zimbabwe’s central bank set a rate of Z$3 trillion to US$1.
Hyperinflation was cured when the government ditched the local Zimbabwean dollar in favour of foreign currencies, which has seen the US dollar, South African rand and Botswana pula officially come into local use.
“We also lost a lot of our members, who died of HIV/AIDS-related diseases, but that does not put us off from fulfilling our obligation to a member, despite the pressure it exerts on our savings,” Ncube said.
At the end of each year, municipal beer-gardens and council parks around the city used to host lively parties, thrown by different burial societies for their members … I foresee those times returning
About 15 percent of sexually active Zimbabweans between the ages of 15 and 49 are HIV positive, but burial societies, in contrast to the more conventional forms of insurance, do not require prospective members to undergo a medical examination.
Back to the good timesNcube attributed the revival of burial societies to the rapidly increasing burial fees charged by the city’s cemeteries, and the high cost of transporting a body to rural areas.
Pumulani Meko, chairman of the Kusile Burial Society, put it down to the greater financial stability being enjoyed since the adoption of multiple currencies, and was generally more optimistic.
“At the end of each year, municipal beer-gardens and council parks around the city used to host lively parties, thrown by different burial societies for their members to coincide with the annual shutdown by many firms and factories,” Meko told IRIN. “I foresee those times returning.”
rm/go/he source.www.irinnews.org
Photo: IRIN
Burial societies making a comeback
BULAWAYO, – On the last Sunday of every month, Zwodwa Mpika, 52, puts on her blue dress and matching brimless cap, the uniform of the burial society she belongs to, and sets off for the meeting.
She has rarely missed a gathering since her husband died in 2006, and her regular attendance has earned her the position of secretary of the Zibuthe Burial Society, located in Sizinda, a suburb of Bulawayo, Zimbabwe’s second city.
“I don’t want this association to collapse, which could easily happen if I do not attend and pay my dues, because without it my late husband’s funeral would have been little more than that of a pauper [burial],” she told IRIN.
Burial societies, to which most low-income families in urban centres belong as an alternative to buying conventional funeral insurance, are beginning to show signs of revival after tottering on the brink of collapse in the country’s decade-long recession.
“A conventional funeral assurance policy does not bring mourners to your funeral to mitigate grief and provide a resounding send-off,” Zibuthe Burial Society chairman Ntandazo Banda told IRIN.
Zimbabwe’s economic malaise has witnessed hyperinflation, shortages of basics foodstuffs that saw nearly 7 million people requiring food assistance in the first quarter of 2009, and an unemployment rate of more than 90 percent.
Burial societies charge monthly subscriptions of as little as US$5 per family and pay the funeral costs of their members, whether they were born in the city or are rural migrants; some even pay if the member comes from a neighbouring country like Zambia or Malawi. Local Zimbabwean traditions dictate that whenever possible the dead should be buried in their ancestral burial grounds at their rural home.
Most burial societies in Bulawayo draw their membership from working-class Zimbabweans, unlike Zibuthe, whose membership consists of a small community of pensioners and a sprinkling of young families of Malawian origin.
“We are trying hard to breathe life into our society but people have little or no disposable income,” Banda said. “We aim to preserve our unique burial traditions as Malawians, hence the small membership, but that does not bar other nationalities from joining us.”
HIV/AIDS and hyperinflationBefore Zimbabwe’s steep economic decline set in, most members could easily afford the monthly subscription of Z$20, but the society’s problems really began when the official annual inflation rate began spiralling towards 230 million percent. “We had to battle to keep the society afloat,” Banda said.
Members are slowly coming forward to update their subscriptions, and that is a good sign
The Kusile Burial Society in the neighbouring Bulawayo suburb of Tshabalala also experienced dwindling contributions and the society of 250 members almost collapsed, but “Members are slowly coming forward to update their subscriptions, and that is a good sign,” Admiral Ncube, treasurer of Kusile Burial Society, told IRIN.
Members defaulted on their dues because of financial hardships. “We barely had 30 fully subscribed members on our register at the end of last year [2008], with the rest unable to pay. Now, less than five are in arrears,” he said.
The attempts by the government to reign in rampant inflation also came at a cost. “Our other major setback [apart from HIV/AIDS] was the central bank’s decision to set an arbitrary exchange rate that almost wiped out the society’s savings,” Ncube said. In January 2009 Zimbabwe’s central bank set a rate of Z$3 trillion to US$1.
Hyperinflation was cured when the government ditched the local Zimbabwean dollar in favour of foreign currencies, which has seen the US dollar, South African rand and Botswana pula officially come into local use.
“We also lost a lot of our members, who died of HIV/AIDS-related diseases, but that does not put us off from fulfilling our obligation to a member, despite the pressure it exerts on our savings,” Ncube said.
At the end of each year, municipal beer-gardens and council parks around the city used to host lively parties, thrown by different burial societies for their members … I foresee those times returning
About 15 percent of sexually active Zimbabweans between the ages of 15 and 49 are HIV positive, but burial societies, in contrast to the more conventional forms of insurance, do not require prospective members to undergo a medical examination.
Back to the good timesNcube attributed the revival of burial societies to the rapidly increasing burial fees charged by the city’s cemeteries, and the high cost of transporting a body to rural areas.
Pumulani Meko, chairman of the Kusile Burial Society, put it down to the greater financial stability being enjoyed since the adoption of multiple currencies, and was generally more optimistic.
“At the end of each year, municipal beer-gardens and council parks around the city used to host lively parties, thrown by different burial societies for their members to coincide with the annual shutdown by many firms and factories,” Meko told IRIN. “I foresee those times returning.”
rm/go/he source.www.irinnews.org
Zimbabwe chased away three international Airlines
Written by Farai Masawi Top Stories Aug 26, 2009
GOVERNMENT last year refused three airlines permission to fly into Zimbabwe in what aviation experts said was a move to protect the national airline from competition and loss of revenue, it was revealed this week.
Speaking to tourism players (ZTA) chief executive Karikoga Kaseke said three airlines, Nationwide from South Africa, Malaysian, and Emirates from the United Arab Emirates, had expressed a desire to fly to Zimbabwe but were not allowed to, as authorities said they wanted to protect Air Zimbabwe.
“The benefit the airlines could have brought to the economy in terms of traffic, revenue and tourists telling the true Zimbabwean story could have been very significant,” said Kaseke.
“Reasons such as ‘we are protecting our airlines were cited. What are we protecting it (Air Zimbabwe) from? They should learn to compete with other airlines. That is the only way they can remain competitive,” said Kaseke.Kaseke said it was not wise to treat the national airline as if it started operating last year when it has been in existence for a long period.
“Tourism ambassadors go out to market Zimbabwe. For example, in China they cannot come by rail or road. The presence of many airlines in the country also increases the amount of traffic, revenue and flexibility as to when one wants to fly to Zimbabwe,” said Kaseke.
Kaseke said tourism was a sensitive and fragile sector and “once we (tourism industry) lose we would have lost. It is easy to lose many tourists than to convince a few to fly to a destination which has been receiving negative publicity. With the World Cup in South Africa next year, the decision did not make sense,” said Kaseke.Air Zimbabwe currently has four planes flying two Modern Ark (MA) 60s, Boeing 737 and a long haul 767.A total of 18 international airlines have left the country since the economic crisis and negative publicity about Zimbabwe started 10 years ago.
These include Lufthansa, Qantas, Austrian Airlines, Swissair, Air India, Air France and TAP Air Portugal.African airlines that are no longer fly into Harare include Egyptair, Air Mauritius, Linhas Aereas de Mocambique, Air Namibia, Royal Swazi Airlines and Air Seychelles. Air Tanzania, Ghana Airways, Air Uganda and Air Cameroon have also pulled out of the route.
Kaseke said the tourism sector had the potential to be among the leading foreign currency earners in the country.He said every Zimbabwean had a duty to market and tell the “real Zimbabwean story, not painting a wrong picture about the country which is always negative”.
“Areas that need urgent attention in the industry are its pricing structure. We are the most expensive in the region. Destinations compete and we could lose out in this regard,” said Kaseke.Kaseke said 2008 was one of the worst years in the history of the tourism industry in Zimbabwe and “preliminary results so far are not pleasing”.
“Events last year after the March elections and the cholera outbreak were some of the major contributors to the setbacks. A total of 17 conferences were cancelled last year alone including the Common Market for Eastern and Southern Africa (Comesa) summit,” said Kaseke.
GOVERNMENT last year refused three airlines permission to fly into Zimbabwe in what aviation experts said was a move to protect the national airline from competition and loss of revenue, it was revealed this week.
Speaking to tourism players (ZTA) chief executive Karikoga Kaseke said three airlines, Nationwide from South Africa, Malaysian, and Emirates from the United Arab Emirates, had expressed a desire to fly to Zimbabwe but were not allowed to, as authorities said they wanted to protect Air Zimbabwe.
“The benefit the airlines could have brought to the economy in terms of traffic, revenue and tourists telling the true Zimbabwean story could have been very significant,” said Kaseke.
“Reasons such as ‘we are protecting our airlines were cited. What are we protecting it (Air Zimbabwe) from? They should learn to compete with other airlines. That is the only way they can remain competitive,” said Kaseke.Kaseke said it was not wise to treat the national airline as if it started operating last year when it has been in existence for a long period.
“Tourism ambassadors go out to market Zimbabwe. For example, in China they cannot come by rail or road. The presence of many airlines in the country also increases the amount of traffic, revenue and flexibility as to when one wants to fly to Zimbabwe,” said Kaseke.
Kaseke said tourism was a sensitive and fragile sector and “once we (tourism industry) lose we would have lost. It is easy to lose many tourists than to convince a few to fly to a destination which has been receiving negative publicity. With the World Cup in South Africa next year, the decision did not make sense,” said Kaseke.Air Zimbabwe currently has four planes flying two Modern Ark (MA) 60s, Boeing 737 and a long haul 767.A total of 18 international airlines have left the country since the economic crisis and negative publicity about Zimbabwe started 10 years ago.
These include Lufthansa, Qantas, Austrian Airlines, Swissair, Air India, Air France and TAP Air Portugal.African airlines that are no longer fly into Harare include Egyptair, Air Mauritius, Linhas Aereas de Mocambique, Air Namibia, Royal Swazi Airlines and Air Seychelles. Air Tanzania, Ghana Airways, Air Uganda and Air Cameroon have also pulled out of the route.
Kaseke said the tourism sector had the potential to be among the leading foreign currency earners in the country.He said every Zimbabwean had a duty to market and tell the “real Zimbabwean story, not painting a wrong picture about the country which is always negative”.
“Areas that need urgent attention in the industry are its pricing structure. We are the most expensive in the region. Destinations compete and we could lose out in this regard,” said Kaseke.Kaseke said 2008 was one of the worst years in the history of the tourism industry in Zimbabwe and “preliminary results so far are not pleasing”.
“Events last year after the March elections and the cholera outbreak were some of the major contributors to the setbacks. A total of 17 conferences were cancelled last year alone including the Common Market for Eastern and Southern Africa (Comesa) summit,” said Kaseke.
Monday, August 24, 2009
The July 2009 Consumer Price Index has now been released and it shows that inflation increased by one percent in that month. In June, you might recall
The July 2009 Consumer Price Index has now been released and it shows that inflation increased by one percent in that month. In June, you might recall, the increase was a little more than half of one percent, so it would appear that the downward drift in prices that was evident in the first five months of the year has bottomed out. However, retailing has remained very competitive and the buying power of the population has shown little sign of improving, so we might see some prices falling again in the coming months.
I have attached the table showing the basic categories and it will be seen that food prices are said to have increased slightly this time, the averages having fallen in June. I queried this claim with the Central Statistical Office as my own calculations suggested that food prices had in fact increased in June. I was told by the statisticians that many of the shops in their survey list did not have a full complement of the items in the food table, so they left the items off their tables and did the calculations on the rest, adjusting the weights for the absent items. As my calculations did not allow for these changes, my result was different from theirs.
I have not put the latest sets of figures to the test this time!
Kindest regards,
John has now been released and it shows that inflation increased by one percent in that month. In June, you might recall, the increase was a little more than half of one percent, so it would appear that the downward drift in prices that was evident in the first five months of the year has bottomed out. However, retailing has remained very competitive and the buying power of the population has shown little sign of improving, so we might see some prices falling again in the coming months.
I have attached the table showing the basic categories and it will be seen that food prices are said to have increased slightly this time, the averages having fallen in June. I queried this claim with the Central Statistical Office as my own calculations suggested that food prices had in fact increased in June. I was told by the statisticians that many of the shops in their survey list did not have a full complement of the items in the food table, so they left the items off their tables and did the calculations on the rest, adjusting the weights for the absent items. As my calculations did not allow for these changes, my result was different from theirs.
I have not put the latest sets of figures to the test this time!
Uncertainties surrounding business conditions and the claimed progress said to have been achieved by the Government of National Unity in preparing the ground for an economic recovery seem to me to still be discouraging potential investors as well as the countries that are keen to help Zimbabwe.
The budgeting challenges that lie ahead of all businesses seem likely to impose a very slow recovery rate for effective demand unless a big influx of liquidity is made possible, but I have to say that I do not see that happening before our politicians have woken up to the need for major policy changes.
Kindest regards,
John Robertson
I have attached the table showing the basic categories and it will be seen that food prices are said to have increased slightly this time, the averages having fallen in June. I queried this claim with the Central Statistical Office as my own calculations suggested that food prices had in fact increased in June. I was told by the statisticians that many of the shops in their survey list did not have a full complement of the items in the food table, so they left the items off their tables and did the calculations on the rest, adjusting the weights for the absent items. As my calculations did not allow for these changes, my result was different from theirs.
I have not put the latest sets of figures to the test this time!
Kindest regards,
John has now been released and it shows that inflation increased by one percent in that month. In June, you might recall, the increase was a little more than half of one percent, so it would appear that the downward drift in prices that was evident in the first five months of the year has bottomed out. However, retailing has remained very competitive and the buying power of the population has shown little sign of improving, so we might see some prices falling again in the coming months.
I have attached the table showing the basic categories and it will be seen that food prices are said to have increased slightly this time, the averages having fallen in June. I queried this claim with the Central Statistical Office as my own calculations suggested that food prices had in fact increased in June. I was told by the statisticians that many of the shops in their survey list did not have a full complement of the items in the food table, so they left the items off their tables and did the calculations on the rest, adjusting the weights for the absent items. As my calculations did not allow for these changes, my result was different from theirs.
I have not put the latest sets of figures to the test this time!
Uncertainties surrounding business conditions and the claimed progress said to have been achieved by the Government of National Unity in preparing the ground for an economic recovery seem to me to still be discouraging potential investors as well as the countries that are keen to help Zimbabwe.
The budgeting challenges that lie ahead of all businesses seem likely to impose a very slow recovery rate for effective demand unless a big influx of liquidity is made possible, but I have to say that I do not see that happening before our politicians have woken up to the need for major policy changes.
Kindest regards,
John Robertson
Friday, August 21, 2009
Zimbabwe Considers Gold Standard
8/20/09
The headline is shocking, but yet it is true. Zimbabwe, the world's poster-child for hyperinflation is considering an alternative to its tragically devalued currency. That alternative is of course SOUND MONEY. Zimbabwe is looking to change its image from the never-ending printing press and children holding stacks of billion dollar bills to stable money backed by in Zimbabwe Central Bank Governor Gideon Gono's words, "credible, tangible and locally available assets."
Could this be an image of the past in Zimbabwe?Wouldn't that be the turnaround story of the century? If they actually follow through with the consideration of sound, stable currency it would be a huge step in the right direction for this impoverished country that once offered so much promise. Another step in the right direction would be to get Mugabe out of office, but one step at a time.In the United States, the false concern of deflation despite the obvious inflation of the money supply is now becoming a concern among the mainstream. The "Oracle of Omaha" used some left-wing language to try to reason with the current powers that be when he stated, "The United States is spewing a potentially damaging substance into our economy — greenback emissions." It is nice that Buffett has finally come along somewhat on this issue, but it is too little, too late. The debt and liabilities are just too much to overcome. Taxes will not be able to address the need to make the payments and still keep up or create government programs. Increasing taxes would drive revenues, production, employment, and the population down.
Sounds about right.Inflation is the only solution for the statists, due to the country's debtor status. The U.S. is a debtor that has to pay off its debts in its own currency to other nations, but yet has the ability to print as much of the money as it wants. The U.S. holds all the cards here, but yet the ability to print the money is a double-edged sword. Hyperinflation to treat fiscal irresponsibility would pay down the debt, but it would ultimately create chaos within the country and distrust on a global level. The U.S. Government & the Federal Reserve made their own bed here and they do not wish to take their medicine. The longer they try to hold off on treating this problem, the more chaotic it will get.
The headline is shocking, but yet it is true. Zimbabwe, the world's poster-child for hyperinflation is considering an alternative to its tragically devalued currency. That alternative is of course SOUND MONEY. Zimbabwe is looking to change its image from the never-ending printing press and children holding stacks of billion dollar bills to stable money backed by in Zimbabwe Central Bank Governor Gideon Gono's words, "credible, tangible and locally available assets."
Could this be an image of the past in Zimbabwe?Wouldn't that be the turnaround story of the century? If they actually follow through with the consideration of sound, stable currency it would be a huge step in the right direction for this impoverished country that once offered so much promise. Another step in the right direction would be to get Mugabe out of office, but one step at a time.In the United States, the false concern of deflation despite the obvious inflation of the money supply is now becoming a concern among the mainstream. The "Oracle of Omaha" used some left-wing language to try to reason with the current powers that be when he stated, "The United States is spewing a potentially damaging substance into our economy — greenback emissions." It is nice that Buffett has finally come along somewhat on this issue, but it is too little, too late. The debt and liabilities are just too much to overcome. Taxes will not be able to address the need to make the payments and still keep up or create government programs. Increasing taxes would drive revenues, production, employment, and the population down.
Sounds about right.Inflation is the only solution for the statists, due to the country's debtor status. The U.S. is a debtor that has to pay off its debts in its own currency to other nations, but yet has the ability to print as much of the money as it wants. The U.S. holds all the cards here, but yet the ability to print the money is a double-edged sword. Hyperinflation to treat fiscal irresponsibility would pay down the debt, but it would ultimately create chaos within the country and distrust on a global level. The U.S. Government & the Federal Reserve made their own bed here and they do not wish to take their medicine. The longer they try to hold off on treating this problem, the more chaotic it will get.
Zimbabwe Consumer Prices Up 1% in July - Second Straight Monthly Rise
Zimbabwe Consumer Prices Up 1% in July - Second Straight Monthly Rise
By Jonga Kandemiiri Washington
20 August 2009
Consumer prices in Zimbabwe rose 1% from June to July after picking up by 0.6% in June from May levels, the country's Central Statistical Office said Thursday.
July's 1% monthly inflation rate would amount to 12% annual inflation if it continued for the next 11 months - but from January through July, prices eased a cumulative 8.9% as the adoption of a mixed hard-currency regimen quelled hyperinflation and boosted imports.
The Statistical Office said the main price drivers in July were fuel and transport fares.
Food and non-alcoholic beverage prices rose by just 0.23% month-over-month, compared with a June decline of 1.26%.
Economist Luxon Zembe told reporter Jonga Kandemiiri that July's 1% pickup was troubling because after months of disinflation prices more recently have been rising.
By Jonga Kandemiiri Washington
20 August 2009
Consumer prices in Zimbabwe rose 1% from June to July after picking up by 0.6% in June from May levels, the country's Central Statistical Office said Thursday.
July's 1% monthly inflation rate would amount to 12% annual inflation if it continued for the next 11 months - but from January through July, prices eased a cumulative 8.9% as the adoption of a mixed hard-currency regimen quelled hyperinflation and boosted imports.
The Statistical Office said the main price drivers in July were fuel and transport fares.
Food and non-alcoholic beverage prices rose by just 0.23% month-over-month, compared with a June decline of 1.26%.
Economist Luxon Zembe told reporter Jonga Kandemiiri that July's 1% pickup was troubling because after months of disinflation prices more recently have been rising.
Thursday, August 20, 2009
Zimbabwe inflation quickens, crisis persists
Wed Aug 19, 2009 11:45am EDT
By Nelson Banya
HARARE, Aug 19 (Reuters) - Zimbabwe's inflation rose to 1 percent month-on-month in July from 0.6 percent in June, figures released by the Central Statistical Office showed on Wednesday, as a new unity government battles for aid to fix the economy.Zimbabwe saw hyperinflation reach 231 million percent last July until the unity government formed by President Robert Mugabe and Prime Minister Morgan Tsvangirai adopted the use of multiple currencies to replace a worthless local currency.But although supermarket shelves which were emptied when Mugabe ordered price cuts in 2007 have largely restocked with imported goods, most people cannot afford to buy goods due to low levels of income.Government workers, who form the bulk of the employed, earn an average $150 and struggle to pay for food, transport and accommodation. The government is facing rising pressure from state employees, with doctors boycotting work and demanding wage increases, while teachers have threatened to strike when the new school term starts in September.The CSO attributed the July increase to a jump in transport costs and the price of food and non-alcoholic beverages."The month on month food and non-alcoholic beverages inflation stood at 0.23 percent in July 2009, gaining 1.49 percentage points on the June rate of -1.26 percent," the CSO said.The government has made economic recovery its top priority but Western donors, seen as key in funding reconstruction, are demanding broad political and economic reforms before providing aid.The southern African country experienced a severe humanitarian crisis last year, highlighted by a cholera outbreak which killed almost 4,300 people from nearly 100,000 cases.On Wednesday, the UN resident humanitarian co-ordinator Agostinho Zacarias warned that the crisis was far from over."Other areas of vulnerability also need to be urgently addressed as Zimbabwe's overall humanitarian situation remains serious," Zacarias said at a ceremony to mark the first World Humanitarian Day in Harare."Projected needs ... include an estimated 2.8 million in need of food aid at the peak of the 2009/10 lean season." (Reporting by Nelson Banya)
By Nelson Banya
HARARE, Aug 19 (Reuters) - Zimbabwe's inflation rose to 1 percent month-on-month in July from 0.6 percent in June, figures released by the Central Statistical Office showed on Wednesday, as a new unity government battles for aid to fix the economy.Zimbabwe saw hyperinflation reach 231 million percent last July until the unity government formed by President Robert Mugabe and Prime Minister Morgan Tsvangirai adopted the use of multiple currencies to replace a worthless local currency.But although supermarket shelves which were emptied when Mugabe ordered price cuts in 2007 have largely restocked with imported goods, most people cannot afford to buy goods due to low levels of income.Government workers, who form the bulk of the employed, earn an average $150 and struggle to pay for food, transport and accommodation. The government is facing rising pressure from state employees, with doctors boycotting work and demanding wage increases, while teachers have threatened to strike when the new school term starts in September.The CSO attributed the July increase to a jump in transport costs and the price of food and non-alcoholic beverages."The month on month food and non-alcoholic beverages inflation stood at 0.23 percent in July 2009, gaining 1.49 percentage points on the June rate of -1.26 percent," the CSO said.The government has made economic recovery its top priority but Western donors, seen as key in funding reconstruction, are demanding broad political and economic reforms before providing aid.The southern African country experienced a severe humanitarian crisis last year, highlighted by a cholera outbreak which killed almost 4,300 people from nearly 100,000 cases.On Wednesday, the UN resident humanitarian co-ordinator Agostinho Zacarias warned that the crisis was far from over."Other areas of vulnerability also need to be urgently addressed as Zimbabwe's overall humanitarian situation remains serious," Zacarias said at a ceremony to mark the first World Humanitarian Day in Harare."Projected needs ... include an estimated 2.8 million in need of food aid at the peak of the 2009/10 lean season." (Reporting by Nelson Banya)
Zimbabwe FM Biti: Next Monetary Move Likely to Be Rand Adoption
By Blessing Zulu Washington
19 August 2009
One day after Reserve Bank of Zimbabwe Governor Gideon Gono urged the reintroduction of the sidelined Zimbabwe dollar, Finance Minister Tendai Biti told Parliament that the country’s next monetary move is more likely to be the adoption of the South African rand.
The Zimbabwe dollar was abandoned in April but has remained in use to make change for bus fares owing to a scarcity of small-denomination U.S. dollar, rand and other bills.
Some informal traders also make change in Zimbabwe dollars. In such uses the going rate of exchange is 3 trillion Zimbabwe dollars to 50 U.S. cents, local sources said.
Biti told the House Committee on Budget Finance and Investment Promotion Tuesday that the advice of monetary experts will be sought on the advantages or drawbacks of joining the South African rand union which includes Namibia, Lesotho and Swaziland.
Biti said the Zimbabwe dollar was unlikely to come back soon, adding that even if it did it would probably have to be pegged to the rand.
Gono proposed reintroducing the local dollar by backing it with gold reserves, saying adopting the rand would entail too many legal complications.
Economist Luxon Zembe, a former president of the Zimbabwe Chamber of Commerce, told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that the country would be best served by adopting the rand as its monetary unit.
Economists and political analysts said the currency debate is likely to cause more friction in Zimbabwe's fractious national unity government. President Robert Mugabe has said he would like to see the Zimbabwean dollar back in full circulation.
Reached by VOA, former finance ministers Herbert Murerwa and Samuel Mumbengegwi declined to comment.
But Simba Makoni, a former finance minister, presidential candidate and leader of the newly formed Mavambo or Dawn party, told VOA that so-called randization is the best way forward as the use of multiple hard currencies is complicating life for ordinary Zimbabweans.
19 August 2009
One day after Reserve Bank of Zimbabwe Governor Gideon Gono urged the reintroduction of the sidelined Zimbabwe dollar, Finance Minister Tendai Biti told Parliament that the country’s next monetary move is more likely to be the adoption of the South African rand.
The Zimbabwe dollar was abandoned in April but has remained in use to make change for bus fares owing to a scarcity of small-denomination U.S. dollar, rand and other bills.
Some informal traders also make change in Zimbabwe dollars. In such uses the going rate of exchange is 3 trillion Zimbabwe dollars to 50 U.S. cents, local sources said.
Biti told the House Committee on Budget Finance and Investment Promotion Tuesday that the advice of monetary experts will be sought on the advantages or drawbacks of joining the South African rand union which includes Namibia, Lesotho and Swaziland.
Biti said the Zimbabwe dollar was unlikely to come back soon, adding that even if it did it would probably have to be pegged to the rand.
Gono proposed reintroducing the local dollar by backing it with gold reserves, saying adopting the rand would entail too many legal complications.
Economist Luxon Zembe, a former president of the Zimbabwe Chamber of Commerce, told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that the country would be best served by adopting the rand as its monetary unit.
Economists and political analysts said the currency debate is likely to cause more friction in Zimbabwe's fractious national unity government. President Robert Mugabe has said he would like to see the Zimbabwean dollar back in full circulation.
Reached by VOA, former finance ministers Herbert Murerwa and Samuel Mumbengegwi declined to comment.
But Simba Makoni, a former finance minister, presidential candidate and leader of the newly formed Mavambo or Dawn party, told VOA that so-called randization is the best way forward as the use of multiple hard currencies is complicating life for ordinary Zimbabweans.
Zimbabwe eyes private cash boost to save carrier
By: Reuters
19th August 2009
Zimbabwe's state-owned airline is considering opening up to private shareholders in exchange for a huge cash injection needed to avert its collapse and plans to cut up to 500 jobs, an official said on Wednesday.
A unity government formed by rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai to end a decade-long political crisis has said it plans to restructure poorly managed state firms, which have been a drain on the budget.
Air Zimbabwe, which government officials say currently receives $2-million a week from state coffers, is a perennial loss-maker weighed down by an ageing fleet, debt and a severe economic crisis in the southern African country.
The airline's chairman, Jonathan Kadzura, told Reuters that both Air Zimbabwe and the government were in talks to find ways of urgently streamlining and recapitalising the business.
"It's either you adapt or die. This is a changing, challenging environment and companies, including Air Zimbabwe, have to be dynamic," Kadzura said.
An investor's prospectus prepared by the government said Air Zimbabwe requires $750-million to renew its fleet and to install a hangar fire protection system. The government would give up a 60 percent stake in exchange for the cash injection.
"We cannot give any figures yet, but we're looking at funds to acquire new aircraft and to install modern ground handling equipment. We're talking to a number of corporations looking at going into partnership with us," Kadzura said.
DECLINING PASSENGER NUMBERS
The chairperson said the decision to lay off a third of Air Zimbabwe staff or up to 500 people was a key step towards realigning the company.
"The job cuts signal the beginning of the restructuring, which shows both the shareholder and Air Zimbabwe are serious," Kadzura said.
"Air Zim's current slim passenger and cargo load factor cannot justify its huge salary bill."
The national carrier's passenger numbers have declined by more than 30% since 2000, coinciding with a corresponding dip in tourist arrivals as the political situation deteriorated, mainly due to a violent drive by Mugabe supporters to seize land from white commercial farmers.
Edited by: Reuters
19th August 2009
Zimbabwe's state-owned airline is considering opening up to private shareholders in exchange for a huge cash injection needed to avert its collapse and plans to cut up to 500 jobs, an official said on Wednesday.
A unity government formed by rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai to end a decade-long political crisis has said it plans to restructure poorly managed state firms, which have been a drain on the budget.
Air Zimbabwe, which government officials say currently receives $2-million a week from state coffers, is a perennial loss-maker weighed down by an ageing fleet, debt and a severe economic crisis in the southern African country.
The airline's chairman, Jonathan Kadzura, told Reuters that both Air Zimbabwe and the government were in talks to find ways of urgently streamlining and recapitalising the business.
"It's either you adapt or die. This is a changing, challenging environment and companies, including Air Zimbabwe, have to be dynamic," Kadzura said.
An investor's prospectus prepared by the government said Air Zimbabwe requires $750-million to renew its fleet and to install a hangar fire protection system. The government would give up a 60 percent stake in exchange for the cash injection.
"We cannot give any figures yet, but we're looking at funds to acquire new aircraft and to install modern ground handling equipment. We're talking to a number of corporations looking at going into partnership with us," Kadzura said.
DECLINING PASSENGER NUMBERS
The chairperson said the decision to lay off a third of Air Zimbabwe staff or up to 500 people was a key step towards realigning the company.
"The job cuts signal the beginning of the restructuring, which shows both the shareholder and Air Zimbabwe are serious," Kadzura said.
"Air Zim's current slim passenger and cargo load factor cannot justify its huge salary bill."
The national carrier's passenger numbers have declined by more than 30% since 2000, coinciding with a corresponding dip in tourist arrivals as the political situation deteriorated, mainly due to a violent drive by Mugabe supporters to seize land from white commercial farmers.
Edited by: Reuters
Tuesday, August 18, 2009
Zimbabwe: Reintroduce Zim Dollar - Gono
18 August 2009
Harare — Reserve Bank of Zimbabwe Governor Dr Gideon Gono has proposed the reintroduction of the Zimbabwe dollar anchored on gold valued by an independent body comprising all stakeholders.
He said the reintroduction of the local currency would help in addressing a number of bottlenecks the country was facing.
GA_googleFillSlot( "AllAfrica_Story_InsetA" );
Dr Gono said the reintroduction of the local unit in the manner he was proposing would go a long way in addressing unavailability of change of small denominations and coins, among other constraints.
The RBZ chief said this yesterday while giving oral evidence before the Parliamentary Portfolio Committee on Natural Resources, Hospitality and Tourism.
The committee, chaired by Nkayi South Member of the House of Assembly Mr Abednico Bhebhe (MDC), wanted to know the financial sector's preparedness in terms of introducing plastic money ahead of 2010 World Soccer Cup Finals to be held in South Africa.
The committee invited the central bank and the Bankers' Association of Zimbabwe, led by its president Dr John Mangundya, to update it on progress.
During yesterday's deliberations, bankers said they had gone a long way with preparations and international credit and debt cards would be ready by end of September this year.
GA_googleFillSlot( "AllAfrica_Story_InsetB" );
The committee, however, expressed concern at the unavailability of change, especially coins.
In response, Dr Gono proffered an array of advice that included the need for political stability, addressing infrastructural issues like availability of electricity, water, transport network, and the health delivery service system, among others.
"The financial sector might do its homework, but if other players don't play their part, the country might not benefit anything from the world soccer showcase," said Dr Gono.
He said there was need to reintroduce the Zimbabwe dollar that would be pegged against gold available.
He said those who had criticised his idea were doing so out of ignorance, as they did not understand the gist of his advice.
GA_googleFillSlot( "AllAfrica_Story_InsetC" );
"Nobody can move me from that conviction. We anchor our Zim dollar to the gold available. It will not only be RBZ, but all stakeholders. A certificate will then be issued to the RBZ on the amount of Zim dollar to be printed after the committee has satisfied itself on the value of the gold," said Dr Gono.
"You can also redeem your Zim dollar in return for an ounce of gold. Say, if you want to keep gold not cash, you can go to your bank and get an equivalent of ounces of gold to the Zim dollar you have, so we will be backing our money with reality on the ground. Such an approach is not inflationary because you are anchoring your money on productivity."
The central bank chief urged Zimbabweans to be pragmatic by "thinking outside the box".
"We can even print gold coins. The Zim dollar can then gain as it is anchored on gold. We need to think outside the box," he said.
Asked why the country had not formally dollarised or randified, Dr Gono said that would involve a number of legal and economic issues.
He said it was not possible to officially dollarise because the United States had imposed sanctions on Zimbabwe while it would be cumbersome for Zimbabwe to officially use the rand as its currency.
"If we are to randify, we will have to be members of the Common Union with Namibia, Lesotho and Swaziland whose economies are anchored with South Africa. All our policy and monetary statements would have to be submitted to South Africa for concurrence before we finally pronounce them," said Dr Gono. Initially, Dr Mangundya had said it was more expensive to import coins because transport costs were determined by weight.
"We will have to pay, say, US$100 000 to import US$10 000 worth of coins," said Dr Mangundya.
Harare — Reserve Bank of Zimbabwe Governor Dr Gideon Gono has proposed the reintroduction of the Zimbabwe dollar anchored on gold valued by an independent body comprising all stakeholders.
He said the reintroduction of the local currency would help in addressing a number of bottlenecks the country was facing.
GA_googleFillSlot( "AllAfrica_Story_InsetA" );
Dr Gono said the reintroduction of the local unit in the manner he was proposing would go a long way in addressing unavailability of change of small denominations and coins, among other constraints.
The RBZ chief said this yesterday while giving oral evidence before the Parliamentary Portfolio Committee on Natural Resources, Hospitality and Tourism.
The committee, chaired by Nkayi South Member of the House of Assembly Mr Abednico Bhebhe (MDC), wanted to know the financial sector's preparedness in terms of introducing plastic money ahead of 2010 World Soccer Cup Finals to be held in South Africa.
The committee invited the central bank and the Bankers' Association of Zimbabwe, led by its president Dr John Mangundya, to update it on progress.
During yesterday's deliberations, bankers said they had gone a long way with preparations and international credit and debt cards would be ready by end of September this year.
GA_googleFillSlot( "AllAfrica_Story_InsetB" );
The committee, however, expressed concern at the unavailability of change, especially coins.
In response, Dr Gono proffered an array of advice that included the need for political stability, addressing infrastructural issues like availability of electricity, water, transport network, and the health delivery service system, among others.
"The financial sector might do its homework, but if other players don't play their part, the country might not benefit anything from the world soccer showcase," said Dr Gono.
He said there was need to reintroduce the Zimbabwe dollar that would be pegged against gold available.
He said those who had criticised his idea were doing so out of ignorance, as they did not understand the gist of his advice.
GA_googleFillSlot( "AllAfrica_Story_InsetC" );
"Nobody can move me from that conviction. We anchor our Zim dollar to the gold available. It will not only be RBZ, but all stakeholders. A certificate will then be issued to the RBZ on the amount of Zim dollar to be printed after the committee has satisfied itself on the value of the gold," said Dr Gono.
"You can also redeem your Zim dollar in return for an ounce of gold. Say, if you want to keep gold not cash, you can go to your bank and get an equivalent of ounces of gold to the Zim dollar you have, so we will be backing our money with reality on the ground. Such an approach is not inflationary because you are anchoring your money on productivity."
The central bank chief urged Zimbabweans to be pragmatic by "thinking outside the box".
"We can even print gold coins. The Zim dollar can then gain as it is anchored on gold. We need to think outside the box," he said.
Asked why the country had not formally dollarised or randified, Dr Gono said that would involve a number of legal and economic issues.
He said it was not possible to officially dollarise because the United States had imposed sanctions on Zimbabwe while it would be cumbersome for Zimbabwe to officially use the rand as its currency.
"If we are to randify, we will have to be members of the Common Union with Namibia, Lesotho and Swaziland whose economies are anchored with South Africa. All our policy and monetary statements would have to be submitted to South Africa for concurrence before we finally pronounce them," said Dr Gono. Initially, Dr Mangundya had said it was more expensive to import coins because transport costs were determined by weight.
"We will have to pay, say, US$100 000 to import US$10 000 worth of coins," said Dr Mangundya.
Zimbabwe: Reintroduce Zim Dollar - Gono
18 August 2009
Harare — Reserve Bank of Zimbabwe Governor Dr Gideon Gono has proposed the reintroduction of the Zimbabwe dollar anchored on gold valued by an independent body comprising all stakeholders.
He said the reintroduction of the local currency would help in addressing a number of bottlenecks the country was facing.
GA_googleFillSlot( "AllAfrica_Story_InsetA" );
Dr Gono said the reintroduction of the local unit in the manner he was proposing would go a long way in addressing unavailability of change of small denominations and coins, among other constraints.
The RBZ chief said this yesterday while giving oral evidence before the Parliamentary Portfolio Committee on Natural Resources, Hospitality and Tourism.
The committee, chaired by Nkayi South Member of the House of Assembly Mr Abednico Bhebhe (MDC), wanted to know the financial sector's preparedness in terms of introducing plastic money ahead of 2010 World Soccer Cup Finals to be held in South Africa.
The committee invited the central bank and the Bankers' Association of Zimbabwe, led by its president Dr John Mangundya, to update it on progress.
During yesterday's deliberations, bankers said they had gone a long way with preparations and international credit and debt cards would be ready by end of September this year.
GA_googleFillSlot( "AllAfrica_Story_InsetB" );
The committee, however, expressed concern at the unavailability of change, especially coins.
In response, Dr Gono proffered an array of advice that included the need for political stability, addressing infrastructural issues like availability of electricity, water, transport network, and the health delivery service system, among others.
"The financial sector might do its homework, but if other players don't play their part, the country might not benefit anything from the world soccer showcase," said Dr Gono.
He said there was need to reintroduce the Zimbabwe dollar that would be pegged against gold available.
He said those who had criticised his idea were doing so out of ignorance, as they did not understand the gist of his advice.
GA_googleFillSlot( "AllAfrica_Story_InsetC" );
"Nobody can move me from that conviction. We anchor our Zim dollar to the gold available. It will not only be RBZ, but all stakeholders. A certificate will then be issued to the RBZ on the amount of Zim dollar to be printed after the committee has satisfied itself on the value of the gold," said Dr Gono.
"You can also redeem your Zim dollar in return for an ounce of gold. Say, if you want to keep gold not cash, you can go to your bank and get an equivalent of ounces of gold to the Zim dollar you have, so we will be backing our money with reality on the ground. Such an approach is not inflationary because you are anchoring your money on productivity."
The central bank chief urged Zimbabweans to be pragmatic by "thinking outside the box".
"We can even print gold coins. The Zim dollar can then gain as it is anchored on gold. We need to think outside the box," he said.
Relevant Links
Asked why the country had not formally dollarised or randified, Dr Gono said that would involve a number of legal and economic issues.
He said it was not possible to officially dollarise because the United States had imposed sanctions on Zimbabwe while it would be cumbersome for Zimbabwe to officially use the rand as its currency.
"If we are to randify, we will have to be members of the Common Union with Namibia, Lesotho and Swaziland whose economies are anchored with South Africa. All our policy and monetary statements would have to be submitted to South Africa for concurrence before we finally pronounce them," said Dr Gono. Initially, Dr Mangundya had said it was more expensive to import coins because transport costs were determined by weight.
"We will have to pay, say, US$100 000 to import US$10 000 worth of coins," said Dr Mangundya.
Harare — Reserve Bank of Zimbabwe Governor Dr Gideon Gono has proposed the reintroduction of the Zimbabwe dollar anchored on gold valued by an independent body comprising all stakeholders.
He said the reintroduction of the local currency would help in addressing a number of bottlenecks the country was facing.
GA_googleFillSlot( "AllAfrica_Story_InsetA" );
Dr Gono said the reintroduction of the local unit in the manner he was proposing would go a long way in addressing unavailability of change of small denominations and coins, among other constraints.
The RBZ chief said this yesterday while giving oral evidence before the Parliamentary Portfolio Committee on Natural Resources, Hospitality and Tourism.
The committee, chaired by Nkayi South Member of the House of Assembly Mr Abednico Bhebhe (MDC), wanted to know the financial sector's preparedness in terms of introducing plastic money ahead of 2010 World Soccer Cup Finals to be held in South Africa.
The committee invited the central bank and the Bankers' Association of Zimbabwe, led by its president Dr John Mangundya, to update it on progress.
During yesterday's deliberations, bankers said they had gone a long way with preparations and international credit and debt cards would be ready by end of September this year.
GA_googleFillSlot( "AllAfrica_Story_InsetB" );
The committee, however, expressed concern at the unavailability of change, especially coins.
In response, Dr Gono proffered an array of advice that included the need for political stability, addressing infrastructural issues like availability of electricity, water, transport network, and the health delivery service system, among others.
"The financial sector might do its homework, but if other players don't play their part, the country might not benefit anything from the world soccer showcase," said Dr Gono.
He said there was need to reintroduce the Zimbabwe dollar that would be pegged against gold available.
He said those who had criticised his idea were doing so out of ignorance, as they did not understand the gist of his advice.
GA_googleFillSlot( "AllAfrica_Story_InsetC" );
"Nobody can move me from that conviction. We anchor our Zim dollar to the gold available. It will not only be RBZ, but all stakeholders. A certificate will then be issued to the RBZ on the amount of Zim dollar to be printed after the committee has satisfied itself on the value of the gold," said Dr Gono.
"You can also redeem your Zim dollar in return for an ounce of gold. Say, if you want to keep gold not cash, you can go to your bank and get an equivalent of ounces of gold to the Zim dollar you have, so we will be backing our money with reality on the ground. Such an approach is not inflationary because you are anchoring your money on productivity."
The central bank chief urged Zimbabweans to be pragmatic by "thinking outside the box".
"We can even print gold coins. The Zim dollar can then gain as it is anchored on gold. We need to think outside the box," he said.
Relevant Links
Asked why the country had not formally dollarised or randified, Dr Gono said that would involve a number of legal and economic issues.
He said it was not possible to officially dollarise because the United States had imposed sanctions on Zimbabwe while it would be cumbersome for Zimbabwe to officially use the rand as its currency.
"If we are to randify, we will have to be members of the Common Union with Namibia, Lesotho and Swaziland whose economies are anchored with South Africa. All our policy and monetary statements would have to be submitted to South Africa for concurrence before we finally pronounce them," said Dr Gono. Initially, Dr Mangundya had said it was more expensive to import coins because transport costs were determined by weight.
"We will have to pay, say, US$100 000 to import US$10 000 worth of coins," said Dr Mangundya.
USD Cheque Books Introduced
LOCAL banks yesterday introduced United States dollar denominated cheque books in response to changes in the economy.Bankers Association of Zimbabwe president Dr John Mangudya announced the latest development in a statement, saying the limit for individual cheques was US$200 while companies can write cheques for up to $500.The use of cheques will come as a huge relief on the national payment system as business was now being mainly transacted on a cash basis outside the Real Time Gross Settlement system.The statement said that all commercial banks will issue cheque books with the usual security features to companies and individuals.Local cheques would be cleared within four working days while country cheques would be cleared after seven days.This comes in the wake of the introduction of foreign currency-denominated ATM cards by three local banks last month.Finance Minister Tendai Biti in April this year urged banks to readjust their systems to enable the use of the multi currency system saying this would go a long way in ensuring the viability of business transactions.The cheque book system had been abandoned early this year when the hyper inflationary environment had caused the local currency to be devalued to unaccountable levels.Dr Mangudya has already said that the move to introduce the foreign currency-denominated cheque books will run concurrently with point-of-sale machines and international debit and credit cards.He said that the availability of the greenback has continued to be a major challenge for the financial sector hence the need to adopt other strategies to allow transactions to continue.Analysts stressed the need for the economy to gear towards the creation of a society that does not depend on cash for all transactions because of foreign currency shortages.Giving oral evidence before a Parliamen-tary Portfolio Committee on Natural Resources, Hospitality and Tourism on the financial sector’s preparedness of 2010 soccer showcase in South Africa yesterday, Dr Mangundya urged the public to be cautious when dealing with cheques."We have started with low upper limits for US$200 and US$500 for individuals and corporates respectively to minimise fraud cases. We therefore urge the public to be cautious when dealing with these cheques in particular to note that we have written 'US$' on the face of the cheque where you write the amount in figures, this is to make a distinction from the old cheque books and also it shows that we are dealing with US dollars and not any other currency," he said."These cheques can also be used to address the challenge of change because if a trader for example has no change, one can write a cheque, so we urge the public to open bank accounts."He said banks would by the end of next month have introduced international credit cards to enable tourists to use them in settlement of debts.
Sunday, August 16, 2009
Half-life of the Zimbabwe dollar
Half-life of the Zimbabwe dollar: Dead, but still used for political debates and for bus fare
By: ANGUS SHAW Associated Press
08/16/09 12:40 AM EDT
HARARE, ZIMBABWE — A woman pays her bus fare with 3 trillion in old Zimbabwe dollars — the equivalent of 50 U.S. cents. The collector accepts the brick of neatly folded bundles of a trillion each without bothering to count the notes.
"No one seems to worry, and it works," said the woman, Lucy Denya, a Harare secretary who says she's seen police officers using old notes to board buses.
The Zimbabwe dollar is officially dead. It was killed off in hopes of curbing record world inflation of billions of percentage points, and Zimbabwe has replaced it with the U.S. dollar and the South African rand.
Yet the role of the old Zimdollar, as it is known, remains in flux. It is still used, and has become another point of contention for the divided leadership of the country, now one of the poorest in the world.
President Robert Mugabe has called for the return of the Zimdollar as legal tender, complaining that most Zimbabweans lack the hard currency needed to buy basic goods. The central bank under governor Gideon Gono, a Mugabe loyalist, has acknowledged printing extra local money to fund government spending that fueled inflation.
But Finance Minister Tendai Biti, who joined the government as part of a power-sharing agreement between his Movement for Democratic Change and Mugabe's ZANU-PF party, has declared the local dollar indefinitely obsolete. He has threatened to quit if a return to the local currency is forced upon him.
"We are putting the tombstone on the corpse of the Zimbabwe dollar," Biti told lawmakers in a midyear fiscal policy statement. In a speech to business leaders, he said, "We are no longer printing our own money."
Biti said monthly inflation rose slightly in June to 0.6 percent, up from zero the month before. He blamed the rise on price hikes in property rentals, gasoline and other nonfood items. He also noted that GDP per capita has plunged from $720 in 2002 to $265 last year, reflecting the shortage of hard cash in the economy.
That shortage is not helped by the state of the global economy, on which Zimbabwe depends.
With the collapse of the country's agricultural economy after the seizure of thousands of white-owned farms beginning in 2000, an estimated 4 million Zimbabweans — many of them skilled — left the country to find jobs in neighboring South Africa and further afield. The so-called "diaspora dollar" became by far the nation's biggest source of hard currency.
But in the global recession, those inflows are diminishing, bankers say. In a typical case, a businessman's daughter in Britain e-mailed him in June that she was halving her monthly remittance of $400.
The independent Zimbabwe National Chamber of Commerce blamed acute shortages of hard currency on payments to buy imported basic goods previously manufactured in Zimbabwe, such as soap and cooking oil from South Africa.
Without enough cash no matter how they cut it, Zimbabweans survive on a mish-mash of currencies.
All the bus drivers can do with Zimdollars is give them back to other passengers in change for American bills. In one reported incident, a passenger pulled a gun on a bus driver who insisted on paying change in local notes.
Outside the cities, where hard currency can be hard to come by, Zimbabwe dollars are used like promissory notes in small transactions. And trillion Zimbabwe dollar notes, the world's biggest denomination bills, are a hit with collectors, selling briskly on eBay. In Zimbabwe, they change hands like tokens or IOUs.
Stores without small change in hard currency don't offer obsolete Zimbabwe dollars in change like the bus drivers do, but routinely provide candies and chocolate bars or "coupons" handwritten on check-out slips to be redeemed on future purchases.
Irene Gwata, owner of a small trading store in rural northwestern Zimbabwe, said hard currency has stopped filtering down to her customers in recent weeks. Locals trade goat meat, chickens and pails of corn for goods, she said.
She saw a village woman board a bus and pay with a live chicken trussed in wire for the 150-kilometer (90-mile) trip to Harare.
With characteristic Zimbabwean humor in adversity, Gwata said, "people wanted to know if she was going to get eggs for change."
By: ANGUS SHAW Associated Press
08/16/09 12:40 AM EDT
HARARE, ZIMBABWE — A woman pays her bus fare with 3 trillion in old Zimbabwe dollars — the equivalent of 50 U.S. cents. The collector accepts the brick of neatly folded bundles of a trillion each without bothering to count the notes.
"No one seems to worry, and it works," said the woman, Lucy Denya, a Harare secretary who says she's seen police officers using old notes to board buses.
The Zimbabwe dollar is officially dead. It was killed off in hopes of curbing record world inflation of billions of percentage points, and Zimbabwe has replaced it with the U.S. dollar and the South African rand.
Yet the role of the old Zimdollar, as it is known, remains in flux. It is still used, and has become another point of contention for the divided leadership of the country, now one of the poorest in the world.
President Robert Mugabe has called for the return of the Zimdollar as legal tender, complaining that most Zimbabweans lack the hard currency needed to buy basic goods. The central bank under governor Gideon Gono, a Mugabe loyalist, has acknowledged printing extra local money to fund government spending that fueled inflation.
But Finance Minister Tendai Biti, who joined the government as part of a power-sharing agreement between his Movement for Democratic Change and Mugabe's ZANU-PF party, has declared the local dollar indefinitely obsolete. He has threatened to quit if a return to the local currency is forced upon him.
"We are putting the tombstone on the corpse of the Zimbabwe dollar," Biti told lawmakers in a midyear fiscal policy statement. In a speech to business leaders, he said, "We are no longer printing our own money."
Biti said monthly inflation rose slightly in June to 0.6 percent, up from zero the month before. He blamed the rise on price hikes in property rentals, gasoline and other nonfood items. He also noted that GDP per capita has plunged from $720 in 2002 to $265 last year, reflecting the shortage of hard cash in the economy.
That shortage is not helped by the state of the global economy, on which Zimbabwe depends.
With the collapse of the country's agricultural economy after the seizure of thousands of white-owned farms beginning in 2000, an estimated 4 million Zimbabweans — many of them skilled — left the country to find jobs in neighboring South Africa and further afield. The so-called "diaspora dollar" became by far the nation's biggest source of hard currency.
But in the global recession, those inflows are diminishing, bankers say. In a typical case, a businessman's daughter in Britain e-mailed him in June that she was halving her monthly remittance of $400.
The independent Zimbabwe National Chamber of Commerce blamed acute shortages of hard currency on payments to buy imported basic goods previously manufactured in Zimbabwe, such as soap and cooking oil from South Africa.
Without enough cash no matter how they cut it, Zimbabweans survive on a mish-mash of currencies.
All the bus drivers can do with Zimdollars is give them back to other passengers in change for American bills. In one reported incident, a passenger pulled a gun on a bus driver who insisted on paying change in local notes.
Outside the cities, where hard currency can be hard to come by, Zimbabwe dollars are used like promissory notes in small transactions. And trillion Zimbabwe dollar notes, the world's biggest denomination bills, are a hit with collectors, selling briskly on eBay. In Zimbabwe, they change hands like tokens or IOUs.
Stores without small change in hard currency don't offer obsolete Zimbabwe dollars in change like the bus drivers do, but routinely provide candies and chocolate bars or "coupons" handwritten on check-out slips to be redeemed on future purchases.
Irene Gwata, owner of a small trading store in rural northwestern Zimbabwe, said hard currency has stopped filtering down to her customers in recent weeks. Locals trade goat meat, chickens and pails of corn for goods, she said.
She saw a village woman board a bus and pay with a live chicken trussed in wire for the 150-kilometer (90-mile) trip to Harare.
With characteristic Zimbabwean humor in adversity, Gwata said, "people wanted to know if she was going to get eggs for change."
Thursday, August 13, 2009
MONETARY POLICY STATEMENT, JULY 2009
MONETARY POLICY STATEMENT, JULY 2009
A few comments are called for on the Governor’s choice of terminology. He describes the Multiple Currency System as a “noble” policy that was introduced by the Reserve Bank of Zimbabwe in the last quarter of 2008. More accurately, the rapidly collapsing Zimbabwe dollar forced the private sector to adopt and use other currencies, initially in defiance of RBZ directives, threats and prosecutions.
RBZ conduct led to the destruction of the integrity of the Zimbabwe dollar, which made the currency useless to everyone, the RBZ and government included. The officials had no option but to accept the use of other currencies for themselves and everyone else. The decision should therefore be seen, not as a noble achievement, but as an ignoble defeat for RBZ policies.
The Governor makes mention of unintended consequences affecting pensioners, those on fixed incomes and those unable to earn foreign currency. This appears to be an attempt to blame the dollarisation for these misfortunes, but government imposed deeply negative real rates of interest more than five years ago. Long before crippling hyperinflation was reached in 2008, these had already destroyed interest earnings as well as the capital held in savings accounts and pension funds.
Government’s earlier price freeze had also forced the shrinkage or closure of thousands of factories and shops, causing massive financial losses. When these are combined with the losses of jobs, earnings, foreign exchange revenues and tax revenues that followed the forced closure of more than 4 000 commercial farming companies, the major “unintended consequences” can be seen to have hit the population well before dollarisation became the only practical option.
The Governor offers some helpful thoughts on the possible return of the Zimbabwe dollar, stressing that the country does have need of its own currency so that it can recover autonomy in formulating its own fiscal and monetary policies. However, as “a country’s currency is defined and dictated by the barometer of real economic activity” and as “the loss of the value of the Zimbabwe dollar was a direct result of the near absolute stagnation in Zimbabwe’s entire productive systems”, the recovery and growth of productive activity has to be the foundation for the return of the Zimbabwe dollar.
Bank liquidity and the conditions in the banking sector receive some attention, but after pointing out that the country has 28 banking institutions, 17 asset management companies and a further 81 operating money lending and micro-finance institutions, the Governor manages to avoid any suggestion that these numbers are part of the problem. A new Framework for Financial Stability Assessment is being developed by the Reserve Bank, but this is mentioned only in relation to the current global banking crisis.
For Zimbabwe, the problems are identified as the capital erosion that came with hyperinflation, the shortages of liquidity, the operational risks and credit risks now faced because the sums owed are all in foreign currency, and the settlement risk now that the Reserve Bank can no longer function as lender of last resort.
To remain in business, banks will have to achieve phased capital adequacy targets in two steps. They must show that they have reached 50% of the prescribed equity capital by September 30 2009 and the balance has to be in place by March 31 2010.
After holding meetings with the banks, the Reserve Bank found that “most banking institutions will be recapitalised through fresh capital injections by the holding companies, private placements, rights issues, mergers and strategic partnerships with new investors”.
From the details supplied, the equity totals will have to amount to US$156 250 000 by the end of next month and to twice that figure by the end of March next year, if all the banks are to remain in business as separate entities. However, if the number of banks is not reduced, the limited amount of business activity seems certain to make the survival prospects questionable for some of them.
The Governor makes several references to bank charges, mainly to point out how much higher they are in Zimbabwe than in South Africa, but he does not explain that the problem stems from the banks’ claimed need to levy transactions charges because they are unable to earn enough from the difference between the interest they charge on loans and the interest they pay to depositors.
This is not because the gap between these rates is too narrow, but because the banks either do not have enough money to lend, or the terms that have to be met by borrowers are too tough in the current uncertain business climate. The damage done to the property market by the Land Reform Programme makes the situation even more uncertain because all title deeds have now become less acceptable as collateral.
Because this has dramatically changed the credit-worthiness of many businesses, the banks have been forced to demand very convincing evidence that borrowers will be able to meet repayment obligations in full and without fail. Few are able to assemble such evidence, partly because of the constraints on working capital, but also because of less dependable sources of supply of local inputs, the loss of skilled workers, the loss of markets, the need to replace capital equipment to recover needed efficiency levels and the frequent cuts in electricity, water and telecommunications services.
The Governor’s complaints that many banks are lending very small percentages of their deposits do not allow for these increased risks, or the exacting conditions that have to be met by local banks before they can draw on lines of credit extended by correspondent banks.
Those banks that have well secured borrowers, but not enough money to lend, face the additional problem that very few local bank-to-bank loans have been arranged, such is the level of uncertainty over which banks might become casualties of the expected eventual shake-out.
For those depositors who are presently keeping their money in cash, their willingness to bank it might best be restored by eliminating the costs of drawing on their deposits, but more particularly, by issuing a Reserve Bank guarantee that their balances will not be raided, either by the Reserve Bank itself, or in response to a Ministry of Finance directive.
In this latest Monetary Policy statement, the Governor describes the instructions the Reserve Bank received from the Ministry of Finance to incur foreign liabilities on behalf of government and states that al the money raised was used by government. He says: “It is pleasing to note that Government has committed itself to paying the debts through a debt takeover programme, as spelt out in the interim Budget Review Statement by the Minister of Finance and subsequently approved by Parliament.”
Reference to the interim Budget statement shows that this “commitment” amounts to the contracting of a debt expert, who will “support the Government in formulating the external debt and arrears clearance strategy, which will form the basis for debt relief”. With regret, I have to suggest that those whose foreign currency account balances disappeared might find that government places the emphasis on debt relief, or debt forgiveness, rather than on debt settlement.
Statistics showing which business sectors had secured loans and advances from commercial banks reveal that in June, the distribution sector, i.e. wholesalers and retailers, had received the largest proportion at 27,2% or US$83,11 million. The amounts lent to other service sector businesses – about 4% to transport, 1,74% to communications, 7% to finance, 2,5% to individuals, 0,8% to construction and 6,75% to other services – makes the balance of the country’s bank loans almost equal between production and consumption, with the amounts lent to agriculture, 24,1% manufacturing, 18,1% and mining, 7,8%, also coming to 50%.
Some progress is reported on the volumes of money being transferred through the Real Time Gross Settlement system, daily transactions rising from US$11 million a day in the last week of April to an average of US$32 million a day in the last week of June. Banks are urged to “consider the re-introduction of cheques at inter-bank level”, but no information is offered on any proposed new clearing arrangements, other than that the Reserve Bank is empowered “to recognise and oversee all payment, clearing and settlement systems”.
The use of cards to make point-of-sale payments within the country is still being finalised and more is still to be done to permit visitors to use their cards while in the country. No mention is made of Zimbabweans being offered cards they can use when abroad.
The willingness of authorised dealers to explore territory and products that were previously kept off-limits by very restrictive exchange controls has prompted the Governor to set new guidelines on the liberalisation of the foreign exchange market.
Accepting that it is now “imperative” that the use of derivatives instruments be allowed in Zimbabwe, he states that, with immediate effect, authorised dealers are permitted to enter into derivatives, but “only where there is an underlying asset”. Investing in derivatives for speculative reasons will not be allowed.
All financial derivatives that have a value or exposure of less than US$5 million, do not require prior Exchange Control approval, but as is the case for with external loans, all financial derivatives above US$5 million require prior approval.
In a description of inflation trends, the governor concentrates largely on fuel prices, pointing out that the economy is now markedly more sensitive to fuel price changes than it was when exchange rate arrangements offered “arbitrage opportunities and speculative sources of income to cover gaps arising from cost build up”, and observes that these opportunities no longer exist. Accordingly, “a significant proportion of fuel costs will be passed on with a quicker pass through as companies face diminished loss absorptive capacity.”
As a result, he expects month on month inflation to increase and may exceed 3% in the third quarter. Domestic fuel prices also respond to erratic domestic supply patterns as well as exchange rate changes between the United States dollar and the South African rand.
MINING
The Governor also summarises his thoughts on the performance of the productive sectors. On the mining sector, he believes that the following handicaps account for many of the difficulties:
(a) Uncertainties associated with the inconclusive reviews to the mining sector legislation;
(b) Intrusion of self-interests leading to mysterious procrastinations in the approval of investment proposals;
(c) Uncoordinated mining sector investment attraction strategies leading to multiple duplications of representations to the same potential investor thereby creating confusion and hesitancy by the potential counter parties;
(d) Non-allocation of meaningful fiscal budgetary resources for active surveying and exploration of country’s true worth in mineral resources terms;
(e) Serious technical capacity deficiencies in the Ministry of Mines and Mining Development due to brain drain;
(f) Capacity constraints on marketing and market penetration; and
(g) Limited capacity to value-add our primary mineral production.
The governor believes that the Mining and Minerals Act should reflect an indigenous policy that encourages foreign investment and that the policy should allow foreign investors who are bringing in capital to own more than 50% of the venture.
He also believes that the country can earn significant foreign currency from the auctioning of mining claims. This idea is much more ominous than any of those listed above. It requires that mining claims should automatically come under the control of government as soon as the minerals are discovered and the claims are registered. This is not the case now, but if changes are introduced to make it happen, they will bring prospecting to an end.
The success previously enjoyed by Zimbabwe’s mining sector was based on the ownership rights to discoveries that were acquired automatically by the person or company that found the mineral deposit. These rights were then used to arrange for development funding or to negotiate for a partnership with, or an outright sale to potential developers. If the State now proposes to assume ownership of new discoveries so that they can be auctioned for State finances, the State will very quickly run out of mining properties to auction.
Regrettably, the Governor has permitted himself to be misled by a table that is said to compare Zimbabwe’s mineral reserves with its current extraction rates. Against gold, the annual refined gold output is compared to the estimated reserves of gold-bearing ore, and by dividing the ore by the metal output, the conclusion is reached that Zimbabwe’s gold reserves can be mined at 20 tonnes a year for 650 000 years.
Unfortunately, the hard fact is that the 20 tonnes of gold referred to, an amount last mined in 2004, was lodged in at least four million tonnes of ore. That is the number by which the known ore reserves should have been divided and the answer is a much more modest three years and three months. Because this is such a short time-span, nothing should be done to discourage continuous exploration for new deposits and government should be happy to see successful prospectors rewarded for their efforts.
AGRICULTURE
Although Zimbabwe has virtually wiped out its capacity to subsidise its hundreds of thousands of farmers, the Governor opens his comments on agriculture with observations on the extent of support offered by the governments of the US, the EU, Japan, Canada and Australia.
In a table, the Governor shows that the support offered to farmers by the governments of OECD countries over the 16 years to 2005 ranged between US$52 billion and US$97 billion a year, which sums came to as much as 31% of each country’s tax revenues. Even Malawi was turned from being as food deficit country into a net exporter of maize because of agricultural support.
Zimbabwe, he says, should therefore commit to the “pooled importation” of critical imports, the enhancement of farm mechanisation, the improvement of national productivity levels, the nationwide development of agricultural skills, the deepening of the strategic grain reserves and the payment of prices that will guarantee the viability of farmers.
The Governor does not acknowledge the non-existence of the funding Zimbabwe would need to duplicate such efforts, but he does suggest that government should set aside 500 000 hectares for the production of strategic crops by individual farmers under contract growing schemes run as joint ventures between the government and the private sector or foreign investors.
However, at no point does the Governor acknowledge the one-time existence of farmers who had the needed experience, had mechanised their operations, had achieved high levels of productivity, were successful enough to operate without need of subsidies, funding their activities with commercial loans that were secured by title deeds to their land and had helped achieve export surpluses almost every year for the past century.
Perhaps his very large contract farming scheme suggestions is as close as the Governor can get to a politically-acceptable means of re-engaging the skills of such people, but doing so without going back on the devastating Land Reform Programme. But if he were to make an honest assessment of why Operation Maguta, the local attempt at State farming, has been disappointing, why the USSR and China could not feed themselves until far-reaching changes were made and why North Korea is still struggling, he would perhaps accept that a few dozen central planners have no hope of replicating the energies that are released when the initiative of thousands of people is freed to set both the pace and the direction of economic and social development.
MANUFACTURING
This sector is dealt with in very few paragraphs, which can be summed up as pleas for restoring the efficiency of the services infrastructure “so as to unlock greater supply response from the manufacturing sector” and suggestions that toll-manufacturing and further beneficiation of primary products would support export-led growth.
A 46% fall in manufactured exports is recorded among the helpful statistics for the first half of 2009 compared with the first half of 2008, but no reference is made to the severe shrinkage of business activity that followed upon the appropriation by the Reserve Bank of foreign currency account balances.
Neither does he mention the effects of the further losses of skills and the continuing impacts of price controls on viability, or the ability of affected companies to fund even basic maintenance programmes, let alone capital equipment replacements.
The basic fact he avoids is that a significant proportion of the manufacturing sector has lost its competitive edge. These firms will not be able to place quality goods into local shops at acceptable prices until their owners have found the money and the courage to catch up with production methods and market changes and to restore their lost efficiency.
PARASTATALS
The Governor claims that parastatals and local authorities account for at least 40% of Gross Domestic Product because of their forward and backward linkages with the rest of the economy. For a meaningful turnaround, efforts should also be geared at addressing the requirements of these critical sectors.
As the infrastructure is mainly developed and managed by parastatals, he says that it is therefore critical to capacitate the sector to ensure that the productive sectors and the rest of the economy have access to power, water, transport and communication.
Most economists would challenge the Governor’s GDP arithmetic on the grounds that percentage figures should add up to no more than 100%. The forward and backward linkages with the rest of the economy of, say, food production, housing or privately owned transport can also be shown to have enormous leverage in all productive processes, but accurate measurements that prevent double-counting would ensure that their totals, plus the totals from all other economic activities, would not exceed 100%.
While the Governor’s observations still need to be taken seriously, their main purpose is clearly to underline the need for vast amounts of money to restore and further develop the country’s power, water, transport and communication services. The message between the lines is that he knows the money has to come from elsewhere and the critical requirement to fully “capacitate” the parastatal organisations has to be supported from abroad.
The same thoughts surface in much more explicit terms in the paragraphs that repeat the government’s frequent accusations that “illegal sanctions” are the reason for Zimbabwe’s difficulties.
“Our plea to the international community is that they give Zimbabweans the deserved giant leap of faith and play a progressive and supportive role through the unconditional removal of the crippling sanctions that are now an unbearable millstone around the country’s economy”.
This section starts with the statement: “The formation of the Inclusive Government did and does indicate and confirm that the people of Zimbabwe fully understand their democratic institutions…”. This phrase appears to be as close as the Governor can get to supporting his claim that the requested “leap of faith” is now “deserved”.
The observations that have come from many visiting diplomats, politicians, investors and commentators seems never to have been heard by the Governor, or by the members of government who have displayed their increasing dismay that aid has not been pouring into the country since the Government of National Unity was formed.
In summary, they have highlighted the lack of progress in the political arena and to the clear evidence that attempts to make headway on important issues, such as the rule of law, civil rights and the freedoms of expression and association have been so frequently thwarted, if not sabotaged.
Political activists managed to vigorously reinforce the evidence that Zimbabwe’s old guard was still in charge and still determined to prevent change when the first meetings to consider new constitutional proposals were broken up by demonstrators and the police did not intervene. This event helped to confirm the belief that Zimbabwe is not yet ready to be offered assistance, specially as a safe assumption could be made that, under current circumstances, any funding supplied might be diverted to strengthen the positions of those who were responsible for Zimbabwe’s economic decline.
At the more fundamental level, Zimbabwe is still seen to be not deserving of support because the policy choices that started the economic downturn have not been revoked, or even amended, and the separate factions of the Government of National Unity appear to be in agreement that no urgent attention need be given to these issues.
Responses from development institutions, investors and donor countries are showing that none of them is prepared to support efforts to help inappropriate policies to work a little better, while good policies could be readily adopted and would make the development process more successful and self-sustaining.
Although humanitarian aid is still being provided and a few highly conditional credit lines have been offered to some banks, the amounts do not add up to the sums needed to start rebuilding the infrastructure or to start the full recovery of the productive sectors.
Sums of that order will have to await the political changes that will restore confidence among investors and will convince development agencies and donor countries that the money will not be wasted.
-------------
John Robertson
A few comments are called for on the Governor’s choice of terminology. He describes the Multiple Currency System as a “noble” policy that was introduced by the Reserve Bank of Zimbabwe in the last quarter of 2008. More accurately, the rapidly collapsing Zimbabwe dollar forced the private sector to adopt and use other currencies, initially in defiance of RBZ directives, threats and prosecutions.
RBZ conduct led to the destruction of the integrity of the Zimbabwe dollar, which made the currency useless to everyone, the RBZ and government included. The officials had no option but to accept the use of other currencies for themselves and everyone else. The decision should therefore be seen, not as a noble achievement, but as an ignoble defeat for RBZ policies.
The Governor makes mention of unintended consequences affecting pensioners, those on fixed incomes and those unable to earn foreign currency. This appears to be an attempt to blame the dollarisation for these misfortunes, but government imposed deeply negative real rates of interest more than five years ago. Long before crippling hyperinflation was reached in 2008, these had already destroyed interest earnings as well as the capital held in savings accounts and pension funds.
Government’s earlier price freeze had also forced the shrinkage or closure of thousands of factories and shops, causing massive financial losses. When these are combined with the losses of jobs, earnings, foreign exchange revenues and tax revenues that followed the forced closure of more than 4 000 commercial farming companies, the major “unintended consequences” can be seen to have hit the population well before dollarisation became the only practical option.
The Governor offers some helpful thoughts on the possible return of the Zimbabwe dollar, stressing that the country does have need of its own currency so that it can recover autonomy in formulating its own fiscal and monetary policies. However, as “a country’s currency is defined and dictated by the barometer of real economic activity” and as “the loss of the value of the Zimbabwe dollar was a direct result of the near absolute stagnation in Zimbabwe’s entire productive systems”, the recovery and growth of productive activity has to be the foundation for the return of the Zimbabwe dollar.
Bank liquidity and the conditions in the banking sector receive some attention, but after pointing out that the country has 28 banking institutions, 17 asset management companies and a further 81 operating money lending and micro-finance institutions, the Governor manages to avoid any suggestion that these numbers are part of the problem. A new Framework for Financial Stability Assessment is being developed by the Reserve Bank, but this is mentioned only in relation to the current global banking crisis.
For Zimbabwe, the problems are identified as the capital erosion that came with hyperinflation, the shortages of liquidity, the operational risks and credit risks now faced because the sums owed are all in foreign currency, and the settlement risk now that the Reserve Bank can no longer function as lender of last resort.
To remain in business, banks will have to achieve phased capital adequacy targets in two steps. They must show that they have reached 50% of the prescribed equity capital by September 30 2009 and the balance has to be in place by March 31 2010.
After holding meetings with the banks, the Reserve Bank found that “most banking institutions will be recapitalised through fresh capital injections by the holding companies, private placements, rights issues, mergers and strategic partnerships with new investors”.
From the details supplied, the equity totals will have to amount to US$156 250 000 by the end of next month and to twice that figure by the end of March next year, if all the banks are to remain in business as separate entities. However, if the number of banks is not reduced, the limited amount of business activity seems certain to make the survival prospects questionable for some of them.
The Governor makes several references to bank charges, mainly to point out how much higher they are in Zimbabwe than in South Africa, but he does not explain that the problem stems from the banks’ claimed need to levy transactions charges because they are unable to earn enough from the difference between the interest they charge on loans and the interest they pay to depositors.
This is not because the gap between these rates is too narrow, but because the banks either do not have enough money to lend, or the terms that have to be met by borrowers are too tough in the current uncertain business climate. The damage done to the property market by the Land Reform Programme makes the situation even more uncertain because all title deeds have now become less acceptable as collateral.
Because this has dramatically changed the credit-worthiness of many businesses, the banks have been forced to demand very convincing evidence that borrowers will be able to meet repayment obligations in full and without fail. Few are able to assemble such evidence, partly because of the constraints on working capital, but also because of less dependable sources of supply of local inputs, the loss of skilled workers, the loss of markets, the need to replace capital equipment to recover needed efficiency levels and the frequent cuts in electricity, water and telecommunications services.
The Governor’s complaints that many banks are lending very small percentages of their deposits do not allow for these increased risks, or the exacting conditions that have to be met by local banks before they can draw on lines of credit extended by correspondent banks.
Those banks that have well secured borrowers, but not enough money to lend, face the additional problem that very few local bank-to-bank loans have been arranged, such is the level of uncertainty over which banks might become casualties of the expected eventual shake-out.
For those depositors who are presently keeping their money in cash, their willingness to bank it might best be restored by eliminating the costs of drawing on their deposits, but more particularly, by issuing a Reserve Bank guarantee that their balances will not be raided, either by the Reserve Bank itself, or in response to a Ministry of Finance directive.
In this latest Monetary Policy statement, the Governor describes the instructions the Reserve Bank received from the Ministry of Finance to incur foreign liabilities on behalf of government and states that al the money raised was used by government. He says: “It is pleasing to note that Government has committed itself to paying the debts through a debt takeover programme, as spelt out in the interim Budget Review Statement by the Minister of Finance and subsequently approved by Parliament.”
Reference to the interim Budget statement shows that this “commitment” amounts to the contracting of a debt expert, who will “support the Government in formulating the external debt and arrears clearance strategy, which will form the basis for debt relief”. With regret, I have to suggest that those whose foreign currency account balances disappeared might find that government places the emphasis on debt relief, or debt forgiveness, rather than on debt settlement.
Statistics showing which business sectors had secured loans and advances from commercial banks reveal that in June, the distribution sector, i.e. wholesalers and retailers, had received the largest proportion at 27,2% or US$83,11 million. The amounts lent to other service sector businesses – about 4% to transport, 1,74% to communications, 7% to finance, 2,5% to individuals, 0,8% to construction and 6,75% to other services – makes the balance of the country’s bank loans almost equal between production and consumption, with the amounts lent to agriculture, 24,1% manufacturing, 18,1% and mining, 7,8%, also coming to 50%.
Some progress is reported on the volumes of money being transferred through the Real Time Gross Settlement system, daily transactions rising from US$11 million a day in the last week of April to an average of US$32 million a day in the last week of June. Banks are urged to “consider the re-introduction of cheques at inter-bank level”, but no information is offered on any proposed new clearing arrangements, other than that the Reserve Bank is empowered “to recognise and oversee all payment, clearing and settlement systems”.
The use of cards to make point-of-sale payments within the country is still being finalised and more is still to be done to permit visitors to use their cards while in the country. No mention is made of Zimbabweans being offered cards they can use when abroad.
The willingness of authorised dealers to explore territory and products that were previously kept off-limits by very restrictive exchange controls has prompted the Governor to set new guidelines on the liberalisation of the foreign exchange market.
Accepting that it is now “imperative” that the use of derivatives instruments be allowed in Zimbabwe, he states that, with immediate effect, authorised dealers are permitted to enter into derivatives, but “only where there is an underlying asset”. Investing in derivatives for speculative reasons will not be allowed.
All financial derivatives that have a value or exposure of less than US$5 million, do not require prior Exchange Control approval, but as is the case for with external loans, all financial derivatives above US$5 million require prior approval.
In a description of inflation trends, the governor concentrates largely on fuel prices, pointing out that the economy is now markedly more sensitive to fuel price changes than it was when exchange rate arrangements offered “arbitrage opportunities and speculative sources of income to cover gaps arising from cost build up”, and observes that these opportunities no longer exist. Accordingly, “a significant proportion of fuel costs will be passed on with a quicker pass through as companies face diminished loss absorptive capacity.”
As a result, he expects month on month inflation to increase and may exceed 3% in the third quarter. Domestic fuel prices also respond to erratic domestic supply patterns as well as exchange rate changes between the United States dollar and the South African rand.
MINING
The Governor also summarises his thoughts on the performance of the productive sectors. On the mining sector, he believes that the following handicaps account for many of the difficulties:
(a) Uncertainties associated with the inconclusive reviews to the mining sector legislation;
(b) Intrusion of self-interests leading to mysterious procrastinations in the approval of investment proposals;
(c) Uncoordinated mining sector investment attraction strategies leading to multiple duplications of representations to the same potential investor thereby creating confusion and hesitancy by the potential counter parties;
(d) Non-allocation of meaningful fiscal budgetary resources for active surveying and exploration of country’s true worth in mineral resources terms;
(e) Serious technical capacity deficiencies in the Ministry of Mines and Mining Development due to brain drain;
(f) Capacity constraints on marketing and market penetration; and
(g) Limited capacity to value-add our primary mineral production.
The governor believes that the Mining and Minerals Act should reflect an indigenous policy that encourages foreign investment and that the policy should allow foreign investors who are bringing in capital to own more than 50% of the venture.
He also believes that the country can earn significant foreign currency from the auctioning of mining claims. This idea is much more ominous than any of those listed above. It requires that mining claims should automatically come under the control of government as soon as the minerals are discovered and the claims are registered. This is not the case now, but if changes are introduced to make it happen, they will bring prospecting to an end.
The success previously enjoyed by Zimbabwe’s mining sector was based on the ownership rights to discoveries that were acquired automatically by the person or company that found the mineral deposit. These rights were then used to arrange for development funding or to negotiate for a partnership with, or an outright sale to potential developers. If the State now proposes to assume ownership of new discoveries so that they can be auctioned for State finances, the State will very quickly run out of mining properties to auction.
Regrettably, the Governor has permitted himself to be misled by a table that is said to compare Zimbabwe’s mineral reserves with its current extraction rates. Against gold, the annual refined gold output is compared to the estimated reserves of gold-bearing ore, and by dividing the ore by the metal output, the conclusion is reached that Zimbabwe’s gold reserves can be mined at 20 tonnes a year for 650 000 years.
Unfortunately, the hard fact is that the 20 tonnes of gold referred to, an amount last mined in 2004, was lodged in at least four million tonnes of ore. That is the number by which the known ore reserves should have been divided and the answer is a much more modest three years and three months. Because this is such a short time-span, nothing should be done to discourage continuous exploration for new deposits and government should be happy to see successful prospectors rewarded for their efforts.
AGRICULTURE
Although Zimbabwe has virtually wiped out its capacity to subsidise its hundreds of thousands of farmers, the Governor opens his comments on agriculture with observations on the extent of support offered by the governments of the US, the EU, Japan, Canada and Australia.
In a table, the Governor shows that the support offered to farmers by the governments of OECD countries over the 16 years to 2005 ranged between US$52 billion and US$97 billion a year, which sums came to as much as 31% of each country’s tax revenues. Even Malawi was turned from being as food deficit country into a net exporter of maize because of agricultural support.
Zimbabwe, he says, should therefore commit to the “pooled importation” of critical imports, the enhancement of farm mechanisation, the improvement of national productivity levels, the nationwide development of agricultural skills, the deepening of the strategic grain reserves and the payment of prices that will guarantee the viability of farmers.
The Governor does not acknowledge the non-existence of the funding Zimbabwe would need to duplicate such efforts, but he does suggest that government should set aside 500 000 hectares for the production of strategic crops by individual farmers under contract growing schemes run as joint ventures between the government and the private sector or foreign investors.
However, at no point does the Governor acknowledge the one-time existence of farmers who had the needed experience, had mechanised their operations, had achieved high levels of productivity, were successful enough to operate without need of subsidies, funding their activities with commercial loans that were secured by title deeds to their land and had helped achieve export surpluses almost every year for the past century.
Perhaps his very large contract farming scheme suggestions is as close as the Governor can get to a politically-acceptable means of re-engaging the skills of such people, but doing so without going back on the devastating Land Reform Programme. But if he were to make an honest assessment of why Operation Maguta, the local attempt at State farming, has been disappointing, why the USSR and China could not feed themselves until far-reaching changes were made and why North Korea is still struggling, he would perhaps accept that a few dozen central planners have no hope of replicating the energies that are released when the initiative of thousands of people is freed to set both the pace and the direction of economic and social development.
MANUFACTURING
This sector is dealt with in very few paragraphs, which can be summed up as pleas for restoring the efficiency of the services infrastructure “so as to unlock greater supply response from the manufacturing sector” and suggestions that toll-manufacturing and further beneficiation of primary products would support export-led growth.
A 46% fall in manufactured exports is recorded among the helpful statistics for the first half of 2009 compared with the first half of 2008, but no reference is made to the severe shrinkage of business activity that followed upon the appropriation by the Reserve Bank of foreign currency account balances.
Neither does he mention the effects of the further losses of skills and the continuing impacts of price controls on viability, or the ability of affected companies to fund even basic maintenance programmes, let alone capital equipment replacements.
The basic fact he avoids is that a significant proportion of the manufacturing sector has lost its competitive edge. These firms will not be able to place quality goods into local shops at acceptable prices until their owners have found the money and the courage to catch up with production methods and market changes and to restore their lost efficiency.
PARASTATALS
The Governor claims that parastatals and local authorities account for at least 40% of Gross Domestic Product because of their forward and backward linkages with the rest of the economy. For a meaningful turnaround, efforts should also be geared at addressing the requirements of these critical sectors.
As the infrastructure is mainly developed and managed by parastatals, he says that it is therefore critical to capacitate the sector to ensure that the productive sectors and the rest of the economy have access to power, water, transport and communication.
Most economists would challenge the Governor’s GDP arithmetic on the grounds that percentage figures should add up to no more than 100%. The forward and backward linkages with the rest of the economy of, say, food production, housing or privately owned transport can also be shown to have enormous leverage in all productive processes, but accurate measurements that prevent double-counting would ensure that their totals, plus the totals from all other economic activities, would not exceed 100%.
While the Governor’s observations still need to be taken seriously, their main purpose is clearly to underline the need for vast amounts of money to restore and further develop the country’s power, water, transport and communication services. The message between the lines is that he knows the money has to come from elsewhere and the critical requirement to fully “capacitate” the parastatal organisations has to be supported from abroad.
The same thoughts surface in much more explicit terms in the paragraphs that repeat the government’s frequent accusations that “illegal sanctions” are the reason for Zimbabwe’s difficulties.
“Our plea to the international community is that they give Zimbabweans the deserved giant leap of faith and play a progressive and supportive role through the unconditional removal of the crippling sanctions that are now an unbearable millstone around the country’s economy”.
This section starts with the statement: “The formation of the Inclusive Government did and does indicate and confirm that the people of Zimbabwe fully understand their democratic institutions…”. This phrase appears to be as close as the Governor can get to supporting his claim that the requested “leap of faith” is now “deserved”.
The observations that have come from many visiting diplomats, politicians, investors and commentators seems never to have been heard by the Governor, or by the members of government who have displayed their increasing dismay that aid has not been pouring into the country since the Government of National Unity was formed.
In summary, they have highlighted the lack of progress in the political arena and to the clear evidence that attempts to make headway on important issues, such as the rule of law, civil rights and the freedoms of expression and association have been so frequently thwarted, if not sabotaged.
Political activists managed to vigorously reinforce the evidence that Zimbabwe’s old guard was still in charge and still determined to prevent change when the first meetings to consider new constitutional proposals were broken up by demonstrators and the police did not intervene. This event helped to confirm the belief that Zimbabwe is not yet ready to be offered assistance, specially as a safe assumption could be made that, under current circumstances, any funding supplied might be diverted to strengthen the positions of those who were responsible for Zimbabwe’s economic decline.
At the more fundamental level, Zimbabwe is still seen to be not deserving of support because the policy choices that started the economic downturn have not been revoked, or even amended, and the separate factions of the Government of National Unity appear to be in agreement that no urgent attention need be given to these issues.
Responses from development institutions, investors and donor countries are showing that none of them is prepared to support efforts to help inappropriate policies to work a little better, while good policies could be readily adopted and would make the development process more successful and self-sustaining.
Although humanitarian aid is still being provided and a few highly conditional credit lines have been offered to some banks, the amounts do not add up to the sums needed to start rebuilding the infrastructure or to start the full recovery of the productive sectors.
Sums of that order will have to await the political changes that will restore confidence among investors and will convince development agencies and donor countries that the money will not be wasted.
-------------
John Robertson
Wednesday, August 12, 2009
Zimbabwe's White Commercial Farmers Seek Justice on Land Invasions
By Patience Rusere Washington
11 August 2009
Zimbabwe's Commercial Farmers Union has added its voice to those demanding justice as well as healing and reconciliation from the country's national unity government.
The group has launched a drive to document crimes committed in the course of farm takeovers since President Robert Mugabe launched fast-track land reform in 2000, including the names of those who allegedly committed assault, murder, rapes and other serious criminal offenses in the course of chaotic farm invasions led by war veterans.
Trevor Gifford, who recently stepped down as union president, said the CFU has compiled information on 15,000 people alleged to have committed such crimes. He would not disclose names but said they include war veterans, youth militia and senior government officials.
There has been an resumption of land invasions since the installation in February of the new unity government combining the former ruling ZANU-PF and the former opposition Movement for Democratic Change. The latest wave of farm takeovers is believed by many to have been engineered by ZANU-PF hardliners intent on destabilizing the new government.
Gifford told reporter Patience Rusere of VOA's Studio 7 for Zimbabwe that white farmers like other Zimbabweans are entitled to seek justice for wrongs they have suffered.
The country as a whole has embarked on a national healing, reconciliation and reintegration program focusing not only on the deadly political violence that followed elections in 2008 but all violence from colonial times through to Zimbabwean independence in 1980.
11 August 2009
Zimbabwe's Commercial Farmers Union has added its voice to those demanding justice as well as healing and reconciliation from the country's national unity government.
The group has launched a drive to document crimes committed in the course of farm takeovers since President Robert Mugabe launched fast-track land reform in 2000, including the names of those who allegedly committed assault, murder, rapes and other serious criminal offenses in the course of chaotic farm invasions led by war veterans.
Trevor Gifford, who recently stepped down as union president, said the CFU has compiled information on 15,000 people alleged to have committed such crimes. He would not disclose names but said they include war veterans, youth militia and senior government officials.
There has been an resumption of land invasions since the installation in February of the new unity government combining the former ruling ZANU-PF and the former opposition Movement for Democratic Change. The latest wave of farm takeovers is believed by many to have been engineered by ZANU-PF hardliners intent on destabilizing the new government.
Gifford told reporter Patience Rusere of VOA's Studio 7 for Zimbabwe that white farmers like other Zimbabweans are entitled to seek justice for wrongs they have suffered.
The country as a whole has embarked on a national healing, reconciliation and reintegration program focusing not only on the deadly political violence that followed elections in 2008 but all violence from colonial times through to Zimbabwean independence in 1980.
Stock Market Watch: The Good, the Bad & the Ugly
(By PERCY TAKUNDA
Published: August 11, 2009
The Good – In Zimbabwe Bloomberg reported that there has been a surge in interest on ZSE. The stock market has surged into the top 5 in Africa passing Nairobi Stock Exchange. Another good from Zimbabwe has been the proposed liberalization of grain buying. One of the tragedies we had to deal within Zimbabwe was the absence of competitive pricing for the produce from farmers.
Another big good in Zimbabwe is that the government shelves stupid law. The government has taken the right tone in assuring investors that the age of jambanja is over. This is a good move and should help resurrect Zimbabwe mining. In my line of work I come across very interesting new mining technologies which if applied to Zimbabwe will unlock thousands of ounces if not millions. At present Zimbabwe gold mining is probably using technology from 20 years ago. The modernization of Zimbabwe mining to world standards will have explosive potential. Watch out for a company called New Dawn Mining listed in Toronto.In the US After a reporting seasons that saw most analysts forecast’ beaten Wall Street rallied to medium –term records. The driving factor was the renewed optimism that the recession was coming to an end. Unemployment figures have improved and house prices seem to be improving. In my introspection the true test for the economy will be a change in inflation. A pick up in inflation data will be a sign that the monetary transmission mechanism is functioning and that the US has moved away from the liquidity trap it has been after the banking crisis. Interest rates will start to pick up and we will move from stagflation to inflation. Production output and employment will also follow that will be my sign for the end of the recession. In the meantime get really scared when you hear the term “double bottom” its one word every investor will get familiar with in the next few months.Virgin sells subscriber in the US which is hot on the heels of the sale of Virgin Mobile Canada to Bell for C$142m (£79.7m) in early July this comes as Sir Richard secured a $280m investment from Sheikh Mansour bin Zayed al-Nahyan into Virgin Galactic. The Abu Dhabi sheikh’s purchase of a 32% stake in the billionaire entrepreneur’s space travel business values it at $900m, and paves the way for a future stock market flotation. The two deals demonstrate Sir Richard’s strategy of launching and funding growth businesses and then exiting when the time is right to reinvest the money earned elsewhere an idea that has made him the billionaire he is today. Virgin invested an initial $200m in VMU in October 2001, and withdrew that money in 2005 in a refinancing. As a result, the $250m from the Sprint sale which consists of the value of Virgin’s remaining equity, loans and its trade mark licence is pure profit….like I like to say money in the bank. A Virgin Group spokesman said the sale follows their group strategy of selling our more mature mobile businesses, and allows us to invest in growth areas like Virgin Mobile India.Yahoo & Google have agreed a deal to share search engine revenue. This deal in my view is somewhat smells anti-competitive. It seems the US competition authorities are behind the technology curve. All the same hats off to Yahoo on this one I personally don’t remember when I last used the yahoo search engine. Randgold resources the African exploration company listed on the LSE have been announced as the preferred bidder for Moto Resources. I am a big fan of exploration and Moto has a couple of million ounces in the DRC. If investors can consider the DRC as a investment destination that can only be good for the rest of Africa…Zimbabwe includedIn Johannesburg the Rand continues to trade around R8/$ a rate that has little to do with economic fundamentals. The good here is that CPI and PPI have all gone down quite significantly and there is renewed talk of another interest rate cut. Rumors at the JSE are that the rand has held up in anticipation of the MTN-Bharti deal which is said to be worth some US$30bn. Another good in SA has been the appointment of Gill Marcus as Reserve Bank governor in my view Tito has done his bit and hats off for passing the button unlike some reserve bank governors I know. The Bad
On the JSE platinum producers realised bad figures in the wake of depressed global demand for platinum metals. Currently 80% of the world’s platinum is produced by SA and Zimbabwe. Demand for platinum is 80% from auto manufactures. The two leading producers Angloplats and Implats have shelved expansion plans and will in all likelihood cut jobs. Vehicle sales globally have continued to slide and only a structural shift in the global economy will stimulate demand for automobiles. In this regard my free investment advice is stay clear of automotive linked industries the worst in my view is yet to come.Johannesburg service delivery strikes have ended and now the next wave of strikes will be from Eskom the power utility company. So after weeks of no garbage collection the next strike will switch off your geyser. Although I sympathise with the workers one gets a feeling the country is being held hostage and something has to be done.On a lighter note…..the beautiful
Italian premier Silvo Berlusconi has sent media stocks in Italy rocking as Italians went about buying tabloids and other publications to get the juicy details of his affair with long-legged Patrizia D’Addario, 42. This was a masterstroke if ever there was a lesson to be leant on investor relations. Berlusconi who is also Italy’s richest man made his wealth as a media tycoon. So from an investor’s point of view I think Mr. Berlusconi is acting in shareholders interest even when in bed fino alla volta prossima…ciao! Percy Takunda is an Equity Analyst based in Johannesburg
Published: August 11, 2009
The Good – In Zimbabwe Bloomberg reported that there has been a surge in interest on ZSE. The stock market has surged into the top 5 in Africa passing Nairobi Stock Exchange. Another good from Zimbabwe has been the proposed liberalization of grain buying. One of the tragedies we had to deal within Zimbabwe was the absence of competitive pricing for the produce from farmers.
Another big good in Zimbabwe is that the government shelves stupid law. The government has taken the right tone in assuring investors that the age of jambanja is over. This is a good move and should help resurrect Zimbabwe mining. In my line of work I come across very interesting new mining technologies which if applied to Zimbabwe will unlock thousands of ounces if not millions. At present Zimbabwe gold mining is probably using technology from 20 years ago. The modernization of Zimbabwe mining to world standards will have explosive potential. Watch out for a company called New Dawn Mining listed in Toronto.In the US After a reporting seasons that saw most analysts forecast’ beaten Wall Street rallied to medium –term records. The driving factor was the renewed optimism that the recession was coming to an end. Unemployment figures have improved and house prices seem to be improving. In my introspection the true test for the economy will be a change in inflation. A pick up in inflation data will be a sign that the monetary transmission mechanism is functioning and that the US has moved away from the liquidity trap it has been after the banking crisis. Interest rates will start to pick up and we will move from stagflation to inflation. Production output and employment will also follow that will be my sign for the end of the recession. In the meantime get really scared when you hear the term “double bottom” its one word every investor will get familiar with in the next few months.Virgin sells subscriber in the US which is hot on the heels of the sale of Virgin Mobile Canada to Bell for C$142m (£79.7m) in early July this comes as Sir Richard secured a $280m investment from Sheikh Mansour bin Zayed al-Nahyan into Virgin Galactic. The Abu Dhabi sheikh’s purchase of a 32% stake in the billionaire entrepreneur’s space travel business values it at $900m, and paves the way for a future stock market flotation. The two deals demonstrate Sir Richard’s strategy of launching and funding growth businesses and then exiting when the time is right to reinvest the money earned elsewhere an idea that has made him the billionaire he is today. Virgin invested an initial $200m in VMU in October 2001, and withdrew that money in 2005 in a refinancing. As a result, the $250m from the Sprint sale which consists of the value of Virgin’s remaining equity, loans and its trade mark licence is pure profit….like I like to say money in the bank. A Virgin Group spokesman said the sale follows their group strategy of selling our more mature mobile businesses, and allows us to invest in growth areas like Virgin Mobile India.Yahoo & Google have agreed a deal to share search engine revenue. This deal in my view is somewhat smells anti-competitive. It seems the US competition authorities are behind the technology curve. All the same hats off to Yahoo on this one I personally don’t remember when I last used the yahoo search engine. Randgold resources the African exploration company listed on the LSE have been announced as the preferred bidder for Moto Resources. I am a big fan of exploration and Moto has a couple of million ounces in the DRC. If investors can consider the DRC as a investment destination that can only be good for the rest of Africa…Zimbabwe includedIn Johannesburg the Rand continues to trade around R8/$ a rate that has little to do with economic fundamentals. The good here is that CPI and PPI have all gone down quite significantly and there is renewed talk of another interest rate cut. Rumors at the JSE are that the rand has held up in anticipation of the MTN-Bharti deal which is said to be worth some US$30bn. Another good in SA has been the appointment of Gill Marcus as Reserve Bank governor in my view Tito has done his bit and hats off for passing the button unlike some reserve bank governors I know. The Bad
On the JSE platinum producers realised bad figures in the wake of depressed global demand for platinum metals. Currently 80% of the world’s platinum is produced by SA and Zimbabwe. Demand for platinum is 80% from auto manufactures. The two leading producers Angloplats and Implats have shelved expansion plans and will in all likelihood cut jobs. Vehicle sales globally have continued to slide and only a structural shift in the global economy will stimulate demand for automobiles. In this regard my free investment advice is stay clear of automotive linked industries the worst in my view is yet to come.Johannesburg service delivery strikes have ended and now the next wave of strikes will be from Eskom the power utility company. So after weeks of no garbage collection the next strike will switch off your geyser. Although I sympathise with the workers one gets a feeling the country is being held hostage and something has to be done.On a lighter note…..the beautiful
Italian premier Silvo Berlusconi has sent media stocks in Italy rocking as Italians went about buying tabloids and other publications to get the juicy details of his affair with long-legged Patrizia D’Addario, 42. This was a masterstroke if ever there was a lesson to be leant on investor relations. Berlusconi who is also Italy’s richest man made his wealth as a media tycoon. So from an investor’s point of view I think Mr. Berlusconi is acting in shareholders interest even when in bed fino alla volta prossima…ciao! Percy Takunda is an Equity Analyst based in Johannesburg
Tuesday, August 11, 2009
Can the Zimbabwe Economy Recover?
By Andrew Moran.
Since Robert Mugabe became President of Zimbabwe, the economy has been on a heavy decline. Zimbabweans are buying bread with billions of Zimbabwe Dollars, violent is rampant and the government is corrupt. What's next?
The economy of Zimbabwe is devastating; hyperinflation is rampant, the agriculture sector is being run by people who do not know how to grow crops, violence is a daily occurrence and government corruption is being seen by Zimbabweans as part of the system.
There was hope for nation of Zimbabwe when western officials brokered a power-sharing deal between current President Robert Mugabe and for Democratic Change leader Morgan Tsvangirai.
Prior to the power-sharing deal, the nation held a controversial election, which saw Pres. Mugabe retain leadership. Throughout the campaign, MDC supporters were threatened, dissent was imprisonment and sometimes death occurred to constituents by the Zimbabwe African National Union-Patriotic Front (ZANU-PF).
In June, both leaders of the country sought monetary aid for the impoverished nation. Pres. Mugabe held a summit with Western and Eastern African nations to influence investors. Controversy came about when internationally indicted Sudanese President Sudan Omar Hassan al-Bashir was invited to the meeting.
Prime Minister Tsvangirai went to Washington to seek not only economic aid but also cancelling isolationist policies set forth by the European Union and the United States. Mr. Tsvangirai spoke at a conference, which was setup by the Council on Foreign Relations in Washington, and said, “We are a potentially vibrant economy. What we need is credit for our businesses and some injection into our recovery budget. It will be important for the U.S. to give transitional support to us, because the alternative is too ghastly if we fail.”
Mr. Tsvangirai’s visit to Washington was a success. US President Barack Obama pledged $73 million and the International Monetary Fund will resume aid, under strict conditions, to the African nation and will also relieve the $649 million debt that Zimbabwe owes.
Success in Harare cannot be foreseen due to vast amounts of economic problems because of many Pres. Mugabe’s policies, including one of transferring white-owned farmland to blacks.
As of December 2008, the annual inflation rate is 516 quintillion per cent. In March, the Zimbabwe Dollar was dumped and the country started to use the South African Rand and the United States Dollar as legal tender to bring back economic sanity to the region.
Before Pres. Mugabe’s rise to power, also the former nation of Rhodesia, Zimbabwe was the leading agricultural country on the African continent with such commodities: corn, cotton, tobacco, coal, gold and platinum.
During Mr. Tsvangirai’s visit to the White House, reporters asked the Prime Minister of Pres. Mugabe should retire and he responded, “At the age of 85, I think one needs to retire.”
Since Robert Mugabe became President of Zimbabwe, the economy has been on a heavy decline. Zimbabweans are buying bread with billions of Zimbabwe Dollars, violent is rampant and the government is corrupt. What's next?
The economy of Zimbabwe is devastating; hyperinflation is rampant, the agriculture sector is being run by people who do not know how to grow crops, violence is a daily occurrence and government corruption is being seen by Zimbabweans as part of the system.
There was hope for nation of Zimbabwe when western officials brokered a power-sharing deal between current President Robert Mugabe and for Democratic Change leader Morgan Tsvangirai.
Prior to the power-sharing deal, the nation held a controversial election, which saw Pres. Mugabe retain leadership. Throughout the campaign, MDC supporters were threatened, dissent was imprisonment and sometimes death occurred to constituents by the Zimbabwe African National Union-Patriotic Front (ZANU-PF).
In June, both leaders of the country sought monetary aid for the impoverished nation. Pres. Mugabe held a summit with Western and Eastern African nations to influence investors. Controversy came about when internationally indicted Sudanese President Sudan Omar Hassan al-Bashir was invited to the meeting.
Prime Minister Tsvangirai went to Washington to seek not only economic aid but also cancelling isolationist policies set forth by the European Union and the United States. Mr. Tsvangirai spoke at a conference, which was setup by the Council on Foreign Relations in Washington, and said, “We are a potentially vibrant economy. What we need is credit for our businesses and some injection into our recovery budget. It will be important for the U.S. to give transitional support to us, because the alternative is too ghastly if we fail.”
Mr. Tsvangirai’s visit to Washington was a success. US President Barack Obama pledged $73 million and the International Monetary Fund will resume aid, under strict conditions, to the African nation and will also relieve the $649 million debt that Zimbabwe owes.
Success in Harare cannot be foreseen due to vast amounts of economic problems because of many Pres. Mugabe’s policies, including one of transferring white-owned farmland to blacks.
As of December 2008, the annual inflation rate is 516 quintillion per cent. In March, the Zimbabwe Dollar was dumped and the country started to use the South African Rand and the United States Dollar as legal tender to bring back economic sanity to the region.
Before Pres. Mugabe’s rise to power, also the former nation of Rhodesia, Zimbabwe was the leading agricultural country on the African continent with such commodities: corn, cotton, tobacco, coal, gold and platinum.
During Mr. Tsvangirai’s visit to the White House, reporters asked the Prime Minister of Pres. Mugabe should retire and he responded, “At the age of 85, I think one needs to retire.”
Friday, August 7, 2009
Are the indigenous exempt from hard work?
Are the indigenous exempt from hard work?
http://www.thezimbabwetimes.com/?p=20682
John Robertson
THE argument I was trying to offer in my blog last week didn't quite make it as the final paragraphs were lost somewhere in cyberspace. Allow me, please, to make the points that went missing.
I was describing the publication that was presented to the Zimbabwe International Investment Conference, an event that was claimed to have been "designed to showcase Zimbabwe's potential" and that was said to have adequately presented investors the opportunity to assess areas of possible investment "through interacting with Zimbabweans themselves".
The "co-operation with indigenous investors" theme was indeed frequently emphasized at the conference and the organisers produced the said glossy colour publication that listed all the things that need to be built, rebuilt or re-equipped.
That too referred to requirements for local participation.
As this fancy document was described on the front cover as a Prospectus, potential investors might have been forgiven for believing that it would invite them to subscribe to loan stock and shares issues and would reveal to them the full extent of financial requirements, the returns they might expect and the extent of local support. But not a sum was suggested, not a project was described in financial terms and not a single domestic contribution was identified. In no way did the document describe even the smallest contribution that would come from indigenous people.
In short, in no way did the document amount to a Prospectus.
Ignoring these points completely, Golden Guvamatanga, the journalist from The Herald who was so pleased with it, said, "We welcome with open arms investment that not only have locals as partners but one that benefits them so that the unprecedented levels of poverty caused by the Western-imposed economic sanctions can be reduced."
Forgive the grammar, please. That is a direct quote.
His main thesis is that indigenisation, by which he means being allowed to claim the right to acquire a large part of the assets built by others, is a wholly honourable quest. But he offers not one line to say why.
Instead, we are invited to accept without question that efforts to "rubbish" all its laudable merits are totally unacceptable.
But what does it mean? He expressed the thought that economic sanctions caused "unprecedented poverty", but this is absurd, not just because economic sanctions were non-existent, but also because it fell outside his theme, which tries to persuade everyone, to accept that indigenous people have an unquestionable right to become partners in ventures started by investors from abroad.
We have to ask how people can demand the rights to become partners without contributing anything. How can they demand the right to extract benefits from activities that depend one hundred percent on the commitments of other people?
To get down to basics, indigenisation is a political ploy that invites voters to loyally support the party that promises to get them things for nothing. And the political objective of "empowerment" is to bring about the disempowerment of any who are considered a potential threat. That is why the Land Reform Programme also dispossessed many successful black farmers; people who needed no favours from the State and who had empowered themselves.
My claim was that if locals can identify good investment options, they should go ahead and develop them. If they don't have the skills, they should work at acquiring them. If they don't have the money, they should set about making it, or develop the credibility to borrow it, and seek out bankers and partners who will back their good ideas.
In other words, do what all other investors do.
Genuine investors do not wait for others to hand them lists of opportunities or identify good ideas for them. They do that for themselves. That is what they do well and that, plus lots of hard work, is what makes them investors.
Why should Zimbabweans feel they have rights to exemptions from the hard work and risks involved just because they are indigenous? They have no such rights and they should be deeply suspicious of politicians who tell them they have. What they do have is the absolute right to work for what they want. Just like everybody else.
http://www.thezimbabwetimes.com/?p=20682
John Robertson
THE argument I was trying to offer in my blog last week didn't quite make it as the final paragraphs were lost somewhere in cyberspace. Allow me, please, to make the points that went missing.
I was describing the publication that was presented to the Zimbabwe International Investment Conference, an event that was claimed to have been "designed to showcase Zimbabwe's potential" and that was said to have adequately presented investors the opportunity to assess areas of possible investment "through interacting with Zimbabweans themselves".
The "co-operation with indigenous investors" theme was indeed frequently emphasized at the conference and the organisers produced the said glossy colour publication that listed all the things that need to be built, rebuilt or re-equipped.
That too referred to requirements for local participation.
As this fancy document was described on the front cover as a Prospectus, potential investors might have been forgiven for believing that it would invite them to subscribe to loan stock and shares issues and would reveal to them the full extent of financial requirements, the returns they might expect and the extent of local support. But not a sum was suggested, not a project was described in financial terms and not a single domestic contribution was identified. In no way did the document describe even the smallest contribution that would come from indigenous people.
In short, in no way did the document amount to a Prospectus.
Ignoring these points completely, Golden Guvamatanga, the journalist from The Herald who was so pleased with it, said, "We welcome with open arms investment that not only have locals as partners but one that benefits them so that the unprecedented levels of poverty caused by the Western-imposed economic sanctions can be reduced."
Forgive the grammar, please. That is a direct quote.
His main thesis is that indigenisation, by which he means being allowed to claim the right to acquire a large part of the assets built by others, is a wholly honourable quest. But he offers not one line to say why.
Instead, we are invited to accept without question that efforts to "rubbish" all its laudable merits are totally unacceptable.
But what does it mean? He expressed the thought that economic sanctions caused "unprecedented poverty", but this is absurd, not just because economic sanctions were non-existent, but also because it fell outside his theme, which tries to persuade everyone, to accept that indigenous people have an unquestionable right to become partners in ventures started by investors from abroad.
We have to ask how people can demand the rights to become partners without contributing anything. How can they demand the right to extract benefits from activities that depend one hundred percent on the commitments of other people?
To get down to basics, indigenisation is a political ploy that invites voters to loyally support the party that promises to get them things for nothing. And the political objective of "empowerment" is to bring about the disempowerment of any who are considered a potential threat. That is why the Land Reform Programme also dispossessed many successful black farmers; people who needed no favours from the State and who had empowered themselves.
My claim was that if locals can identify good investment options, they should go ahead and develop them. If they don't have the skills, they should work at acquiring them. If they don't have the money, they should set about making it, or develop the credibility to borrow it, and seek out bankers and partners who will back their good ideas.
In other words, do what all other investors do.
Genuine investors do not wait for others to hand them lists of opportunities or identify good ideas for them. They do that for themselves. That is what they do well and that, plus lots of hard work, is what makes them investors.
Why should Zimbabweans feel they have rights to exemptions from the hard work and risks involved just because they are indigenous? They have no such rights and they should be deeply suspicious of politicians who tell them they have. What they do have is the absolute right to work for what they want. Just like everybody else.
Thursday, August 6, 2009
Zimbabwe farm chaos persists, hits coffee industry
Wed Aug 5, 2009 12:28pm EDT
By Nelson Banya
HARARE (Reuters) - Zimbabwe's once promising coffee industry faces total collapse due to upheavals linked to President Robert Mugabe's controversial land redistribution policy, a farmers union said on Wednesday.
The coffee industry was growing steadily until 2000, when Mugabe embarked on a drive to resettle landless but inexperienced black farmers on white-owned commercial farms.
A report presented by the Coffee Growers' Association (CGA) at an annual congress of the Commercial Farmers' Union (CFU)
representing Zimbabwe's 500-odd remaining white farmers, said the industry had virtually collapsed due to farm invasions.
Coffee output would be around 500 tons this year, down 93 percent on the 2001 figure of 7,260 tons, and 300 tons is forecast for 2010, the report said.
"This national crop is what one large scale producer was able to produce in the nineties, which is an indication of just how far we have fallen," the CGA said.
"It is astounding to note that no meaningful coffee has ever been produced on a coffee farm taken, beyond the year of the takeover."
Before the farm disturbances, the industry had projected expanding production to 20,000 tons by 2004, which would have put the country within sight of east African producers Kenya, Tanzania, Burundi and Rwanda by the end of the decade.
Zimbabwe used to export its arabica brand of coffee to the European market.
"The future of this sector is very bleak. In order for the coffee industry to restart, the return of tradable title deeds needs to happen to allow for both the farmer and the banker to be secure with their respective investments," the CGA said.
CFU president Trevor Gifford said commercial farmers were frustrated that the new unity government formed by Mugabe and former rival, Prime Minister Morgan Tsvangirai, had not moved to stop farm invasions.
"Farmers were hopeful of a moratorium on all prosecutions and evictions and that dispossessed farmers would be engaged to resolve their needs. Regrettably, nothing has changed," Gifford told the congress.
"Government continues to acquire more land and prosecute more farmers. Farm disruptions and evictions continue."
Once a regional supplier of grain, Zimbabwe has failed to feed itself since 2001, relying on imports and donor handouts.
Industry experts say production of all major crops -- including maize, wheat and tobacco -- has declined by more than 50 percent since then.
Mugabe, who denies accusations that his land seizures helped decimate Zimbabwe's economy, says the policy was meant to address historical land ownership imbalances.
(Editing by Sue Thomas)
By Nelson Banya
HARARE (Reuters) - Zimbabwe's once promising coffee industry faces total collapse due to upheavals linked to President Robert Mugabe's controversial land redistribution policy, a farmers union said on Wednesday.
The coffee industry was growing steadily until 2000, when Mugabe embarked on a drive to resettle landless but inexperienced black farmers on white-owned commercial farms.
A report presented by the Coffee Growers' Association (CGA) at an annual congress of the Commercial Farmers' Union (CFU)
representing Zimbabwe's 500-odd remaining white farmers, said the industry had virtually collapsed due to farm invasions.
Coffee output would be around 500 tons this year, down 93 percent on the 2001 figure of 7,260 tons, and 300 tons is forecast for 2010, the report said.
"This national crop is what one large scale producer was able to produce in the nineties, which is an indication of just how far we have fallen," the CGA said.
"It is astounding to note that no meaningful coffee has ever been produced on a coffee farm taken, beyond the year of the takeover."
Before the farm disturbances, the industry had projected expanding production to 20,000 tons by 2004, which would have put the country within sight of east African producers Kenya, Tanzania, Burundi and Rwanda by the end of the decade.
Zimbabwe used to export its arabica brand of coffee to the European market.
"The future of this sector is very bleak. In order for the coffee industry to restart, the return of tradable title deeds needs to happen to allow for both the farmer and the banker to be secure with their respective investments," the CGA said.
CFU president Trevor Gifford said commercial farmers were frustrated that the new unity government formed by Mugabe and former rival, Prime Minister Morgan Tsvangirai, had not moved to stop farm invasions.
"Farmers were hopeful of a moratorium on all prosecutions and evictions and that dispossessed farmers would be engaged to resolve their needs. Regrettably, nothing has changed," Gifford told the congress.
"Government continues to acquire more land and prosecute more farmers. Farm disruptions and evictions continue."
Once a regional supplier of grain, Zimbabwe has failed to feed itself since 2001, relying on imports and donor handouts.
Industry experts say production of all major crops -- including maize, wheat and tobacco -- has declined by more than 50 percent since then.
Mugabe, who denies accusations that his land seizures helped decimate Zimbabwe's economy, says the policy was meant to address historical land ownership imbalances.
(Editing by Sue Thomas)
Tuesday, August 4, 2009
Tongaat Plans $19 Million Investment in Zimbabwe
By Ron Derby
Aug. 3 (Bloomberg) -- Tongaat Hulett Ltd., the sugar company part-owned by Anglo American Plc, plans to invest 150 million rand ($19 million) in Zimbabwe after the formation of a coalition government resolved a political standoff.
It’s “night to day when we compare what has been happening this year in Zimbabwe to the last 10 years,” Peter Staude, chief executive officer of the Tongaat, South Africa-based company, said today in a phone interview. The sugar producer will make the investment over three years to help meet a goal of doubling its output of the sweetener in Zimbabwe, he said.
Spending by the sugar company would help to reverse an outflow of foreign investment from Zimbabwe over the last decade. The country formed a coalition government in February, ending a 10-year political impasse. Steel industry leader ArcelorMittal’s South African unit reportedly is interested in taking over state-owned Zimbabwe Iron & Steel Co.
Tongaat, South Africa’s second-biggest sugar company, will produce about 298,000 metric tons of the sweetener in Zimbabwe this year, Staude said. That equates to about half of installed capacity of 600,000 tons, according to the CEO. Zimbabwe is among African countries that qualify for preferential access to the European Union at premium prices, he said.
Profit Jumps
The sugar company also reported a ninefold surge in first- half profit after including its Zimbabwean activities in results. Net income jumped to 2.42 billion rand from 266 million rand a year earlier, Tongaat said today in a stock-exchange statement. Sales gained 24 percent to 3.85 billion rand.
“Increased emphasis on renewable energy” will buoy international sugar prices, while shortages of land and water will also help support prices, said Staude.
Tongaat was unchanged at 98.50 rand in Johannesburg trading. The stock has jumped 55 percent this year, increasing the company’s market value to 10.2 billion rand. That’s almost equal to Illovo Sugar Ltd., the biggest South African sugar producer.
Zimbabwean President Robert Mugabe’s election victories against the MDC party led by Morgan Tsvangirai in 2000, 2002, 2005 and last year were described as marred by violence and irregularities by the U.S. and European Union. Anglo is among companies that have sold Zimbabwean assets, as are U.S. ketchup maker HJ Heinz Co. and U.K. platinum producer Lonmin Plc.
To contact the reporter on this story: Ron Derby in Johannesburg at rderby1@bloomberg.net
Aug. 3 (Bloomberg) -- Tongaat Hulett Ltd., the sugar company part-owned by Anglo American Plc, plans to invest 150 million rand ($19 million) in Zimbabwe after the formation of a coalition government resolved a political standoff.
It’s “night to day when we compare what has been happening this year in Zimbabwe to the last 10 years,” Peter Staude, chief executive officer of the Tongaat, South Africa-based company, said today in a phone interview. The sugar producer will make the investment over three years to help meet a goal of doubling its output of the sweetener in Zimbabwe, he said.
Spending by the sugar company would help to reverse an outflow of foreign investment from Zimbabwe over the last decade. The country formed a coalition government in February, ending a 10-year political impasse. Steel industry leader ArcelorMittal’s South African unit reportedly is interested in taking over state-owned Zimbabwe Iron & Steel Co.
Tongaat, South Africa’s second-biggest sugar company, will produce about 298,000 metric tons of the sweetener in Zimbabwe this year, Staude said. That equates to about half of installed capacity of 600,000 tons, according to the CEO. Zimbabwe is among African countries that qualify for preferential access to the European Union at premium prices, he said.
Profit Jumps
The sugar company also reported a ninefold surge in first- half profit after including its Zimbabwean activities in results. Net income jumped to 2.42 billion rand from 266 million rand a year earlier, Tongaat said today in a stock-exchange statement. Sales gained 24 percent to 3.85 billion rand.
“Increased emphasis on renewable energy” will buoy international sugar prices, while shortages of land and water will also help support prices, said Staude.
Tongaat was unchanged at 98.50 rand in Johannesburg trading. The stock has jumped 55 percent this year, increasing the company’s market value to 10.2 billion rand. That’s almost equal to Illovo Sugar Ltd., the biggest South African sugar producer.
Zimbabwean President Robert Mugabe’s election victories against the MDC party led by Morgan Tsvangirai in 2000, 2002, 2005 and last year were described as marred by violence and irregularities by the U.S. and European Union. Anglo is among companies that have sold Zimbabwean assets, as are U.S. ketchup maker HJ Heinz Co. and U.K. platinum producer Lonmin Plc.
To contact the reporter on this story: Ron Derby in Johannesburg at rderby1@bloomberg.net
Aide to Zimbabwe Finance Minister Biti Allegedly Beaten by Army Soldiers
By Sandra Nyaira Washington
03 August 2009
The formation of Zimbabwe's Movement for Democratic Change led by Prime Minister Morgan Tsvangirai said Monday that an aide to Finance Minister Tendai Biti, secretary general of the dominant MDC grouping, was attacked and seriously injured Saturday at the minister’s residence, leaving him hospitalized.
MDC sources said Howard Makonza was attacked by soldiers guarding the nearby residence of Lt. Gen. Philip Sibanda, commander of the army. The MDC said it was concerned by the assault as it closely followed Biti’s receipt recently of a bullet in the mail.
The MDC said it reported the attack to the Zimbabwe Republic Police, but police spokesman Wayne Bvudzijena said he was not aware of any such complaint.
MDC spokesman Nelson Chamisa told reporter Sandra Nyaira of VOA's Studio 7 for Zimbabwe that a party investigation has been opened to find out what happened.
03 August 2009
The formation of Zimbabwe's Movement for Democratic Change led by Prime Minister Morgan Tsvangirai said Monday that an aide to Finance Minister Tendai Biti, secretary general of the dominant MDC grouping, was attacked and seriously injured Saturday at the minister’s residence, leaving him hospitalized.
MDC sources said Howard Makonza was attacked by soldiers guarding the nearby residence of Lt. Gen. Philip Sibanda, commander of the army. The MDC said it was concerned by the assault as it closely followed Biti’s receipt recently of a bullet in the mail.
The MDC said it reported the attack to the Zimbabwe Republic Police, but police spokesman Wayne Bvudzijena said he was not aware of any such complaint.
MDC spokesman Nelson Chamisa told reporter Sandra Nyaira of VOA's Studio 7 for Zimbabwe that a party investigation has been opened to find out what happened.
The cost of dying in Zimbabwe
Are things improving in Zimbabwe? Next month is the expiry of the GPA and it is going to be interesting to see what unfolds in the political landscape.
I am sure Zimbabwe remains a confused issue for many living outside Zimbabwe, with the President and Prime Minister constantly contradicting themselves. As someone who scans headlines daily and lives in the thick of the maelstrom, I too am confused!
But the same conversation is on everyone’s minds here: how long will it be until we see real change? Right now things are marginally better, but all in this country is relative to how it was just a short while ago.
Up until February a visit to the local hospital was a waste of time, because there were few doctors, a scattering of nurses, almost no drugs, a limited supply of cleaning materials, and patients had to bring their own food. Medicins Sans Frontier and other humanitarian organisations are doing an amazing job trying to patch up our medical services, but we still have a long, long way to go.
The pothole fixers are a new breed of work force in Zimbabwe. These unofficial gangs bring in barrowloads of sand to plug the potholes pockmarking our roads, and rely on donations from the public for their livelihoods. On the one hand they are providing an essential service and people appreciate their efforts, but they can also be a menace on the road.
Last week there was a tragedy on one of the very same bumpy main roads in the city. One pothole fixer was knocked down by a motorist when he jumped out from the verge to put out his hand for a donation. The motorist just did not see him on time as he had leapt out from the passenger side of the vehicle.
The ‘potholer’ was obviously badly injured and the motorist immediately phoned the hospital for an ambulance. An hour later neither the police nor the ambulance had arrived so, throwing conventional caution that dictates one does not move an accident victim, they loaded the injured man into the back of the car and sped off to the nearest government hospital. It took another hour for a doctor to arrive to attend to them, and at that time the victim was still conscious.
Half an hour later the doctor and nurse on duty walked out from behind the curtain - the young man was dead. Could he have been saved with a more efficient emergency service?
We will never know the answer to that.
Now the motorist, who is not terribly affluent (he is a civil servant) is facing a horrible dilemma: he has been told if he takes responsibility for the funeral charges for the deceased, it will be seen as an admission of guilt by the police. But his human conscience dictates he has to help as up until now the family of the deceased has not been found. The poor man was obviously another victim of the regime, destined to leave his rural home in a desperate attempt to eke out a living in a country with 94% unemployment.
The motorist went to investigate funeral charges and was aghast at the costs. The cheapest coffin costs R1,850. The mortuary, dressing of the deceased, and burial fees amount to a further R5,000. This equates to no less than five months of an average civil servant’s salary.
In the low density areas it has become commonplace to see scotch-carts carrying the dead to their burials. I was at a funeral not long ago and saw three elderly women digging a grave themselves as they could not afford the cost of a gravedigger. People are making coffins themselves, in their backyards, breaking up any furniture they can to put their loved ones to rest.
Another bizarre image is for those who can afford fancy coffins. At the same funeral I describe above, I witnessed the mourners mixing cement which they poured into the grave. They did this to prevent grave robbers from digging up the dead, tossing the body, and re-selling the coffin!
Food prices have dropped dramatically in Zimbabwe, but the cost of dying remains sky high!
I am sure Zimbabwe remains a confused issue for many living outside Zimbabwe, with the President and Prime Minister constantly contradicting themselves. As someone who scans headlines daily and lives in the thick of the maelstrom, I too am confused!
But the same conversation is on everyone’s minds here: how long will it be until we see real change? Right now things are marginally better, but all in this country is relative to how it was just a short while ago.
Up until February a visit to the local hospital was a waste of time, because there were few doctors, a scattering of nurses, almost no drugs, a limited supply of cleaning materials, and patients had to bring their own food. Medicins Sans Frontier and other humanitarian organisations are doing an amazing job trying to patch up our medical services, but we still have a long, long way to go.
The pothole fixers are a new breed of work force in Zimbabwe. These unofficial gangs bring in barrowloads of sand to plug the potholes pockmarking our roads, and rely on donations from the public for their livelihoods. On the one hand they are providing an essential service and people appreciate their efforts, but they can also be a menace on the road.
Last week there was a tragedy on one of the very same bumpy main roads in the city. One pothole fixer was knocked down by a motorist when he jumped out from the verge to put out his hand for a donation. The motorist just did not see him on time as he had leapt out from the passenger side of the vehicle.
The ‘potholer’ was obviously badly injured and the motorist immediately phoned the hospital for an ambulance. An hour later neither the police nor the ambulance had arrived so, throwing conventional caution that dictates one does not move an accident victim, they loaded the injured man into the back of the car and sped off to the nearest government hospital. It took another hour for a doctor to arrive to attend to them, and at that time the victim was still conscious.
Half an hour later the doctor and nurse on duty walked out from behind the curtain - the young man was dead. Could he have been saved with a more efficient emergency service?
We will never know the answer to that.
Now the motorist, who is not terribly affluent (he is a civil servant) is facing a horrible dilemma: he has been told if he takes responsibility for the funeral charges for the deceased, it will be seen as an admission of guilt by the police. But his human conscience dictates he has to help as up until now the family of the deceased has not been found. The poor man was obviously another victim of the regime, destined to leave his rural home in a desperate attempt to eke out a living in a country with 94% unemployment.
The motorist went to investigate funeral charges and was aghast at the costs. The cheapest coffin costs R1,850. The mortuary, dressing of the deceased, and burial fees amount to a further R5,000. This equates to no less than five months of an average civil servant’s salary.
In the low density areas it has become commonplace to see scotch-carts carrying the dead to their burials. I was at a funeral not long ago and saw three elderly women digging a grave themselves as they could not afford the cost of a gravedigger. People are making coffins themselves, in their backyards, breaking up any furniture they can to put their loved ones to rest.
Another bizarre image is for those who can afford fancy coffins. At the same funeral I describe above, I witnessed the mourners mixing cement which they poured into the grave. They did this to prevent grave robbers from digging up the dead, tossing the body, and re-selling the coffin!
Food prices have dropped dramatically in Zimbabwe, but the cost of dying remains sky high!
Suspension of Diamond Exports Wouldn't Impact Zim's Recovery Says NGO
By Jeff Miller
Posted: 08/03/09 14:36
RAPAPORT... Partnership Africa Canada (PAC) was the first nongovernmental organization (NGO) to call for the ban on rough diamonds from Zimbabwe, back in December 2008. Now the Kimberley Process Certification Scheme seems set on a six-month suspension of the member country following its investigation into alleged abuses and murder at Zimbabwe's diamond fields. But Zimbabwe claims a rough ban would hurt the nation's economic recovery — a claim that PAC concluded is hogwash. "Arguments to the contrary by Zimbabwe's political leaders, that diamonds are key to Zimbabwe's economic revival, are based on deliberately inflated diamond production levels and are simply smoke and mirrors," said Bernard Taylor, executive director of PAC.
Kimberley Process figures for Zimbabwe in 2008 place the value of its total diamond production at $44 million, an increase of 40 percent from 2007. In March, PAC released its own report on the horrors behind Zimbabwe's diamond trade, "Zimbabwe, Diamonds and the Wrong Side of History." PAC thus welcomed the Kimberley Process review mission and its decision to suspend Zimbabwe from the process. The report found "massive diamond smuggling and the murder of scores of artisanal diamond miners by the Zimbabwe military in October 2008 to gain control of the Marange diamond fields in eastern Zimbabwe," according to PAC.
"Without aiming to harm the country, suspension is one of the only tools the Kimberley Process has to encourage member countries to undertake the necessary reforms to meet the Kimberley Process Certification Scheme minimum requirements and thereby rejoin the world diamond regulatory body," said Susanne Emond of PAC. PAC also repeated its call for the Kimberley Process to develop a clear and actionable protocol on gross human rights abuse in the management of a member's diamond industry. "The onus is on the members of the Kimberley Process to take vigorous action to prevent tainted diamonds from entering the world's clean diamond stream," said Taylor. "Zimbabwe is the test for the Kimberley Process to show the world it cares about human rights and is working to keep consumer confidence in the purity of diamonds."
Posted: 08/03/09 14:36
RAPAPORT... Partnership Africa Canada (PAC) was the first nongovernmental organization (NGO) to call for the ban on rough diamonds from Zimbabwe, back in December 2008. Now the Kimberley Process Certification Scheme seems set on a six-month suspension of the member country following its investigation into alleged abuses and murder at Zimbabwe's diamond fields. But Zimbabwe claims a rough ban would hurt the nation's economic recovery — a claim that PAC concluded is hogwash. "Arguments to the contrary by Zimbabwe's political leaders, that diamonds are key to Zimbabwe's economic revival, are based on deliberately inflated diamond production levels and are simply smoke and mirrors," said Bernard Taylor, executive director of PAC.
Kimberley Process figures for Zimbabwe in 2008 place the value of its total diamond production at $44 million, an increase of 40 percent from 2007. In March, PAC released its own report on the horrors behind Zimbabwe's diamond trade, "Zimbabwe, Diamonds and the Wrong Side of History." PAC thus welcomed the Kimberley Process review mission and its decision to suspend Zimbabwe from the process. The report found "massive diamond smuggling and the murder of scores of artisanal diamond miners by the Zimbabwe military in October 2008 to gain control of the Marange diamond fields in eastern Zimbabwe," according to PAC.
"Without aiming to harm the country, suspension is one of the only tools the Kimberley Process has to encourage member countries to undertake the necessary reforms to meet the Kimberley Process Certification Scheme minimum requirements and thereby rejoin the world diamond regulatory body," said Susanne Emond of PAC. PAC also repeated its call for the Kimberley Process to develop a clear and actionable protocol on gross human rights abuse in the management of a member's diamond industry. "The onus is on the members of the Kimberley Process to take vigorous action to prevent tainted diamonds from entering the world's clean diamond stream," said Taylor. "Zimbabwe is the test for the Kimberley Process to show the world it cares about human rights and is working to keep consumer confidence in the purity of diamonds."
Zimbabwe `needs SA investment`
source: SouthAfrica.info
3 August 2009
Zimbabwean Prime Minister Morgan Tsvangirai called for South African investment in his country.
“We believe South African companies are better placed to understand the environment in Zimbabwe,” Tsvangirai said at a dinner with South African business and government officials in Sandton on Friday night.
“Instead of attracting foreign investment from Europe and other places, we believe that South African companies can operate in an environment that is almost similar (to their own).”
South Africans are in a position to understand the “politics, economics and potential of the country,” said Tsvangirai.
At the moment, the Zimbabwean government did not have the resources to make major infrastructure investments, “but if there are private companies who would like to go into
3 August 2009
Zimbabwean Prime Minister Morgan Tsvangirai called for South African investment in his country.
“We believe South African companies are better placed to understand the environment in Zimbabwe,” Tsvangirai said at a dinner with South African business and government officials in Sandton on Friday night.
“Instead of attracting foreign investment from Europe and other places, we believe that South African companies can operate in an environment that is almost similar (to their own).”
South Africans are in a position to understand the “politics, economics and potential of the country,” said Tsvangirai.
At the moment, the Zimbabwean government did not have the resources to make major infrastructure investments, “but if there are private companies who would like to go into
Monday, August 3, 2009
Econet pumps $94m into Zimbabwe
August 2, 2009
By Our Correspondent
HARARE – Econet Wireless International (EWI), a major international cell-phone operator owned by self-exiled Zimbabwean entrepreneur Strive Masiyiwa, has pumped US$94 million into Zimbabwe to expand its network.Buoyed by the relative economic stability ushered in by the government of national unity between President Mugabe, Prime Minister Morgan Tsvangirai and Deputy Prime Minister Arthur Mutambara, EWI shareholders are promising more funding to bankroll the next phase of a development programme – the provision of cell phone accessories such as wireless Internet, data services for specialist applications, 3G and broadband.
Econet, Zimbabwe’s leading cell-phone operator has proudly flaunted its 1 million subscriber base on billboards and TV adverts. The company announced last month that it now serves more than 1 million customers in Zimbabwe after the recent expansion of the network. Econet now controls 52 percent of the Zimbabwe market share.
Douglas Mboweni
Econet Zimbabwe chief executive, Douglas Mboweni said there was a sharp rise in airtime usage since February, when the inclusive government was established.
This means more money for the company, he said, adding that with accelerated growth in subscriber numbers, profit was expected to continue to grow.
The new government allowed the use of multiple foreign currencies in February, taking out of circulation the worthless Zimbabwe dollar that fuelled market uncertainty by fluctuating erratically due to hyperinflation, thus adversely slashing airtime usage.
Mboweni said the sharp rise in airtime usage was sweet news to the company.
“Detailed information will be supplied to the market when we release our half year results, but there is a very clear trend that shows that performance has vastly improved since January-February 2009,” Mboweni said in an update on Econet Zimbabwe’s operations.
“Econet Wireless now has the capacity to meet demand for new lines.”
Mboweni said that contract lines were now available on demand, whilst queues for prepaid lines were getting shorter with some Econet shops no longer having queues at all.
“Financing is available to the company to meet any requirement for the foreseeable future,” he said.
Econet Zimbabwe was able to rely on the parent company, EWI, he added.
Econet Wireless International was founded in 1993 by the exiled Zimbabwean entrepreneur, Masiyiwa, and has, in a decade, grown to be one of the top telecommunications operators in Africa, and one of the few African businesses with a global reach. It is one of Zimbabwe’s rare success stories.
Deputy Prime Minister Mutambara has called for the return of all exiled businessman such as Masiyiwa, many of them hounded out of the country by Reserve Bank of Zimbabwe governor Gideon Gono on trumped-up charges of externalising foreign currency.
While in exile Masiyiwa came to the rescue of a troubled newspaper and became the largest shareholder in Associated Newspapers of Zimbabwe (ANZ), publishers of the fiercely independent Daily News, the country’s largest-selling newspaper. Government banned the publication in 2003.
Masiyiwa has had a strained relationship with government, which accused him of bankrolling the then opposition MDC and linked the party to the newspaper. He has staunchly denied the charges.
Though founded in 1993, Econet only started to operate as a cell phone operator in 1998 because the Zimbabwean government refused to grant the company a licence. Masiyiwa took the government to court, and after a legal wrangle that lasted nearly five years, the company was eventually awarded a licence by the country’s highest court.
Since then, the company has rapidly expanded beyond Zimbabwe’s borders.
Econet Wireless International has successfully operated Mascom Wireless in Botswana with more than 410 000 subscribers, and commanding 72 percent market share. In Zimbabwe Econet controls 52 percent of the market share.
A controversial Nigerian operation, where Econet now controls a 5 percent stakehold, boasts of a 2.5 million subscriber base.
In Lesotho, Econet runs fixed and mobile phone networks. In Europe it has a telecommunications licence, together with the first African teleport establishment, Econet Satellite Services (ESS), linking more than 61 African networks to the global telecommunications networks. The company has an annual turnover in excess of US$100 million. ESS also has a subsidiary in Europe dealing in call cards.
EWI is now considering entry into the Kenyan market, The Zimbabwe Times has been told.
Econet’s rapidly expanding network in the Zimbabwe mobile telephony industry has helped lower call charges and enabled more Zimbabweans to own handsets.
Two weeks ago the Finance Minister, Tendai Biti, allowed cell-phones to be imported duty-free into Zimbabwe saying it was high time the country stepped into the global village.
By Our Correspondent
HARARE – Econet Wireless International (EWI), a major international cell-phone operator owned by self-exiled Zimbabwean entrepreneur Strive Masiyiwa, has pumped US$94 million into Zimbabwe to expand its network.Buoyed by the relative economic stability ushered in by the government of national unity between President Mugabe, Prime Minister Morgan Tsvangirai and Deputy Prime Minister Arthur Mutambara, EWI shareholders are promising more funding to bankroll the next phase of a development programme – the provision of cell phone accessories such as wireless Internet, data services for specialist applications, 3G and broadband.
Econet, Zimbabwe’s leading cell-phone operator has proudly flaunted its 1 million subscriber base on billboards and TV adverts. The company announced last month that it now serves more than 1 million customers in Zimbabwe after the recent expansion of the network. Econet now controls 52 percent of the Zimbabwe market share.
Douglas Mboweni
Econet Zimbabwe chief executive, Douglas Mboweni said there was a sharp rise in airtime usage since February, when the inclusive government was established.
This means more money for the company, he said, adding that with accelerated growth in subscriber numbers, profit was expected to continue to grow.
The new government allowed the use of multiple foreign currencies in February, taking out of circulation the worthless Zimbabwe dollar that fuelled market uncertainty by fluctuating erratically due to hyperinflation, thus adversely slashing airtime usage.
Mboweni said the sharp rise in airtime usage was sweet news to the company.
“Detailed information will be supplied to the market when we release our half year results, but there is a very clear trend that shows that performance has vastly improved since January-February 2009,” Mboweni said in an update on Econet Zimbabwe’s operations.
“Econet Wireless now has the capacity to meet demand for new lines.”
Mboweni said that contract lines were now available on demand, whilst queues for prepaid lines were getting shorter with some Econet shops no longer having queues at all.
“Financing is available to the company to meet any requirement for the foreseeable future,” he said.
Econet Zimbabwe was able to rely on the parent company, EWI, he added.
Econet Wireless International was founded in 1993 by the exiled Zimbabwean entrepreneur, Masiyiwa, and has, in a decade, grown to be one of the top telecommunications operators in Africa, and one of the few African businesses with a global reach. It is one of Zimbabwe’s rare success stories.
Deputy Prime Minister Mutambara has called for the return of all exiled businessman such as Masiyiwa, many of them hounded out of the country by Reserve Bank of Zimbabwe governor Gideon Gono on trumped-up charges of externalising foreign currency.
While in exile Masiyiwa came to the rescue of a troubled newspaper and became the largest shareholder in Associated Newspapers of Zimbabwe (ANZ), publishers of the fiercely independent Daily News, the country’s largest-selling newspaper. Government banned the publication in 2003.
Masiyiwa has had a strained relationship with government, which accused him of bankrolling the then opposition MDC and linked the party to the newspaper. He has staunchly denied the charges.
Though founded in 1993, Econet only started to operate as a cell phone operator in 1998 because the Zimbabwean government refused to grant the company a licence. Masiyiwa took the government to court, and after a legal wrangle that lasted nearly five years, the company was eventually awarded a licence by the country’s highest court.
Since then, the company has rapidly expanded beyond Zimbabwe’s borders.
Econet Wireless International has successfully operated Mascom Wireless in Botswana with more than 410 000 subscribers, and commanding 72 percent market share. In Zimbabwe Econet controls 52 percent of the market share.
A controversial Nigerian operation, where Econet now controls a 5 percent stakehold, boasts of a 2.5 million subscriber base.
In Lesotho, Econet runs fixed and mobile phone networks. In Europe it has a telecommunications licence, together with the first African teleport establishment, Econet Satellite Services (ESS), linking more than 61 African networks to the global telecommunications networks. The company has an annual turnover in excess of US$100 million. ESS also has a subsidiary in Europe dealing in call cards.
EWI is now considering entry into the Kenyan market, The Zimbabwe Times has been told.
Econet’s rapidly expanding network in the Zimbabwe mobile telephony industry has helped lower call charges and enabled more Zimbabweans to own handsets.
Two weeks ago the Finance Minister, Tendai Biti, allowed cell-phones to be imported duty-free into Zimbabwe saying it was high time the country stepped into the global village.
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