November 11, 2009
By Takarinda Gomo
President Mugabe makes surprise announcement in Zhombe
Recently, they invited him to their sleepy village in order to donate 65 tones of maize and thank him for his everlasting benevolence.
After showering the villagers with accolades and their enduring patriotism, President Mugabe departed from his prepared speech and made a surprise announcement that the Zimbabwe dollar was coming back before the end of the year. Come hell or high water and damn the consequences!
The stock market panicked and shares nose dived by more than 12% compared to the previous week. Not only did investors flee, but corporates and individuals started withdrawing all their money from financial institutions. Business confidence had been eroded. Such, is the price Zimbabwe has to pay for impromptu policy announcements.
Economist Dr Eric Bloch, in his weekly column published in the Zimbabwe Independent, said President Mugabe and Zanu-PF demanded the reinstatement of the Zimbabwe dollar because usage of any other currency constituted surrender of national sovereignty.
“But the Zimbabwe dollar is so appallingly worthless that its usage at the present time represents naught, but sovereignty over nothing,” wrote Dr Bloch.
The Harare rumour mill is awash with juicy street talk that the Governor of the Reserve Bank of Zimbabwe (RBZ), Dr Gideon Gono, a taking cue from the President’s off guard remarks in Zhombe, ordered Fidelity Printers, a subsidiary of RBZ to go overdrive in printing useless Zimbabwe dollars.
Dr Gono still treasures fond memories of 2008 when he just printed worthless “bearer cheques” that he used to mop up US dollars on the parallel market. His ego was massaged as everybody depended on him because he dispensed largesse to government ministries, banks, state enterprises and even private companies. Gono became a household name and his delusion made him to actually believe he was on top of the situation, despite the pain and suffering among innocent people who slept in the queue to withdraw very little cash that was not even enough for bus fare.
Salvation came with the advent of the inclusive Government, which brought in a no-nonsense Finance Minister, Tendai Biti. He quickly dumped the Zimbabwe dollar and introduced a basket of currencies as legal tender. Hyperinflation which had exceeded 200 percent was wiped out overnight and stability in the market slowly picking up.
The bone of contention is for how long Zimbabwe will continue using a multi-currency regime? There are serious problems with either adopting a single currency, either the US dollar or the South African Rand, as the currency of preference. The other option is the rank madness of re-introducing the Zimbabwe dollar. Let us examine the arguments of adopting either the US dollar or the South African Rand as single currencies for Zimbabwe.
The US dollar dilemma
The status of the US dollar as an international currency has been damaged by the global credit crunch of 2007- 2009. However, this has not stopped the appetite for US dollars. It can be argued that countries need foreign reserves in order to intervene in the foreign exchange market, to prevent shocks on trade and financial flows that cause uncontrollable currency fluctuations.
Any system that uses the US dollar as its national currency is seriously flawed. In order to acquire large reserves of the US dollars, a country needs to run current account surpluses with the USA. But, global imbalances have created a crisis for US dollar, to such an extent, that the political logic for a US dollar based monetary and financial system is now less compelling.
Behind all the problems for the US dollar, an inconvenient truth is that the importance of the US dollar to many countries has not diminished. In foreign exchange markets, the dollar actually strengthened after the financial crisis. As the US dollar exchange fluctuated, the anticipated crash did not happen.
It follows that, the US dollar as a currency, is usable because it dominates foreign debt and trade, whilst governments use the US dollar to smoothen debt flows, and at the same time intervening on the exchange market. Despite the rise of the more appealing Euro, most countries still prefer to use the US dollar, which remains the exchange rate anchor. The problem is when the domestic inflation begins to track the US dollar inflation.
The choice of what mix of currencies, maximizes a particular combination of risks and always assume that all currencies are equally easy to use. Foreign investors conduct transactions and concentrate their holdings in US dollars because they are easy to buy and sell, whilst other currencies have to struggle to compete against the US dollar.
For all practical purposes, the US dollar is the first among equals.
Since the First World War (1914-18), use of multiple currencies has been functional. Currency units co-existed peacefully, each with its own constituency. For Zimbabwe, since the advent of the inclusive government, multiple currencies led to the avoidance of instability within markets and retching up of market discipline. The choice of full dollarised currency is no longer in Government control as money is out of government hands. Zimbabwe is effectively on a currency board footing, because the money is determined by foreign reserves.
The only money that can circulate is export earnings, capital inflows, foreign remittances and offshore lines of credit. This situation can only change when local financial institutions can accumulate foreign currency from exports and be able to dispense loans in foreign exchange at a lending rate that depends on statutory reserve ratio set by the central bank. This creates credit and expands money supply.
The monetary dilemma that bedevils Zimbabwe is that, at present, there is no lender of last resort to act as a buffer or safety net. RBZ has mortgaged its control over monetary policy. Nothing will really change in Zimbabwe if the central bank is closed today!
Banks are approaching this policy flaw with extreme caution because of low loan-to-deposit ratios. Loans are attracting at least 7 percent interest per annum against the background of liquidity problems affecting the country.
So what are the problems of using only the US dollar? At a glance these include:
Elevated price levels leading to, or caused by profiteering and unrealistic age demands by labour;
Inefficient transaction mechanisms (the no-change scenarios);
Limited dollarised plastic money;
Limited use of automated teller machines (ATMs);
Critical shortage of dollar liquidity;
Low volumes of exports as a result of uncompetitive pricing;
Low volume and high mark-up business models;
Overvalued US dollar prices; and
Exceedingly high cost of doing business.
The Rand Dilemma
According to Erick Bloch, many people living in Zimbabwe’s second city Bulawayo, and the surrounding southern areas, where the South African Rand (ZAR) is widely used, suffer a major reduction in spending power. This is a result of the strengthening of the Rand against the US Dollar during the last six months, which moved from ZAR 10: US$1 to ZAR 7.2: US$1 representing 28 percent in Rand terms.
People who live in the Southern and Western districts of Zimbabwe and earn US dollars, are very bitter because of the movement of currency cross-rates and they are demanding that the government abandons use of the multi-currency basket and use only the Rand.
For all practical purposes, the strengthening of the Rand against the US dollar should not be viewed as permanent. It emanated from the current rise in the price of gold on the world market. Demand for gold has driven the price of gold from US$900 to over US$1040 hence the windfall for South Africa, a major gold producer.
Bloch argues that should the price of gold fall, it would mean weakening of the Rand against the US dollar. If Zimbabwe had adopted the Rand as its only currency, it will be adversely affected. This is happening in the South African diamond sector, where the prices are falling.
The Rand is a volatile currency, which already complicates cross-border trading and investment decisions. Besides, there are serious perceptions about where South Africa is heading politically and economically. Bloch assets that 70 percent of South African textile industry has collapsed due to cheap imports from the East, especially China. Also, the boon enjoyed in the construction sector that came as a result of the 2010 World Cup, will soon be over as projects are completed. Future demand in that sector is highly improbable.
Sadc Regional Currency
The third option for Zimbabwe currency reform is to wait until Sadc has introduced a regional currency along the same lines as the Euro is the currency of most European countries. The down side is that the Zimbabwean economy is so volatile and, if it takes five years before the Sadc regional currency to be introduced, a lot of harm will have happened to the country.
From this analysis, it would be sheer recklessness and typical lunacy to re-introduce the Zimbabwe dollar just to boost some people’s bruised egos. It follows that adoption of any single currency now, has very negative impacts on the economy. Zimbabwe should continue using multiple currencies until it meets certain benchmarks, which include:
Attaining a GDP rate of 6 percent per annum;
Reducing the budget deficit to less than 5 percent of GDP;
Enjoying both low inflation and interest rates;An average level of domestic savings and investment levels above 23 percent of GDP;
Lured back skilled people in the Diaspora and continue training more; and
Has a well-defined business value chain.
The hapless villagers at Zhombe, who cheered President Mugabe when he punched the air declaring the return of the ghost of the Zimbabwe dollar, should be forgiven, for, as the Bible says, they do not know what they are doing!
The Zimbabwe dollar is as dead as a dodo.
Thursday, November 12, 2009
Friday, November 6, 2009
Kimberly Process: Zimbabwe Escapes but must be Independently verified
Zimbabwe has escaped suspension from the Kimberly process – the certification scheme which regulates the sale of so-called blood diamonds.
Instead, the 70-member international diamond trade body has agreed to give Zimbabwe more time to reform its mining practices.
Rights groups alleged soldiers killed about 200 people at a diamond field last year, which the government denies.
The decision came as talks to save the unity government started in Mozambique.
The coalition administration – formed in February – has been in crisis since Prime Minister Morgan Tsvangirai began boycotting cabinet meetings last month.
Mr Tsvangirai is protesting at the way President Robert Mugabe is implementing the power-sharing deal.
Revenue
The BBC’s southern Africa correspondent Karen Allen says the compromise diamond deal agreed in Namibia is likely to anger human rights groups.
President Mugabe says he has met his side of the unity deal
Although its own investigators found killings and forced evictions from the Marange diamond fields in the east of the country close to the border with Mozambique, the Kimberley Process panel stopped short of kicking Zimbabwe out, she says.
Instead it has adopted a plan – proposed by Zimbabwe itself – which includes calls for an independent inspector to monitor diamonds leaving the controversial fields.
Human rights groups claim the diamonds have been an important source of revenue for the military and for President Mugabe’s Zanu-PF party.
Meanwhile, Mr Mugabe and Mr Tsvangirai are both attending the talks in Mozambique organised by leaders of the Southern African Development Community (Sadc).
Former opposition leader Mr Tsvangirai has accused his long-time rival of being a “dishonest and unreliable partner” in the power-sharing deal, which was struck last year.
The opposition MDC party also accuses Mr Mugabe’s Zanu-PF party of persecuting its officials.
Zanu-PF has described the accusations as “propaganda”.
Human Rights Watch recently urged Sadc leaders to press Zanu-PF to end what it called “ongoing human rights abuses”
BBC
Instead, the 70-member international diamond trade body has agreed to give Zimbabwe more time to reform its mining practices.
Rights groups alleged soldiers killed about 200 people at a diamond field last year, which the government denies.
The decision came as talks to save the unity government started in Mozambique.
The coalition administration – formed in February – has been in crisis since Prime Minister Morgan Tsvangirai began boycotting cabinet meetings last month.
Mr Tsvangirai is protesting at the way President Robert Mugabe is implementing the power-sharing deal.
Revenue
The BBC’s southern Africa correspondent Karen Allen says the compromise diamond deal agreed in Namibia is likely to anger human rights groups.
President Mugabe says he has met his side of the unity deal
Although its own investigators found killings and forced evictions from the Marange diamond fields in the east of the country close to the border with Mozambique, the Kimberley Process panel stopped short of kicking Zimbabwe out, she says.
Instead it has adopted a plan – proposed by Zimbabwe itself – which includes calls for an independent inspector to monitor diamonds leaving the controversial fields.
Human rights groups claim the diamonds have been an important source of revenue for the military and for President Mugabe’s Zanu-PF party.
Meanwhile, Mr Mugabe and Mr Tsvangirai are both attending the talks in Mozambique organised by leaders of the Southern African Development Community (Sadc).
Former opposition leader Mr Tsvangirai has accused his long-time rival of being a “dishonest and unreliable partner” in the power-sharing deal, which was struck last year.
The opposition MDC party also accuses Mr Mugabe’s Zanu-PF party of persecuting its officials.
Zanu-PF has described the accusations as “propaganda”.
Human Rights Watch recently urged Sadc leaders to press Zanu-PF to end what it called “ongoing human rights abuses”
BBC
Reclamation, Zimbabwe Plan Gem Mine on Atrocity Site
By Carli Lourens and Brian Latham
Nov. 5 (Bloomberg) -- New Reclamation Group Ltd. plans to form a venture with Zimbabwe to mine diamonds from a deposit that human rights groups have said has been the site of military atrocities, a copy of the agreement shows.
New Reclamation, a Johannesburg scrap metal company part owned by Old Mutual Plc, will manage mining on the deposit through its at least 50 percent owned Grandwell Holdings Ltd. in partnership with Marange Resources Ltd., a unit of the state-owned Zimbabwe Mining Development Corp. Two members of the decision making body of President Robert Mugabe’s political party confirmed the terms of the agreement, declining to be identified because it is confidential.
Marange, as the deposit is known, was seized by the government from Maidstone, England-based African Consolidated Resources Plc in 2006 after gems were found. As many as 20,000 illegal miners besieged the area, also known as Chiadzwa, and were later cleared off by the army and police. New York-based Human Rights Watch says more than 200 were killed last year. Zimbabwe’s police say they have had no reports of atrocities. New Reclamation and Zimbabwe’s mines minister didn’t return calls.
“Marange wishes to strategically partner with Grandwell, which shall provide funding” to help mine and market diamonds, according to the July 21 agreement, which is signed by New Reclamation, ZMDC, Grandwell and Marange.
The Zimbabwe High Court on Sept. 24 confirmed the title of African Consolidated to claims on the field. The U.K. company has said it is seeking the return of its concession.
‘Preparing to Mine’
“Reclamation is preparing to mine in our concession area,” Andrew Cranswick, the chief executive officer of African Consolidated, said in a phone interview from Zimbabwe. “They’re preparing to start mining next week.”
The area allocated to New Reclamation overlaps with African Consolidated’s claim, he added.
The Kimberley Process, a global body created to curb trade in gems mined to fund conflict, considered whether to suspend Zimbabwe as a member after a mission visited the Southern African country in May, when it investigated claims of diamond smuggling and related violence from Marange. It decided today to keep Zimbabwe as a member and support its program to work toward compliance with the group’s rules.
“Zimbabwe has had more than enough time to put a halt to the human rights abuses and smuggling at Chiadzwa,” Tiseke Kasambala, Africa researcher with Human Rights Watch said in a phone interview from Johannesburg. “The situation there cannot be allowed to continue any longer.”
Investors Deterred
Grandwell, registered in Mauritius, will provide as much as $100 million toward mining the deposit, the agreement states, adding that the shareholders of Reclamation will need to approve the project.
New Reclamation’s Chief Executive Officer Michael Movsas, through his personal assistant, declined to speak to Bloomberg News and was said to be unavailable when subsequent calls were made. Calls to the office and mobile phones of Obert Mpofu, Zimbabwe’s mines minister, weren’t answered while four calls to ZMDC didn’t connect.
Lynn Bolin, a Cape Town-based spokeswoman for Old Mutual, which owns 5.28 percent of New Reclamation, referred questions back to the company.
New Reclamation, southern Africa’s biggest scrap metal company, sold 253 million euros ($375 million) of bonds due in 2013 in January 2006. It processes ferrous and non-ferrous metal as well as glass, plastic and paper waste and employs more than 2,000 people according to its Web site.
‘Law Must be Upheld’
Zimbabwe, which is trying to recover from a decade-long recession, is trying to attract foreign investment even as a dispute between Mugabe’s Zimbabwe African National Union- Patriotic Front and the Movement for Democratic Change threatens to dismantle a coalition government set up in February deters investors.
“We have said before that a full independent investigation is needed and that the law must be upheld,” Nelson Chamisa, an MDC spokesman, said in a phone interview from Harare today. “The mining claims, like any dispute, must be resolved and upheld by the country’s courts.”
To contact the reporters on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net. Brian Latham in Durban, South Africa at blatham@bloomberg.net.
Last Updated: November 5, 2009 11:11 EST
Nov. 5 (Bloomberg) -- New Reclamation Group Ltd. plans to form a venture with Zimbabwe to mine diamonds from a deposit that human rights groups have said has been the site of military atrocities, a copy of the agreement shows.
New Reclamation, a Johannesburg scrap metal company part owned by Old Mutual Plc, will manage mining on the deposit through its at least 50 percent owned Grandwell Holdings Ltd. in partnership with Marange Resources Ltd., a unit of the state-owned Zimbabwe Mining Development Corp. Two members of the decision making body of President Robert Mugabe’s political party confirmed the terms of the agreement, declining to be identified because it is confidential.
Marange, as the deposit is known, was seized by the government from Maidstone, England-based African Consolidated Resources Plc in 2006 after gems were found. As many as 20,000 illegal miners besieged the area, also known as Chiadzwa, and were later cleared off by the army and police. New York-based Human Rights Watch says more than 200 were killed last year. Zimbabwe’s police say they have had no reports of atrocities. New Reclamation and Zimbabwe’s mines minister didn’t return calls.
“Marange wishes to strategically partner with Grandwell, which shall provide funding” to help mine and market diamonds, according to the July 21 agreement, which is signed by New Reclamation, ZMDC, Grandwell and Marange.
The Zimbabwe High Court on Sept. 24 confirmed the title of African Consolidated to claims on the field. The U.K. company has said it is seeking the return of its concession.
‘Preparing to Mine’
“Reclamation is preparing to mine in our concession area,” Andrew Cranswick, the chief executive officer of African Consolidated, said in a phone interview from Zimbabwe. “They’re preparing to start mining next week.”
The area allocated to New Reclamation overlaps with African Consolidated’s claim, he added.
The Kimberley Process, a global body created to curb trade in gems mined to fund conflict, considered whether to suspend Zimbabwe as a member after a mission visited the Southern African country in May, when it investigated claims of diamond smuggling and related violence from Marange. It decided today to keep Zimbabwe as a member and support its program to work toward compliance with the group’s rules.
“Zimbabwe has had more than enough time to put a halt to the human rights abuses and smuggling at Chiadzwa,” Tiseke Kasambala, Africa researcher with Human Rights Watch said in a phone interview from Johannesburg. “The situation there cannot be allowed to continue any longer.”
Investors Deterred
Grandwell, registered in Mauritius, will provide as much as $100 million toward mining the deposit, the agreement states, adding that the shareholders of Reclamation will need to approve the project.
New Reclamation’s Chief Executive Officer Michael Movsas, through his personal assistant, declined to speak to Bloomberg News and was said to be unavailable when subsequent calls were made. Calls to the office and mobile phones of Obert Mpofu, Zimbabwe’s mines minister, weren’t answered while four calls to ZMDC didn’t connect.
Lynn Bolin, a Cape Town-based spokeswoman for Old Mutual, which owns 5.28 percent of New Reclamation, referred questions back to the company.
New Reclamation, southern Africa’s biggest scrap metal company, sold 253 million euros ($375 million) of bonds due in 2013 in January 2006. It processes ferrous and non-ferrous metal as well as glass, plastic and paper waste and employs more than 2,000 people according to its Web site.
‘Law Must be Upheld’
Zimbabwe, which is trying to recover from a decade-long recession, is trying to attract foreign investment even as a dispute between Mugabe’s Zimbabwe African National Union- Patriotic Front and the Movement for Democratic Change threatens to dismantle a coalition government set up in February deters investors.
“We have said before that a full independent investigation is needed and that the law must be upheld,” Nelson Chamisa, an MDC spokesman, said in a phone interview from Harare today. “The mining claims, like any dispute, must be resolved and upheld by the country’s courts.”
To contact the reporters on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net. Brian Latham in Durban, South Africa at blatham@bloomberg.net.
Last Updated: November 5, 2009 11:11 EST
Thursday, November 5, 2009
Report: Suspend Zimbabwe over diamond smuggling
By DONNA BRYSON (AP)
JOHANNESBURG — Investigators for the world's diamond control body say Zimbabwe should be suspended because its security forces are raping women, killing illegal miners and smuggling gems out of a diamond field in the troubled country's east.
Human rights groups have made similar accusations, but the charges carry particular weight coming from Kimberley Process investigators who visited Zimbabwe in June and July. Their recommendations are in a confidential report obtained by The Associated Press Wednesday.
Zimbabwean authorities have repeatedly denied such charges, including in statements to Kimberley Process investigators and officials. The investigators said they found evidence contradicting the official account, and that information provided by Zimbabwean authorities "was false, and likely intentionally so."
The report was presented to Kimberley Process Certification Scheme officials, who were expected to decide this week on what to do about the southern African country. Their investigators recommended that Zimbabwe either be suspended or voluntarily suspend itself until it has met minimum standards for remaining part of the process.
The Kimberley Process was established in 2002 in an attempt to stem the flow of "blood diamonds" — gems sold to fund fighting across Africa. Participants must certify the origins of the diamonds being traded. Suspension could result in buyers shunning Zimbabwe's diamonds.
While the rough gems flowing from Zimbabwe's Marange field do not fit the strict Kimberley definition of conflict diamonds, the investigators said the lawlessness in the area would make it easy for traffickers to bring in such gems from other countries and then export them as Zimbabwean.
"Lawlessness, particularly when combined with violence and largely overseen by government entities, should not be the hallmark of any system ... deemed to be compliant" with the Kimberley process, the investigators added.
The investigators interviewed witnesses, victims and survivors of victims.
While illegal miners often fled when team members approached, seven told of working for soldiers who allowed them to keep only 10 percent of the proceeds of any diamonds recovered.
"Each one of these illegal miners reported seeing people killed and the numbers they cited ranged from one to seven," the report said. "This group also told members of the team that they observed extreme violence against illegal miners" by soldiers using rifles, dogs, batons and tear gas.
The report said women "reported that, while under the custody of the security forces, they were raped repeatedly by military officers and that they have been forced to engage in sex with illegal miners. One victim told the team that she tested HIV positive after she had been forced to have sex with two men and then raped by a military officer."
The investigators said it was "credible" that syndicates operated by police and soldiers have been smuggling rough diamonds out of Marange since at least 2008, and likely since formal production began in 2007.
"The team concludes that the government of Zimbabwe authorities are aware of these syndicates and ongoing smuggling operations and have permitted them to continue," the report said.
London-based Global Witness, a human rights groups that tracks how Africa's mineral wealth is misused, has complained that the Kimberley Process has so far failed to address smuggling, money laundering and human rights abuses in Marange.
Human Rights Watch called last week for Zimbabwe to be suspended from the Kimberley Process. The international rights watchdog has said repeatedly that Zimbabwean soldiers are smuggling diamonds and killing and beating civilians to consolidate a hold on Marange that benefits the ZANU-PF party of longtime President Robert Mugabe.
Mugabe entered into a coalition with his rival Morgan Tsvangirai in February, but Tsvangirai this month suspended his participation, accusing Mugabe of continuing human rights abuses and undermining the unity agreement. According to Kimberley process officials, Zimbabwe exported nearly 800,000 carats of diamonds from three fields, including Marange, last year. Zimbabwe has no diamond processing facilities, so exports only rough gems.
JOHANNESBURG — Investigators for the world's diamond control body say Zimbabwe should be suspended because its security forces are raping women, killing illegal miners and smuggling gems out of a diamond field in the troubled country's east.
Human rights groups have made similar accusations, but the charges carry particular weight coming from Kimberley Process investigators who visited Zimbabwe in June and July. Their recommendations are in a confidential report obtained by The Associated Press Wednesday.
Zimbabwean authorities have repeatedly denied such charges, including in statements to Kimberley Process investigators and officials. The investigators said they found evidence contradicting the official account, and that information provided by Zimbabwean authorities "was false, and likely intentionally so."
The report was presented to Kimberley Process Certification Scheme officials, who were expected to decide this week on what to do about the southern African country. Their investigators recommended that Zimbabwe either be suspended or voluntarily suspend itself until it has met minimum standards for remaining part of the process.
The Kimberley Process was established in 2002 in an attempt to stem the flow of "blood diamonds" — gems sold to fund fighting across Africa. Participants must certify the origins of the diamonds being traded. Suspension could result in buyers shunning Zimbabwe's diamonds.
While the rough gems flowing from Zimbabwe's Marange field do not fit the strict Kimberley definition of conflict diamonds, the investigators said the lawlessness in the area would make it easy for traffickers to bring in such gems from other countries and then export them as Zimbabwean.
"Lawlessness, particularly when combined with violence and largely overseen by government entities, should not be the hallmark of any system ... deemed to be compliant" with the Kimberley process, the investigators added.
The investigators interviewed witnesses, victims and survivors of victims.
While illegal miners often fled when team members approached, seven told of working for soldiers who allowed them to keep only 10 percent of the proceeds of any diamonds recovered.
"Each one of these illegal miners reported seeing people killed and the numbers they cited ranged from one to seven," the report said. "This group also told members of the team that they observed extreme violence against illegal miners" by soldiers using rifles, dogs, batons and tear gas.
The report said women "reported that, while under the custody of the security forces, they were raped repeatedly by military officers and that they have been forced to engage in sex with illegal miners. One victim told the team that she tested HIV positive after she had been forced to have sex with two men and then raped by a military officer."
The investigators said it was "credible" that syndicates operated by police and soldiers have been smuggling rough diamonds out of Marange since at least 2008, and likely since formal production began in 2007.
"The team concludes that the government of Zimbabwe authorities are aware of these syndicates and ongoing smuggling operations and have permitted them to continue," the report said.
London-based Global Witness, a human rights groups that tracks how Africa's mineral wealth is misused, has complained that the Kimberley Process has so far failed to address smuggling, money laundering and human rights abuses in Marange.
Human Rights Watch called last week for Zimbabwe to be suspended from the Kimberley Process. The international rights watchdog has said repeatedly that Zimbabwean soldiers are smuggling diamonds and killing and beating civilians to consolidate a hold on Marange that benefits the ZANU-PF party of longtime President Robert Mugabe.
Mugabe entered into a coalition with his rival Morgan Tsvangirai in February, but Tsvangirai this month suspended his participation, accusing Mugabe of continuing human rights abuses and undermining the unity agreement. According to Kimberley process officials, Zimbabwe exported nearly 800,000 carats of diamonds from three fields, including Marange, last year. Zimbabwe has no diamond processing facilities, so exports only rough gems.
ZIMBABWE: Donors uneasy about Mugabe's threat
President Robert Mugabe HARARE, 4 November 2009 (IRIN) -
Zimbabwean President Robert Mugabe's threat to appoint interim ministers to plug the gap left by the "disengagement" of the Movement for Democratic Change (MDC) from the unity government could lead to a review of donor funding, a highly placed official from a major donor country told IRIN. "We are still monitoring developments. No decision has been made to appoint acting ministers, but that would certainly send a wrong message, and could get donors who want the situation in Zimbabwe to improve to review their financial commitments to the inclusive government," said the official, who declined to be identified. The Global Political Agreement (GPA), signed in September 2008, paved the way for the formation of the unity government in February 2009. "When the Global Political Agreement was signed ... we said at the time that we would be looking out to see if the GPA was fully implemented," the official noted. Morgan Tsvangirai, Prime Minister and MDC leader, withdrew from attending cabinet meetings on 16 October 2009 over Mugabe's procrastination in swearing in provincial governors, while alleging that MDC members and officials faced constant harassment. The MDC also believes that the continued stay in office of the attorney general and the Reserve Bank Governor - self-admitted allies of Mugabe - is in contravention of the GPA. After the MDC's disengagement, information minister Webster Shamu said "His Excellency [Mugabe] may have to consider appointing ministers in an acting capacity to key ministries, for the sake of a successful agricultural season and general economic turnaround." The passage of the unity government has been far from smooth, but the MDC's disengagement represents the most serious breakdown in relations between the partners in the fledgling unity government and its attempt to haul Zimbabwe out of the economic abyss in which nearly 7 million people relied on donor food aid in the first quarter of 2009. The Southern African Development Community (SADC) organ on politics, defence and security will meet on 5 November in Maputo, capital of Mozambique, to discuss developments in Zimbabwe.
Firstly, appointing acting ministers would be illegal and unconstitutional; doing so would be killing the GPA The organ's troika of members is comprised of Mozambican President Armando Guebuza, Zambian President Rupiah Banda, and sub-Saharan Africa's last absolute monarch, King Mswati III. SADC chairman Joseph Kabila, President of the Democratic Republic of Congo, has already visited Zimbabwe to try to resolve the impasse. Zimbabwe's finance portfolio has also been the object of an ongoing turf war between the MDC and Mugabe's ZANU-PF party. "Firstly, appointing acting ministers would be illegal and unconstitutional; doing so would be killing the GPA," Finance Minister Tendai Biti told IRIN. "It would amount to a violation of the Global Political Agreement, which created the transitional inclusive government. It has to be understood that the MDC has only disengaged from ZANU-PF, and not government work. We are all going to our offices to work," he said. Government work continues "Nothing has changed in terms of how we do business; we are coming up with frameworks of introducing good governance and accountability to avoid abuse of funds. The money is stored in a multi-donor basket fund, and there has to be consultation and agreement on how it is spent." Prof Arthur Mutambara, Deputy Prime Minister and leader of a breakaway MDC faction, told IRIN that Tsvangirai's decision to boycott cabinet could prove counterproductive. "If decisions are made in cabinet, even if others have boycotted the meeting, they will be binding," he said. "So, what we have been doing is to fight against bad decisions, while acting as the peace-builder between Prime Minister Morgan Tsvangirai and President Robert Mugabe." dd/go/he
Theme(s): (IRIN) Economy, (IRIN) Food Security, (IRIN) Governance [ENDS]
Zimbabwean President Robert Mugabe's threat to appoint interim ministers to plug the gap left by the "disengagement" of the Movement for Democratic Change (MDC) from the unity government could lead to a review of donor funding, a highly placed official from a major donor country told IRIN. "We are still monitoring developments. No decision has been made to appoint acting ministers, but that would certainly send a wrong message, and could get donors who want the situation in Zimbabwe to improve to review their financial commitments to the inclusive government," said the official, who declined to be identified. The Global Political Agreement (GPA), signed in September 2008, paved the way for the formation of the unity government in February 2009. "When the Global Political Agreement was signed ... we said at the time that we would be looking out to see if the GPA was fully implemented," the official noted. Morgan Tsvangirai, Prime Minister and MDC leader, withdrew from attending cabinet meetings on 16 October 2009 over Mugabe's procrastination in swearing in provincial governors, while alleging that MDC members and officials faced constant harassment. The MDC also believes that the continued stay in office of the attorney general and the Reserve Bank Governor - self-admitted allies of Mugabe - is in contravention of the GPA. After the MDC's disengagement, information minister Webster Shamu said "His Excellency [Mugabe] may have to consider appointing ministers in an acting capacity to key ministries, for the sake of a successful agricultural season and general economic turnaround." The passage of the unity government has been far from smooth, but the MDC's disengagement represents the most serious breakdown in relations between the partners in the fledgling unity government and its attempt to haul Zimbabwe out of the economic abyss in which nearly 7 million people relied on donor food aid in the first quarter of 2009. The Southern African Development Community (SADC) organ on politics, defence and security will meet on 5 November in Maputo, capital of Mozambique, to discuss developments in Zimbabwe.
Firstly, appointing acting ministers would be illegal and unconstitutional; doing so would be killing the GPA The organ's troika of members is comprised of Mozambican President Armando Guebuza, Zambian President Rupiah Banda, and sub-Saharan Africa's last absolute monarch, King Mswati III. SADC chairman Joseph Kabila, President of the Democratic Republic of Congo, has already visited Zimbabwe to try to resolve the impasse. Zimbabwe's finance portfolio has also been the object of an ongoing turf war between the MDC and Mugabe's ZANU-PF party. "Firstly, appointing acting ministers would be illegal and unconstitutional; doing so would be killing the GPA," Finance Minister Tendai Biti told IRIN. "It would amount to a violation of the Global Political Agreement, which created the transitional inclusive government. It has to be understood that the MDC has only disengaged from ZANU-PF, and not government work. We are all going to our offices to work," he said. Government work continues "Nothing has changed in terms of how we do business; we are coming up with frameworks of introducing good governance and accountability to avoid abuse of funds. The money is stored in a multi-donor basket fund, and there has to be consultation and agreement on how it is spent." Prof Arthur Mutambara, Deputy Prime Minister and leader of a breakaway MDC faction, told IRIN that Tsvangirai's decision to boycott cabinet could prove counterproductive. "If decisions are made in cabinet, even if others have boycotted the meeting, they will be binding," he said. "So, what we have been doing is to fight against bad decisions, while acting as the peace-builder between Prime Minister Morgan Tsvangirai and President Robert Mugabe." dd/go/he
Theme(s): (IRIN) Economy, (IRIN) Food Security, (IRIN) Governance [ENDS]
Mwana Africa gets debt funding for Zimbabwe mine
Mwana Africa gets debt funding for Zimbabwe mine
Wed Nov 4, 2009 10:16am EST
LONDON, Nov 4 (Reuters) - Mwana Africa Plc (MWA.L) has gained approval for $10 million of debt funding to accelerate the expansion of the Freda Rebecca gold mine in Zimbabwe.
The company expects to get the first tranche, up to $4 million, of the loan before the end of the year, chief executive Kalaa Mpinga told Reuters in an interview.
The loan from the Industrial Development Corp of South Africa, a state-owned finance institution, will enable Mwana to accelerate the mine's refurbishment programme.
It plans to increase production to more than 50,000 ounces of gold a year on completion of Phase II.
"As things stand we aim to complete Phase II by next September," said Mpinga, adding that if the company is able to draw down the loan early it could complete the refurbishment ahead of schedule.
Operating costs for the mine are estimated at $650-700 an ounce and are anticipated to drop to about $500 per ounce on completion of Phase II, Mpinga said, noting that these figures were conservative.
The shares rose as much as 14 percent on Wednesday, and were up 8 percent at 13.5 pence at 1502 GMT.
"We believe this news should be taken positively since a key obstacle to delivering the expanded 50,000 ounce production was availability of finance, since commercial banks were always unlikely to stump up for Zimbabwe risk," said Liberum Capital in a note.
Mwana hasn't shied away from operating in higher risk countries. It has projects in the Democratic Republic of Congo, Angola, Ghana and Botswana.
(Editing by Victoria Bryan)
Wed Nov 4, 2009 10:16am EST
LONDON, Nov 4 (Reuters) - Mwana Africa Plc (MWA.L) has gained approval for $10 million of debt funding to accelerate the expansion of the Freda Rebecca gold mine in Zimbabwe.
The company expects to get the first tranche, up to $4 million, of the loan before the end of the year, chief executive Kalaa Mpinga told Reuters in an interview.
The loan from the Industrial Development Corp of South Africa, a state-owned finance institution, will enable Mwana to accelerate the mine's refurbishment programme.
It plans to increase production to more than 50,000 ounces of gold a year on completion of Phase II.
"As things stand we aim to complete Phase II by next September," said Mpinga, adding that if the company is able to draw down the loan early it could complete the refurbishment ahead of schedule.
Operating costs for the mine are estimated at $650-700 an ounce and are anticipated to drop to about $500 per ounce on completion of Phase II, Mpinga said, noting that these figures were conservative.
The shares rose as much as 14 percent on Wednesday, and were up 8 percent at 13.5 pence at 1502 GMT.
"We believe this news should be taken positively since a key obstacle to delivering the expanded 50,000 ounce production was availability of finance, since commercial banks were always unlikely to stump up for Zimbabwe risk," said Liberum Capital in a note.
Mwana hasn't shied away from operating in higher risk countries. It has projects in the Democratic Republic of Congo, Angola, Ghana and Botswana.
(Editing by Victoria Bryan)
Zimbabwe has no money for food production!
HARARE – Zimbabwe’s cash strapped government has managed to raise only US$5.7 million out of $48 million it had planned to use to fund agricultural production this season, the ministry of agriculture said on Tuesday. In the first official confirmation that the 2009/2010 farming season that began last week will again go to waste, agricultural permanent secretary Ngoni Masoka also said that the country had managed to acquire less than half of the amount of fertilizer required by farmers.“Only US$5.7 million out of a total provision of US$48 million having been released as at 30 September 2009,” Masoka told Parliament’s portfolio committee on agriculture.The lack of funds had crippled efforts to mobilise resources and inputs to ensure increased food output to end hunger that has stalked Zimbabwe for the past 10 years, according to Masoka.He said: “A total of 1 200 000 tonnes of fertiliser were required for the 2009/2010 season. To date only 44 percent has been mobilised through private sector partnerships and donor assistance, leaving a huge gap which will adversely impact on productivity.”President Robert Mugabe and Prime Minister Morgan Tsvangirai’s coalition government has made revival of food production to end hunger a key priority. But the administration’s failure to raise cash from donors has hampered its ability to resuscitate agriculture or other key sectors of the economy. Farm invasions that have continued despite promises by the unity government to restore law and order in the agricultural sector will also hit hard efforts to increase food production.* Zimonline
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