Zimbabwe: a daunting social reality

The big news out of Zimbabwe last week was that inflation had dropped down to three digits. Great! We’re very happy for ourselves. But really, what does that news matter when prices went up dramatically and our currency was devalued this month on the heels of Gono’s “Sunrise,” more like sunset, project. For the record, inflation is a measure of the increase of prices over a set period. Why am I telling you this? Because dear reader, I want you not to be surprised when August’s month on month inflation figures come out; it is going to be much higher than the celebrated levels of July.

Thank you very much Gideon Gono.

Speaking of Gono, there’s a new consipiracy theory floating around out there. This one, sired by exiled businessman Mutumwa Mawere, speculates that Gono (like Jonathan Moyo) is exploiting the power vacuum in ZANU-PF to become law unto himself. Quoth Mawere

The role of emergency powers in a democratic state is a different subject that requires its own assessment but in this column, I thought it would be useful as we critically evaluate the assertion that Jonathan Moyo and Gono are probably the two most important individuals in Zimbabwe who have sufficiently understood the power vacuum in Zanu PF to effectively and efficiently use Presidential Powers to undermine not only parliament but unconstitutionally undermine civil liberties in the name of national interest.

Interesting theory.

It is startling but true that Mugabe has done nothing in both cases to reign in the apparently limitless power these “young turks” on their mediocre campaigns to “reform” Zimbabwe. On the contrary and much to the chagrin of ZANU-PF’s elder statesmen Mugabe has defended both men viciously, at times threatening to the wrath of the law to protect his young guns. This despite everyone, and I mean everyone else’s realization of how far “out in left field” their ideas and have been, to quote the oft used American analogy. What! Converting Zimbabwe Broadcasting Corporation into six strategic business units? That was Moyo. What! Converting Zimbabwe’s currency midstream and dubbing that monetary reform? That was Gono.

If Mawere is right, it’s only a matter of time before Gono’s new found influence crumbles. Just like Moyo before him.

I’ve been wondering lately, is it me or is there a real irony of ironies playing out in Zimbabwean news reports. In this report from the Herald, president Mugabe suggests (for the umpteenth time this week) that agricultural output is increasing this year. Yet over here the nation,s millers are saying,

Zimbabwe has run out of maize-meal, its main staple food, in yet another sign of a deepening crisis in the southern African country.

In a stark reminder of how the gains of independence from Britain 26 years ago were fast eroding away, Zimbabweans woke up on Monday to celebrate Heroes Day holiday held in commemoration of fallen heroes of the liberation struggle, but with shops empty of maize-meal.

The chairman of the Zimbabwe Grain Millers Association (ZGMA) that groups private milling firms, Thembinkosi Ndlovu, said the countrywide shortage of maize-meal was because the state-owned Grain Marketing Board (GMB) had not supplied maize to millers because it did not have any in stock.

Isn’t it ironic?

To be fair, allow me now dear reader to invoke yet another concept from basic economics ; market failure. A market failure is basically when the market system is unable to satisfy the public good and/or create the most efficient exchange of products and money.

(You should know by now) I belabor myself to elucidate economic concepts with just reason. The supply of grain to millers in Zimbabwe is a market. The Grain Marketing Board, a parastatal has a monopoly in this market but they are failing to satisfy the public interests. This is no small public interest either; in Zimbabwe, as in many places across Africa cornmeal is the staple. Therefore this (and can we have a drumroll please,) is a market failure. A (agricultural) commodity exchange market failure in an agrobased economy. Our economy cannot function if we cannot get agriculture right. Efficiently operating the agricultural sector is the most basic requirement for the sustenance of our entire economy.

Whatever it is, the mother of all ironies or a market failure, the reality is life on Zimbabwe’s streets is officially past impossible. This is a daunting social reality.

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Eddie Cross: Living on the edge

The Sword of Damocles.

For those who are not familiar with the above saying, it is used to describe a situation where a heavy fighting sword is hung by a thread from the roof over the head of a person who was strapped down underneath it and awaiting death. The Zanu PF regime is in just such a position and during the Minister of Finance’s address to Parliament last week, he held a knife against that thread and threatened to cut it and in so doing, in my view, he would signal the death of Zanu PF and his own regime. The issue he was talking about was one that I have addressed several times before – the price of maize.

Maize is that stuff the Americans call corn and feed to their hogs and cows. In Africa – certainly southern Africa, it is the primary food staple and we eat huge quantities of it every day. It is cooked as porridge and eaten with some form of “relish”. Perhaps oil and vegetables, a bit of meat with some gravy or sour milk, sometimes even rough peanut butter. The great majority of Zimbabweans have not “eaten” if they have not had “sadza” at least once a day. Most poor families would have cold sadza for breakfast (left over from the evening meal) and then at least one large meal at lunch or in the evening with hot sadza as the main course.

We eat 115 kilograms of maize meal per capita per annum. It is therefore a very important component of daily life and the key to the tenuous stability of Zimbabwe lies in the fact that it is cheap and reasonably available. But there is a price to pay for this and no one – except poor old Herbert, dares to talk about it.

The facts are as follows: –

1. We need 1,2 million tonnes of maize a year for human consumption –
assuming no cross border activity.
2. We need another 600 000 tonnes for animal consumption as stock feed.
3. We need about 100 000 tonnes a year for industrial use – the production
of breakfast cereals and snacks, starch and alcohol.
4. We produced last year, about 700 000 tonnes of maize in Zimbabwe, we
imported over 1 million tonnes and maize was constantly in short supply.
5. This past season the government claims a crop of 1,7 million tonnes but
most observers think the actual crop is less than 900 000 tonnes and the expectation is that we will again have to import over a million tonnes.
6. The Grain Marketing Board has a total monopoly over maize grain imports,
purchases and sales. The Police and the military enforce this.

The economics of this trade are astonishing – even in a country and a continent where politically inspired skewed economic policies are rife. The South African grain industry grew a crop last year of over 10 million tonnes and with domestic consumption at about 7 million tonnes, had a significant surplus for export. This gave rise to price levels in South Africa at import parities and generally below R1000 per tonne. At one stage the price was as low as R700 per tonne and this threatened the viability of the whole industry.

This past year, South African farmers have cut back on their maize plantings and will produce less than 6 million tonnes – output will be below consumption for the first time in many years. As a result prices have risen sharply and are now running at about R1500 per tonne. South Africa is now importing grain from abroad (mainly yellow maize for stock feed) and is continuing to export white maize to the region.

This price translates to a landed cost of maize imported to Zimbabwe of R1750 per tonne. Transport charges from silos in South Africa to the closest silos in Zimbabwe have to be paid in foreign currency. This suggests a local landed cost of Z$60 million at bank rates and Z$140 million at parallel market rates. Local producer prices are currently set at Z$31 million per tonne.

These price profiles must be set against the selling price that has prevailed now for a considerable period of time of Z$600 000 per tonne or R17,50 per tonne – 0,1 per cent of the actual cost of imports and 0,2 percent of the local producer price.

This enormous price differential (administrative costs at the GMB are 10 times the selling price) leads to massive market distortions – cross border trade is huge as the cost of maize meal in Botswana and South Africa is equal to about Z$280 000 per kilogram compared to Z$18 000 to Z$28 000 per kilogram in Zimbabwe, depending on source and quality. Technically there are no reasons why a local farmer should not sell to the GMB. On paper the retail price of maize meal is so low that the GMB price should be very attractive. In practice this is not happening – deliveries to the GMB have been less than 100 000 tonnes total so far this year. With stock feed compounders paying the full price for imported maize and sourcing all their foreign exchange to do so in the parallel market, they offer high prices to producers even though this is illegal. Roadblocks are routinely manned by GMB staff to prevent this trade, but it happens – the differentials are just too great.

But the main impact lies with the GMB which, even though the World Food Programme is importing food to feed up to a third of our population, must itself import about 50 000 tonnes of maize a month to meet domestic needs for human consumption. The numbers are frightening: –

1. At official foreign exchange rates of 250 to 1 for new dollars to the US
dollar, the cost of imported maize to the GMB is Z$62 500 new dollars per tonne. Add to this handling charges of Z$10 000 per tonne and the cost out of a GMB silo is Z$72 500 per tonne.
2. The GMB recovers only Z$600 per tonne from sales leaving a deficit of
Z$71 900 per tonne or Z$3,6 billion new dollars a month. (US$14,4 million).
3. The cost of these direct imports will be US$150 million a year resulting
in combined losses of Z$43,2 billion new dollars.

With total foreign exchange availability to the Zimbabwe government via the Reserve Bank at about US$560 million per annum – all at about Z$250 to 1, it is most unlikely that the hard currency for these essential imports by the GMB will be available – competing demands for fuel and electricity and other essential imports will consume most available resources. I still think it likely that someone or another government is in fact funding the supply of maize to the GMB at present. Traders tell me they have no idea where the money is coming from. One local maize importer says he knows but will not tell me who it is. Whoever it is should take note that a new government here will never repay such loans – designed, as they are, to simply extend the life of a bankrupt and repulsive regime.

For the rest, it’s back to that statement by old Herbert and his threat to “review” the selling price of maize to millers. When he said that I bet every Zanu PF leader in the country shivered. Can you imagine what would happen if a 10 kilogram bag of this basic essential suddenly rose in price by 10 times. There would be a revolution. Herbert knows that time is running out – such distortions in prices simply cannot be sustained indefinitely and there are limits to the pockets of foreign donors. But for Zanu PF, the sword of Damocles hangs by a slim thread, rubbed day-by-day, hour-by-hour, by the winds of inflation.

E G Cross
Bulawayo, 5th August 2006

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Eddie Cross: Nearly There

Is the end in sight?

There are growing signs that we may be seeing the end of the Mugabe regime. The principle driver is the economy, but this is now being supported by regional consensus that he has to step down so as to allow intervention and recovery. Political momentum is also being supported by renewed global agreement that Zanu has exhausted all options, save one and must now step down and allow change to take place.

On the economic front the pace of collapse has accelerated sharply. This is not reflected in official statistics but today the US dollar is trading at five times the official rate, fuel prices have risen to over Z$500 000 a litre and a loaf of bread is selling at Z$200 000 with milk not far behind for a half litre. This week maize meal prices have doubled, pushed by the first price increase in maize from the GMB in nearly two years. In the past 24 hours, we have been without electricity for 12 hours – many areas are also without water.

I watched the Zimbabwe television news the other night and heard Mr. Mugabe announce that we are no longer importing maize – we have after all grown enough maize to feed ourselves! The reality is that in the week ending the 14th July, we imported 17 000 tonnes of white maize from South Africa. No matter what the rhetoric, the reality stays stubbornly in sight – we will only reap a third of our maize needs, imports will again have to be over a million tonnes. We have grown a scant 20 000 hectares of wheat and barley and will have to import three quarters of our needs of these essential grains as well.

But aside from the dismal outlook for agriculture, with the exception of the platinum sector where special agreements and the power of a few multinationals are holding the sector together, the Zimbabwe economy is very close to collapse. The fiscal deficit is totally out of control and inflation can only accelerate in the months ahead. The railways and other State controlled parastatals and companies are at an advanced stage of collapse – many struggling to maintain even limited services and supplies. This is typified by Air Zimbabwe, which, this past week has had only one aircraft flying.

But it is not only in these spheres that the noose is tightening about the neck of Zanu PF. It’s also in the body politic. Demonstrations and marches are a daily occurrence. Hundreds are arrested for one misdemeanor or another. MDC Members of Parliament resolved this week to boycott Parliament saying that it has ceased to have any relevance to the crisis that is unfolding here. This past weekend the MDC held rallies and meetings across the whole country – calling on the people to get ready for the day when they will be called out onto the streets of our towns and cities to say “enough is enough”.

This coming weekend we will hold meetings of our National Executive and Council and the MDC Council will meet on Saturday with representatives from civil society organisations to agree on the “Road Map” (if you want a copy let me know and I will send it to you) and to discuss plans for the next few weeks. All civil society organisations will attend plus the Trade Unions and representatives of the Churches.

On Sunday I attended a small meeting with Party leaders from the rural areas to outline their participation in the actions that are being planned. The meeting was held behind closed doors and in near darkness. The feelings deep and the sense of commitment profound. At the end of the meeting the group rose, held hands and pledged to support each other in the struggle that lay ahead. Then a simple meal with water and they returned as they had come – at their own expense and by private transport to their remote villages.

I am so privileged to belong to this movement among the poor and disadvantaged. The man who led the discussions has seen his home for only one day in the past two months. He gets no salary and meets most of his own costs. His freedom and family at risk every day. Today I walked into a meeting with two women there – just back from a meeting in a Church surrounded by four truckloads of police. The one lady has been in prison many times in recent months. They were planning their next moves and action. “Soon”, they said to me “the long night will be over”.

Most observers and commentators do not believe the MDC and its allies can bring this off. I see a very different picture altogether. Zanu PF and its cohorts in the CIO and elsewhere are very nervous and with every reason. They have failed as a government in every sphere of their responsibilities. They have failed to keep us safe and secure, they have failed to protect our freedoms, the very freedoms that were the goals of the liberation struggle. They have failed to deliver a rising standard of living and access to health and education. They have failed to create and secure our jobs. Now they must go and allow others to start to put things right.

It was interesting to me to see that the ASEAN countries have just agreed to isolate the regime in Burma. This after 30 years of patient tolerance of a regime that has held its people in military submission and captivity. Perhaps now the world community will be less tolerant of these aberrant regimes – identify them for what they are and isolate and punish their leadership until they agree to allow their people the basic rights taken for granted in modern democracies. Perhaps this is also the moment for us in Zimbabwe.

Just this week the Chairman of the SADC, a regional grouping of central and southern African states invited Morgan Tsvangirai to visit Gaborone and hold discussion with his administration on the crisis in Zimbabwe. An unusual honor in Africa where opposition is often confused with insubordination and treachery. He was well received and the visit given prominence by the media – the government owned daily carried a full color picture of the two men embracing and tonight there is an hour-long interview with Morgan on Botswana television.

I get the sense that people here are exhausted and dispirited. They are denied the information they need to be anything else. Lets not despair – the finish line is in sight and we must finish the race we joined in the year 2000 when we decided to finally confront the regime in Harare. It has taken longer than any of us expected and it has been much tougher than we anticipated, but we are nearly there.

Eddie Cross
Bulawayo, 25th July 2006

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Hot Seat: Moyo, Raftopoulos and Robertson

Violet: We continue the teleconference interview discussing various issues of national interest with three people who have at one time or another advised some of the key players in Zimbabwean politics – political analyst Professor Brian Raftopoulos, former Information Minister, now independent MP Professor Jonathan Moyo and leading economist John Robertson. This week we are going to be discussing how Mugabe thinks. What is his mindset? Why is he allowing the country to collapse so totally? A huge part of that collapse has been economic and so we start this week’s discussion with the economy.

With inflation nearing 1200% it’s been said the economy has become Mugabe’s real opposition. So I first asked economist John Robertson to explain the state of the economy and tell us how bad things really are.

Robertson: The state of the economy is certainly extremely serious. We have lost about half of our gross domestic product. The GDP per capita has come down to less that US$1 per day for the population as a whole and at that level we have, I am afraid, a very debilitated population. I think many, many people are suffering malnutrition and because of the treatment and the various little security measures taken by the government we have also a traumatised population. Which might explain why they have not taken mass action to date. There was some evidence of courage to do that back in 1997/ 98, but the treatment that was meted out to the people after that has left them very, very cautious and very anxious not to have that experience again.
Now these problems are mounting in such a way that the economy can no longer employ most of the people. We’ve got some 300 000 youngsters turning 18 in this country every year – about maybe 10% of them can find work – the rest of them are unemployed and unable to find any kind of suitable employment anywhere. So they have to leave the country if they want work. We’ve got many of them leaving for South Africa illegally and facing very serious problems when they do that. I think that we face a very, very long recovery unless we get a massive amount of assistance from abroad. And once again I say that South Africa’s position here is the most important. We could speak of following the same path of recovery as say Uganda or Ethiopia or Mozambique and each of those cases we are talking more than 30 years and they still haven’t come right. We could come right very much more quickly with a lot of assistance from South Africa. I believe that the South African assistance could be in the form of the assistance given say to East Germany by West Germany when the Berlin Wall came down.

Eddie Cross: Once more in to the breech

Morgan had lunch with a group of local business leaders this week. During the conversation he made the point that he would never have predicted that the Nationalist government in South Africa in 1989 would have accepted the changes that were about to break over the heads of all who lived in South Africa. They controlled all the instruments of the State, huge resources, the electoral system and the media. Domestically they seemed to be unassailable. Five years later they were defeated, out of power and the party that had dominated South Africa for the previous 45 years had disintegrated.

It happens. Never say the word “impossible” in politics.

Suddenly there is a new consensus in the international community about Zimbabwe. This replaces the assumed approach sculptured by Tony Blair at the G8 summit in mid 2005 when the G8 renewed its commitment to helping put the Zimbabwe economy back on its feet and its support for the approach proposed by the South Africans. After the Gleneagles summit, Thabo Mbeki has had a go at getting Mr. Mugabe to step aside and allow reform and recovery on three separate occasions and on each occasion he was frustrated by the local leadership.

Eddie Cross: Swirls in the Water.

A few years ago I spent a marvelous time on the Chobe River flood plains on the boundary between Namibia and Botswana. For those of you who do not know the area, the Zambezi River runs down the western border of Zambia for several hundred kilometers and then hits a basalt ridge where it backs up and spills over into the flood plains on either side of the river creating huge seasonal wetlands.

In the south, these wet lands drain into the Chobe River and then back into the Zambezi River at Kazungula. This gives the river its May flood that makes a visit to the Victoria Falls so spectacular. When this process is underway from April to July, the waters of the flood plains drain into deep gullies that are kept open by Hippos and these run for up to 30 to 40 kilometers into the Chobe River.

We spent a wonderful day on the flood plains with a local guide armed with light fishing gear. We went up to the head of a system of drainage channels and then drifted down with the current. As we did so our guide showed us how to cast our lures into spots on the edge of the channels where a swirl indicated the presence of Tiger fish. These were hunting the smaller fish emerging from the reed beds where they had lived for the past few months.

The results were spectacular – about every third cast saw a fish rise and strike and of these we landed about one in three. We fished all day in wonderful surroundings, lush swampland as far as you could see, beautiful clear blue skies and a temperature of about 25 c. Not much game but we had to watch for Hippo and Crocodiles.

Swirls In the water. That is what we have seen all week in southern Africa. Brief statements from South African leaders about the crisis in Zimbabwe, statements from the UN in Geneva and New York. Tantalizing stuff, but what does it all mean? It probably points to political Tiger fish hunting smaller prey in Zimbabwean waters.

Where to start

Some days, today is one of them, there’s seems to be too much going on I just don’t know where to start or focus my energy.

I could spend hours bloviating on the not so pleasant plight of Lovemore Madhuku the leader of Zimbabwe’s National Constitutional Assembly–an umbrella body of civic groups pushing for a new constitution in Zimbabwe. He has taken a battering in the news over the last few days because he somehow managed to secure himself a third term at the helm of NCA in violation of the groups constitution. He took care of that though, he ammended the constitution. Needless to say, Dr. Madhuku is swimming in controversy. The activist is accused of manifesting the same despotic tendencies his opposes in Mugabe. He fired back at his critics in an interview with SW Radio’s Violet Gonda.

The Interception of Communications Bill, which empowers the government to monitor cyber and telephony activities of individuals “suspected of threatening national security” continues to sail through the legislative hoops on its way to becoming law. After being gazetted late last week, it went for reading in parliament’s legal committee. If they pass it, the bill could be tabled on the floor for a vote in a matter of days. By the end of the week it could be signed into law.

That’s a bogus concept for you, national security in Zimbabwe? Security from what, certainly not from hunger, disease, dilapidated infrastructure, economic implosion and so on. The governent can’t even provide workspace for some of their own functions and they want to talk about “national security?”

Eddie Cross: “The Prognosis”

Marvelous word that – hope not too many of you had to go to your dictionaries to find out what it means! However I feel rather smug – I said a few days ago that the 15th May marks the start of our winter, and I was more than right for once. It has snowed all the way from the Western Cape to Mpumalanga in the Transvaal. I was in Johannesburg over the weekend and it was well below freezing at night.

But our elections Directorate in the MDC also has just cause to celebrate. Last week when I was in Harare for three days they told me that they had estimated that Zanu PF would be able to garner up to 4 000 votes in the bi-election taking place in one of the Harare province constituencies. They had come to this conclusion after a detailed study of the voter’s roll and street surveys. They were just about spot on – Zanu registered about 3 900 votes.

However they also felt at the time that the poll was going to be low despite the turnout at MDC rallies and the impact of a walk about done by the President during the campaign. Some estimated a turn out as low as 8 000 and they felt this might result in a poor outcome for the MDC as the MDC vote was split by the current dispute. In the event they need not have worried – the MDC received nearly 10 000 votes, the Mutambara group 500.

Eddie Cross: “Floating off the Mountain”

I was watching a TV programme the other day and saw a story about a woman living in the USA who faced an enormous challenge when a teenager. She took it to God in prayer and when she recounted the response she described it as “like floating off the mountain.” I know the feeling because I to have been there in the past.

You as an individual face a mountain and to get to your destination you have to climb that mountain and get down the other side. At the start all you can see is this huge mass, perhaps towering up into the clouds, dark menacing and difficult. It always feels as if this is “mission impossible”.

Eddie Cross: “A Winter of Discontent”

The Beginning of Winter

The 15th of May is generally regarded as the start of winter here in Zimbabwe. In Matabeleland we can expect frost any time from this date and right now the weather is just out of this world – clear blue skies, crisp mornings and brilliant moonlit nights. Most people do not appreciate that we on the highveld of Africa often have days when the temperature will drop to well below zero – frozen bird baths and garden hoses. But apart from that it bears little resemblance to winter in the north.

For Zanu PF this past week has shown many signs that this is going to be a long winter for them. Perhaps their last winter?

First they suddenly postponed the publication of the inflation data for April. We all knew why – as expected, it went over the barrier of 1000 per cent per annum. In fact in April the month on month inflation was 21 per cent. Most of us think that the real inflation rate is much higher, I wonder if they are still using the controlled prices for goods that are supposed to be under price control for example?

Then suddenly interest rates fell dramatically in the markets – on Monday they were over 300 per cent per annum, Friday it was difficult to place money at any interest – the overnight rate was a paltry 5 per cent. This is a sure indication that government is not borrowing money to meet its obligations – it is just printing it. If that is true, then we have only seen the start of the inflation storm – very rough weather ahead.