From John Robertson

We have now had two full years since the Consumer Price Index was rebased on the US dollar prices recorded in December 2008 and the averages for that month were set at 100. Such were the distortions at the time that, of the twelve groups of goods and services identified, the averages for only four of them are now recording figures of more than 100. These are liquor and cigarettes at 102,26, the rent, rates, power and water category at 116,12, transport at 105,76 and education at 110,00.


As the services can be described as almost entirely of Zimbabwe origin, their costs seem less likely to be held down by their suppliers having to compete with imports, so from medical services to hairdressers and from motor mechanics to the rates charged by local authorities, the indices have all trended well above the figures for most imported goods, as well as for locally produced goods that face competition from imports.

Some of the lowest price indices are for clothing and footwear, household textiles and the types of goods that competing supermarkets are obliged to offer at attractive prices, whether imported or sourced from local manufacturers. Other prices have remained almost unchanged and among these, fuels and lubricants are a good example. Although the index for these has reached 153,9, this figure has varied very little for the past 17 months. Fuel price increases that occurred in December appear to have happened too late to be included in the December index.

The month-on-month increases show that 28 of the 67 items surveyed for the index went down in price in December, but the tightness of the market conditions is illustrated by the fact that the prices of 30 of the 67 items were lower than in December 2009. While the managements of some factories are known to have invested in plant and equipment to achieve improved production volumes and standards, the most obvious investments have been in retail premises that might have extended the areas and stocks of goods well beyond the spending power of Zimbabweans, specially as about 70% of the working-age population is sill unable to find steady employment.

In my comments after the Budget presentation in November, I pointed out that funds for the claimed doubling of public sector salaries had not been provided for in the figures. The January salaries paid to the military and civil servants reflect my concern, and we now hear of plans for strikes and other protests. As about one third of Zimbabwe’s working population draws a government salary, this disappointment is affecting the business sector too.

Reports are also being circulated about food shortages and the growing need for assistance in the rural areas ahead of the maize harvests. Hopefully the news will start improving when the crops start coming in.

Kindest regards,

John

German investor in Zimbabwe vows to press case against land seizure

Harare - A German investor who has taken the Zimbabwe government to the Paris-based International Centre for Settlement of Investment Disputes (ICSID) after Harare seized his properties under its reform programme is vowing to stay put until the case is settled.


In an interview at one of his properties north of Harare, Heinrich von Pezold, 58, said he went to the ICSID after Harare refused to deal with his complaints.

He said that his three investments are covered by a bilateral investment protection treaty that Berlin and Harare signed in 1995.

'A lot of damage has been caused on my assets by settlers on my properties,' he said. 'Over the years I have tried to engage the government of Zimbabwe.'

Von Pezold called Zimbabwe 'a place to do productive investment, which is why we continue to invest here.'

He hopes for a chance to meet the government and find a solution under the bilateral investment protection accord.

'But for now we want the arbitration centre to settle this matter,' von Pezold said, declining to disclose how much compensation he was claiming.

Zimbabwe Attorney General Johannes Tomana confirmed that Harare was being summoned by the ICSID.

'We have received the papers and we are looking at them,' he said.

Von Pezold, one of the few white commercial farmers left in Zimbabwe, said he was confident that one day Zimbabwe will honour its international obligations. He vowed that he will not leave his investments until justice has prevailed.

'We have no dispute with Zimbabwe. We have dispute with some policies. Many countries go through times of difficulty,' he said, and added he believed Zimbabwe's current problems will be resolved.

But it was important for investors stand up for their rights, von Pezold said.

'Only if people have faith in the future will they risk their savings to build a future Zimbabwe,' he said, while gazing out at his tobacco fields.

Von Pezold has three estates in Zimbabwe, which he said he bought in 1988 from a commercial farmer.

'I have invested millions of dollars in Zimbabwe and just can't let that investment go,' he said.

Von Pezold last year was the focus of controversy between Berlin and Harare, after he refused to vacate his seized coffee plantation which the government wanted to confiscate for resettlement.

The German embassy in Zimbabwe protested to Zimbabwe's Foreign Ministry to help cool the dispute down.

Zimbabwe Finance Minister Says Government Unable to Lift State Salaries

Despite talk of a strike, sources say civil servants are not unified on how to proceed, some arguing for a strike or other industrial action, others proposing to seek an audience with President Robert Mugabe

Studio 7 Reporters
Harare & Washington 21 January 2011

Zimbabwean Finance Minister Tendai Biti has told negotiators for state employees that the government is in a financial crisis, tightening the deadlock over the demand by public workers for a significant rise in salaries amid threats of a strike next week.

Biti and Public Service Minister Eliphas Mukonoweshuro met representatives of state employees on Thursday, when the finance minister said resources are tight.

Negotiators had issued an ultimatum demanding an increase in the base pay rate to US$500 a month, roughly equal to the monthly cost of living for an average family. Civil servants dismissed the small pay increases offered by the government early this month putting the base rate for public employees at US$168 a month.

Despite talk of a strike, sources say workers are not unified on how to proceed, some arguing for an industrial action, others proposing to seek an audience with president Robert Mugabe, who will be on annual leave until February 8.

Public Service Minister Mukonoweshuro told VOA Studio 7 reporter Blessing Zulu that negotiations with representatives of state workers will continue.

Progressive Teachers Union of Zimbabwe Secretary General Raymond Majongwe said the two ministers wanted discussions Thursday to remain secret.

Zimbabwe Teachers Association Chief Executive Officer Sifiso Ndlovu told reporter Brenda Moyo that his organization won’t call a strike until all avenues of negotiation with the government have been explored.

Elsewhere, ZANU-PF members staged a violent demonstration at Town House in Harare to protest the recent slashing of maize crops in the Kuwadzana and Glenview suburbs, but council officials said that they had not ordered the destruction of crops.

VOA Studio 7 correspondent Thomas Chiripasi reported on the protest

Big Power Cuts in Zimbabwe Cities Unrelated to 2009 Estimated Bills - ZESA

ZESA Public Relations Manager Fullard Gwasira said that while the utility did not write off estimated bills , indications are that some people delay paying their bills until they can no longer afford to settle them
Gibbs Dube
Washington 21 January 2011
A spokesman for the Zimbabwe Electricity Supply Authority on Friday dismissed reports the parastatal has disconnected power supplies to Zimbabweans in urban areas based on 2009 estimated bills which a regulatory body had ordered it to write down.

ZESA Public Relations Manager Fullard Gwasira said that although the estimated bills were not written off by the electrical utility, indications were that some customers delay paying their power bills until they can no longer afford to settle them.

Gwasira said the Competitions, Pricing and Tariff Commission ordered a revision of the bills based on meter readings. He could not account for bills as high as US$600 in some cases.

Residents who have been cut off said bills were based on 2009 estimated usage.

Gwasira said consumers must pay their electricity bills in order to continue receiving power from the utility. “We are currently not disconnecting power on estimated bills but for electricity consumers used over a long time without paying for it,” he said

Fuel Shortages Resurface in Zimbabwe As Financial Woes Hit State Supplier

Independent daily Newsday quoted Energy Minister Elton Mangoma as saying fuel supplies through the Beira line are erratic and South Africa has stopped supplying fuel because of its own supply issues

Sithandekile Mhlanga & Gibbs Dube
Washington 21 January 2011

Fuel shortages, once common in Zimbabwe before the introduction of a monetary system of mixed hard currencies in early 2009, have returned in many parts of the country.

Fuel market sources said shortages are related to financial problems at the National Oil Company of Zimbabwe or Noczim, often accused of mismanagement or worse. The state entity has been unable to import enough fuel from South Africa and Mozambique, from which fuel flows through a pipeline along the so-called Beira Corridor.

The independent daily Newsday quoted Energy Minister Elton Mangoma as saying fuel supplies through the Beira line have been erratic while South Africa has been exporting less fuel because it has its own problems ensuring an adequate supply.

Fuel shortages have been reported in particular in Bulawayo, Gwanda, Plumtree and Victoria Falls, which are geographically dependent on South African exports.

Zimbabwe National Chamber of Commerce President Trust Chikohora said shortages are affecting businesses which are having trouble distributing goods. "We hope this will not get out of control as it will have a devastating effect on the economy,” he said.

Former Nkayi member of Parliament Abednico Bhebhe, operator of a fuel service station in Bulawayo, said that at times the station goes two days without gasoline.

Affirmative Action Group President Supa Mandiwanzira said it is unacceptable for the country to be short of fuel at a time when the economy is attempting a recovery.

Zimbabwe Annual Inflation Slows in December But Pickup Seen in Early 2011

Though current inflation rates are challenging Zimbabwean households, the scale is far from the astronomical inflation rates registered in 2008 as hyperinflation raged and living standards plunged

Ntungamili Nkomo
Washington 18 January 2011

Consumer inflation in Zimbabwe slowed in December to a 12-month rate of 3.4 percent from 4.2 percent in November, the Zimbabwe National Statistical Agency said Tuesday.
Prices declined by four tenths of one percent in the month.

Bulawayo-based economist Eric Bloch warned however that the easing of inflation pressures may be short-lived due to a recent spike in fuel prices in particular.

Bloch told VOA Studio 7 reporter Ntungamili Nkomo that he sees inflation picking up this month and February. "A recent hike in fuel prices will definitely push inflation upwards, and I predict a 5 or 6 percent year-on-year rate by the end of January," he said.

Buletsi Nyathi, a resident of Gwanda, Matabeleland South province, said recent increases in the price of key commodities are straining family budgets.

"The price increases are small, but wide-ranging and having a negative impact on our budgets," observed Nyathi. "Families are barely getting by."

Though current inflation rates are challenging Zimbabwean households, the scale is far from the astronomical inflation rates registered in 2008 as hyperinflation raged, fueled by the massive printing of money by the Reserve Bank of Zimbabwe.

But that hyperinflationary spike ended when Zimbabwe abandoned its debased dollar and turned to a monetary regimen using a mixture of foreign currencies including the US dollar, the South African rand and the Botswana pula

Zimbabwean banks miss recapitalisation deadline

January 17th, 2011 in Business, NewsAPA-Harare (Zimbabwe) At least four Zimbabwean financial institutions are under stress after they allegedly missed a 31 December 2010 deadline to meet minimum capital thresholds set by the Central Bank in the country, the ZimOnline news agency reported Monday.
According to the news agency, only 20 out of the country’s 24 financial institutions were in compliance with the prescribed minimum paid-up capital requirements as of the end of last year.

Under the Reserve Bank of Zimbabwe (RBZ) regulations, for commercial banks to be operational they would need to have share capital amounting to US$12.5 million while merchant banks should have had balance sheets of US$10 million by the end of last year.
Building societies were supposed to have raised their capital to US$5 million by the end of last month.

“A number are still under-capitalised and may be forced to close or seek strategic partners if they are to remain operational,” an RBZ source told the news agency.

He refused to disclose which institutions were under stress, fearing this could trigger panic in the market.
RBZ governor Gideon Gono is expected to announce the outcome of the financial sector recapitalisation programme when he presents his 2011 monetary policy statement later this month or in February.
The failure by the financial institutions to meet the new RBZ capitalisation requirements rekindles debate as whether or not the country is over-banked.
Analysts say that with its small population, Zimbabwe only requires a minimum of five and a maximum of 10 banks.
The country currently has more than 40 financial institutions that are scrambling for a shrinking cake.
JN/ad/APA
2011-01-17