Wednesday, May 26, 2010

Zimbabwe: Economy Grows, but Future Is Uncertain

Published: May 25, 2010
After a decade of economic decline and hyperinflation, Zimbabwe’s economy grew about 4 percent last year, consumer prices fell about 8 percent, and bank deposits tripled, the International Monetary Fund reported Tuesday. But the I.M.F. characterized the outlook for this year as “highly uncertain.” President Robert Mugabe’s insistence on some local ownership of companies has slowed foreign investment, while higher wages for civil servants have consumed a growing share of the still limited public spending.
HARARE, 25 May 2010 (IRIN) - The death of Zimbabwe's secretary for agriculture, Renson Gasela, and two other senior officials from the Movement for Democratic Change (MDC) in a car accident recently has highlighted the country's inability to respond to accidents, emergencies or disasters.

It took more than eight hours for the men to receive assistance after the accident because police in the nearby southeastern mining town of Zvishavane had no transport, and fire brigade units had no fuel to make the 25km journey. Emergency services only arrived after the MDC secretary general, Welshman Ncube, provided fuel.

"That incident alone is a small representation of how the coalition government has dismally failed the people of Zimbabwe," political analyst John Makumbe told IRIN, because the response time probably would have been quicker if senior officials from ZANU-PF - the other party in Zimbabwe's unity government - had been involved in an accident.

"The truth of the matter is that the inclusive government is failing to deliver, or to improve the lives of Zimbabweans. When schools opened recently, a majority of students were turned away because their parents or guardians could not afford to pay school fees; supermarket shelves are full of goods and food, but a visit to many households will reveal that people are starving in their homes."

The unity government - a fragile coalition between President Robert Mugabe's ZANU-PF, Prime Minister Morgan Tsvangirai's MDC, and an MDC breakaway faction led by Deputy Prime Minister Arthur Mutambara - has failed to inspire since its formation in February 2009.

Collapsing services

National Railways of Zimbabwe, the country's train service, is on the verge of collapse, as is the Zimbabwe United Passenger Company, the public bus service; domestic refuse has begun piling up in urban areas as municipalities fail to collect it; Health and Child Welfare minister Henry Madzorera revealed that 78 percent of midwife positions are vacant.

Over the last few months it has dawned on me that we are certainly going nowhere in terms of the improvement of our lives - life has become even more expensive. The present and the future are bleak

The intermittent supply of electricity is expected to get worse because Zimbabwe will be exporting 300 megawatts of electricity to South Africa during the FIFA World Cup competition beginning in June.

Barbra Mawara, a junior manager at a manufacturing company in the capital, Harare, told IRIN that she had decided against leaving the country after the formation of the unity government, but was once again toying with the idea.

"Over the last few months it has dawned on me that we are certainly going nowhere in terms of the improvement of our lives - life has become even more expensive. The present and the future are bleak; there is fatigue and lack of will among Zimbabweans. The politicians have certainly let Zimbabweans down while fighting over jobs among themselves," she said.

The exasperation over any real progress is also affecting politicians. "The MDC has been taken over by greedy people with self-serving interests. We have started campaigning among the people in preparation for elections [expected to take place in 2011 or 2012]," said Job Sikhala, a former senior official in Mutambara's party who has broken away to form the MDC 99 party. [The MDC was formed in 1999].

He said the coalition government had made little progress in improving people's lives, as Mugabe continued to control the national agenda. "In the inclusive government Mugabe remains the driver of the bus, with Tsvangirai as the bus conductor, while Mutambara is the baggage loader, and that will not result in any meaningful changes."

The latest example of Mugabe's apparent disregard for his coalition partners and the Global Political Agreement, which paved the way for the unity government, has been the appointment of George Chiweshe to head the High Court.

Chiweshe was head of the Zimbabwe Electoral Commission in 2008, which the MDC claim saw large-scale rigging to ensure that Tsvangirai did not win an outright victory in the presidential poll and the election result was delayed for month.

A band aid

"The inclusive government only managed to stop the bleeding but did not cure the wound. Some stability was attained, but there has been no progress," political commentator Luke Tamborinyoka told IRIN.

"There is no progress on the land audit, the constitution-making process, and the opening of media space; there is high unemployment and poverty, and although supermarket shelves are full, few can afford the commodities," he said.

Human rights activist and political commentator Rejoice Ngwenya told IRIN: "Politicians argue that because of the inclusive government there is little political violence and that supermarket shelves have goods, but that can hardly be an acceptable excuse because violence and the poor economic environment was brought by politicians."

Ngwenya commented: "In any case, violence is on the increase while many people can not afford to buy the food, which is expensive. Because of failure to secure credit lines to improve the performance of the inclusive government, the coalition has weakened over the months since its formation."

Tuesday, May 18, 2010

Zimbabwe's National Oil Company in Bid to Raise Equity Capital; Experts Skeptical

Energy industry sources said NOCZIM, now operating at 30% of its capacity and laying off thousands of workers, is negotiating with the Harare government to retain a controlling 51% stake in the enterprise after raising equity capital
Jonga Kandemiiri & Gibbs Dube
Washington 17 May 2010
The National Oil Company of Zimbabwe is planning to sell a 49% share stake in an effort to raise capital to pay US$270 million in debt which threatens the survival of the state-controlled enterprise.

Energy industry sources said the company, now operating at 30% of its capacity and laying off thousands of workers, is negotiating with the Harare government to retain a 51% stake. The sources said NOCZIM had to shut down projects including plantations of jatropha intended to produce biodiesel, among and other unprofitable activities.

Harare economist John Robertson told VOA Studio 7 reporter Gibbs Dube that it is unlikely investors will buy shares in the state-run company as it lacks credibility given past losses and reports of internal abuses.

Elsewhere, the Reserve Bank of Zimbabwe has revised national totals for domestic and external debt, which now stand at a combined US$5.84 billion. Zimbabwe owes around US$5.3 billion to international lenders, much of which has fallen into arrears, preventing the country from accessing new lines of credit from public financial institutions.

Economist Prosper Chitambara of the Labor and Economic Development Research Institute of Zimbabwe told reporter Jonga Kandemiiri that the national debt has surged due to Harare’s inability to make payments

From John Robertson

Zimbabwe's All Items Consumer Price Index increased by 0,12% in April, taking the index from 95,0 to 95,1 against the base of December 2008 = 100. The average increases for food, drink and tobacco products was about 0,9%, but price decreases were seen for some items, mainly vehicles, telephone services, clothing and footwear.

Compared to April 2009, prices rose by an average of 4,75%. Over the year, the largest increases were seen alcoholic beverages & tobacco, at 17,4%, transport at 13,4% and hotels & restaurants at 12,6%, but decreases over the year were seen for clothing & footwear at 9,6% and 7,7% for communications. Average prices and fees also went down for furniture & household products and for recreational equipment.

I hope to complete and send to you the more detailed table tomorrow.

Kindest regards,

Sunday, May 16, 2010

Zimbabwe’s Annual Inflation Leaps to 4.8 Percent in April

Zimbabwe’s annual inflation rose to 4.8 percent in April — from 3.5 percent the previous month, according to data released by the Central Statistical Office on Friday.

The CSO, however, said the indicative month-on-month inflation eased from 1.1 percent in March to 0.1 percent in April, thanks to a significant drop in food prices.
A coalition government formed by President Robert Mugabe and Prime Minister Morgan Tsvangirai last year has stabilized the once free-falling southern African economy.

A raft of pro-market macroeconomic measures introduced by the government soon after its inauguration in February 2009 saw inflation declining from a world-record 500 billion percent at the end of 2008.

The decision by the new Harare regime to discard the country’s free-falling currency, the Zimbabwe dollar, and adopt a basket of hard currencies as legal tender also helped stabilize prices of products which became readily available in shops and destroyed a thriving black market that had kept pressure on inflation.

The economic stability is however being threatened by bickering among Zimbabwe’s coalition partners amid reports that hardliners from Mugabe’s ZANU PF party want to frustrate any reforms pushed through by Tsvangirai’s party.

Observers fears that the squabbles will ultimately derail the unity government or slow down the momentum achieved over the past 15 months.

Bickering over a controversial black empowerment law has already cost Zimbabwe millions of dollars worth of foreign investment as investors wait for finalization of regulations that would see non-Zimbabweans surrendering at least 51 percent of the companies to local business.

Source African Press Agency

Friday, May 14, 2010

Zimbabwe's inflation rises to 4.8%


HARARE — Annual inflation in Zimbabwe accelerated to 4.8 percent in April, up from 3.5 percent in March, the government statistics agency announced Friday.

Zimbabwe's economy was ravaged by runaway hyperinflation during a decade-long freefall that impoverished the country.

But prices have stabilised since the government abandoned the worthless local currency last year, allowing trade in US dollars and other foreign currencies.

The economy has shown signs of recovery since the formation of a power-sharing government last year by President Robert Mugabe and long-time rival Morgan Tsvangirai.

But Finance Minister Tendai Biti last month revised down the growth forecast for this year from 7.7 to 4.8 percent, citing slower-than-expected foreign investment.

Saturday, May 1, 2010

Bretton Woods Institutions Tell Zimbabwe Official More Reform Needed to Consider Aid

Bretton Woods Institutions Tell Zimbabwe Official More Reform Needed to Consider Aid

Though the IMF and World Bank demand further reform to consider aid, sources said the World Bank is looking at including Zimbabwe in an initiative to overhaul the energy sectors in three African countries

Blessing Zulu & Patience Rusere
Washington 30 April 2010

The International Monetary Fund and the Word Bank have told a top official in the former ruling ZANU-PF party of Zimbabwean President Robert Mugabe that the international financial institutions need to further reform in Harare before they can extend any form of economic aid for economic reconstruction.

ZANU-PF chief Parliamentary Whip Joram Gumbo, a vice president of the Pan African Parliament, was in Washington this week for meetings at the two Bretton Woods Institutions.

He is only the second senior ZANU-PF official to travel to Washington since the unity government came into being.

Most top party officials are barred from travel to the United States under targeted sanctions.

Tourism Minister Walter Mzembi traveled to the American capital last year with Prime Minister Tsvangirai. Neither Mzembi nor Gumbo are on the sanctions list and are considered to be ZANU-PF moderates.

Gumbo told VOA Studio 7 reporter Blessing Zulu that despite the demand for reform, the World Bank is looking at including Zimbabwe in an initiative to revamp the energy sectors in three African countries.

Meanwhile, Zimbabwe's Ministry of State Enterprises said an audit of state-controlled companies found some top managers receiving salaries of up to US$14,000 a month, Web news agency ZimOnline reported.

VOA was unable to confirm the findings with State Enterprises Minister Joel Gabhuza.

Zimonline quoted Gabhuza as saying the audit of parastatals met with resistance from chief executives who provided false information or were under the protection of powerful politicians.

The ministry said the exercise, which started last month, is intended to rationalize salaries. Most parastatals are running in the red yet their managers receive perks such as gasoline and school fees for their children.

Most workers, including state employees, get no more than US$200 a month with the government strapped.

Economist and political analyst Rejoice Ngwenya told VOA Studio 7 reporter Patience Rusere that given the lifestyle of most state enterprise managers, the report’s findings are not surprising

Indigenisation deadline deferred indefinitely

To the best of my knowledge, the following extract from The Standard has not yet been contradicted,. Whether we can safely accept the statements this time has yet to be seen, but the pressures to bring about the indefinite deferral were strong enough to make this move highly probable. But we must be careful not to get too caught up in wishful thinking!

If it is contradicted, as happened last time, I will make sure I keep you informed!

Kindest regards,

John Robertson

Indigenisation deadline deferred indefinitely

Saturday, 17 April 2010

CABINET on Tuesday postponed indefinitely an April 15 deadline for foreign companies to submit plans to cede 51% of their shareholding to locals pending consultations on 10 key principles that will see an overhaul of the controversial empowerment regulations.

Sources revealed last week that despite political posturing by President Robert Mugabe and Indigenisation Minister Saviour Kasukuwere, cabinet was unanimous that the regulations that seek to operationalise the 2007 Indigenisation and Economic Empowerment Act cannot be passed in the form proposed by Zanu PF.

"The cabinet position is that the deadline of 45 days from March 1 for companies to provide their indigenisation plans has been set aside pending finalisation of consultations around 10 principles that are central to the empowerment exercise," said Gorden Moyo, the Minister of State in the Prime Minister's Office.

The Standard understands some of the principles that are being reviewed include the hotly contested requirement that companies must cede 51% of their shareholding to locals. The new proposals would see companies selling shares at market value and the prescribed asset value of US$500 000 would include both liabilities and assets.

Companies listed on the Zimbabwe Stock Exchange and new investors may also be exempted from the regulations. Instead of being forced to comply with the law within five years, companies may be given up to 15 years, the new proposals have shown.

Government will also no longer impose a blanket threshold on the number of shares to be ceded as each sector would be allowed to come up with its own proposals. An indigenisation compliance board will also be set up to assess and approve localisation plans by companies to allay fears that the empowerment process would be abused by the responsible minister to benefit cronies.

Sectoral boards for each sector such as mining, industry and retail would be set to deal with issues at micro level. Firms that have also invested heavily on community development projects may also be excluded from the process. "We have all accepted that there should be indigenisation but it must be broad based," Moyo said.

"The only objections were that the regulations should not be implemented in the formula they were proposed." In public, Mugabe and Kasukuwere have maintained that there is no going back on the regulations. However, the law has scared investors and dampened interest in the ZSE.


From john Robertson

Several of the changes recorded by the Central Statistical Office in March 2010 seem likely to cause some surprise. Rents are said to have fallen by 16,4%, carpets became 43% cheaper, car prices went down 28% and jewellery and clocks declined by 17,8%. However, rates went up 28,25%, motorcycles went up by 15,3%, fish prices rose 11,6%, vegetable by 9,2% and tobacco products by 7,3%.

The biggest increases over the year to March were a rise of 234,7% rise in the prices of scotch carts, a 66% increase in fuel and lubricant prices, a 45,75% increase in hotel room charges, a rise of 30,9% in dental charges and of 28% in hospital services. Wine prices were also down 28% on the year and cars show up again with a fall of 22,4% for the year.