Up on Global Voices

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As the poor get poorer, the rich are only going to get richer in Zimbabwe. In this post, Mugabe Makaipa describes how Zimbabwe’s stock market has grown 12,000% over last year as it has become chief among the few safe places that people can hedge against inflation. With inflation skyrocketing, unemployment reaching 80%, the local bourse has simultaneously become a boon to the capitalist intentions of the few that are willing to make the risky investment in Zimbabwean stock too. Sadly, the economically elite are the only beneficiaries of the reeling economy that is in Zimbabwe.

In Zimbabwe, they are very few and far between.

Therefore, all of the rich people, government officials, and banks are putting their money into stocks so that it doesn’t lose value. Demand is high, so the price is too.

The everyday people of Zimbabwe don’t see any benefit to this, though. Their masters may not see it for much longer either. Stock prices on the index are obviously inflated and unsustainable. It’s only a matter of time before it comes crashing down, taking down many in its spiral.

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ICG Report on Zimbabwe creates buzz

International Crisis Group (ICG), a global political think tank released a report on Zimbabwe that has generated a lot of attention in cyberspace over the past 48 hours. Here’s the important stuff, the recommendations ICG makes in the report,

To the Government of Zimbabwe and ZANU-PF:

1. Abandon plans to extend President Mugabe’s term beyond its expiration in March 2008 and support SADC-led negotiations to implement an exit strategy for him no later than that date.

2. Negotiate with the MDC on a constitutional framework, power-sharing agreement, detailed agenda and benchmarks for a two-year political transition, beginning in March 2008, including:

(a) adoption of a constitutional amendment in the July 2007 parliamentary session providing for nomination in March 2008, by two-thirds majority, of a non-executive president, an executive prime minister and de-linking of government and ZANU-PF party positions;

(b) a power-sharing agreement leading in early 2008 to a transitional government, including ZANU-PF and the MDC, tasked with producing a new draft constitution, repealing repressive laws, drawing up a new voters roll and demilitarising and depoliticising state institutions in accordance with agreed timelines and benchmarks, and leading to internationally supervised elections in 2010; and

(c) implementation of an emergency economic recovery plan to curb inflation, restore donor and foreign investor confidence and boost mining and agricultural production, including establishment of a Land Commission with a strong technocratic base and wide representation of Zimbabwean stakeholders to recommend policies aimed at ending the land crisis.

3. Abandon plans for a new urban displacement program and act to redress the damage done by Operation Murambatsvina by:

(a) providing shelter to its homeless victims; and

(b) implementing the recommendations of the Tibaijuka Report, including compensation for those whose property was destroyed, unhindered access for humanitarian workers and aid and creation of an environment for effective reconstruction and resettlement.

To the Movement for Democratic Change:

4. Proceed with internal efforts to establish minimum unity within the party and a common front for dealing with the government and ZANU-PF and contesting presidential and parliamentary elections, while retaining reunification as the ultimate goal.

5. Hold internal consultations between faction leaders to adopt a joint strategy aiming at:

(a) finalising negotiations with ZANU-PF over constitutional reforms, a power-sharing agreement and formation of a transitional government in March 2008; and

(b) preparing for a March 2008 presidential election if negotiations with ZANU-PF fail, and President Mugabe retains power.

To Zimbabwean and South African Civil Society Organisations:

6. Initiate legal proceedings in South African courts to attach any assets stolen from the Zimbabwean government and transferred to or invested in South Africa and to obtain the arrest and prosecution of egregious Zimbabwean human rights abusers visiting South Africa.

To SADC and South Africa:

7. Engage with the U.S. and the EU to adopt a joint strategy for resolving the crisis that includes:

(a) mediation by SADC of negotiations for an exit deal on expiration of President Mugabe’s term in 2008 and of an agreement between ZANU-PF and the MDC on a power-sharing transitional government to oversee development of a new constitution, repeal repressive laws and hold internationally supervised presidential and parliamentary elections in 2010; and

(b) understandings on the use by the U.S. and EU of incentives and disincentives to support the strategy in regard to targeted sanctions, political relations with the transitional government and resumption of assistance.

8. Engage with the Zimbabwe government to facilitate talks between ZANU-PF and the MDC leading to the above steps.

9. Convene an urgent meeting of the SADC Organ on Politics, Defence and Security Co-operation to consider the regional consequences of the economic meltdown in Zimbabwe and recommend action by the Heads of State summit to deal with the situation.

To the United States and the European Union:

10. Engage with SADC countries to adopt the above-mentioned joint strategy, including understandings on timelines and benchmarks to be met by the Zimbabwean authorities in restoring and implementing a democratic process.

11. Increase pressure on President Mugabe and other ZANU-PF leaders if they do not cooperate with efforts to begin a transition and restore democracy, including by taking the following measures to close loopholes in targeted personal sanctions:

(a) apply the sanctions also to family members and business associates of those on the lists;

(b) cancel visas and residence permits of those on the lists and their family members; and

(c) add Reserve Bank Governor Gideon Gono to the EU list.

12. Portugal, holding the EU Presidency in the second half of 2007, should not invite President Mugabe and other members of the Zimbabwe government or ZANU-PF on the EU targeted sanctions list to the EU-AU summit unless significant reforms have already been undertaken.

13. Increase funding for training and other capacity-building assistance to democratic forces in Zimbabwe.

To the United Nations Secretary-General:

14. Assign a senior official – a new Special Envoy to Zimbabwe, the Special Adviser to the Secretary General on Africa or a high-level member of the Department of Political Affairs – responsibility for the Zimbabwe portfolio including to support the SADC-led initiative, and monitor the situation for the Secretary General.

To the United Nations Security Council:

15. Begin discussions aimed at placing the situation in Zimbabwe on the agenda as a threat to international peace and security.

To the Office of the High Commissioner for Human Rights or in the alternative the Human Rights Council:

16. Initiate a follow-up investigation on the Tibaijuka Report, including plans for a new urban displacement campaign, arrests of informal miners and political repression, and recommend actions to the member states, the Security Council and the Secretariat.

To the Commonwealth Secretariat:

17. Encourage Commonwealth member countries in Southern Africa to help mediate a political settlement for a post-Mugabe Zimbabwe, setting benchmarks for a return of the country to the organisation.

18. Establish a group of Eminent Persons to engage with Zimbabwe, using the good offices of its regional members to facilitate access.

19. Work through Commonwealth civil society organizations to build up civil society capacity in Zimbabwe.

I can’t say the report, recommendations, or all the attention it is getting have me jumping out of my seat. Don’t get me wrong, I am not going to dismiss the report either, there’s clearly been a diligent effort by the group to document the status quo in Zimbabwe today.
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Gono delivers…another damp squib.

Against the damning background of a controversial mercedes benz, a hardly complentary expose on his meteoric rise, clashes with the finance minister Herbert Murerwa, and the rapid unraveling of his policies, Gono was constitutionaly mandated to deliver yet another monetary policy statement yesterday. Deliver he did, but certainly not a policy statement.

The only change, a cut in money supply which doesn’t count becuase in an already highly speculative economy, speculation will increase by a factor equal to the decrease in money supply. Translation; our record breaking inflation will skyrocket this year if Gono sticks to his promises. Add to that, Gono’s tepid appeals to the government to sell off none performing parastatals and his call for action from other stakeholder, and what you get is nothing.

Here’s what Gono did, or didin’t do in his policy. Lending rates; stagnant at 500%. Exchange rate; shunted at long outdated paltry rates, and nothing else. Correct me if I’m wrong, but last time checked the sum of nothing is, well, nothing. If anything, this last statement was notable because it was Gono’s thinly disguised concession to Zimbabwe free (sometimes called black) market.
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Eddie Cross: How long?

How long, oh Lord?

Perhaps this has been the most common question that I have been asked in recent weeks. People look at me anxiously and hope for an indication that things are not as bad as they seem and that there is some hope that this long nightmare might end.

That is a tough question – perhaps because there is no answer. The truth of the matter is that we might wake up tomorrow morning and find that everything has changed. The reality is however, that change is not likely to come very soon and it is how we manage that bit of information that matters.

Let’s just review the overall situation that confronts us right now.

It is now certain that 2007 is going to be much worse than 2006. Inflation is going to be higher, the economy will almost certainly shrink – for the 9th year in a row and the flood of economic refugees into other countries will, if anything get worse. Shortages will be more widespread and this will
create additional problems for those of us who live here. I predict that the coming agricultural season will be much worse than in the past year. Output across the board will be lower – without exception.

Then there is the situation in Zanu PF. Mr. Mugabe is no longer functioning effectively as Head of State – he is working very short hours and for whatever reason is already in a state of semi retirement. He has moved to his new home in Harare and goes into the office late in the morning
returning home before midday. Few people are seeing him and it is clear that government is confused and divided – no strong central direction is apparent. Everybody is doing his or her own thing.

Then there is the succession debate. Rumors abound about Mugabe’s future plans – they all point to him stepping down and it would appear from our sources that the debate on whether to allow him to remain President until 2010 has been quashed. It would appear to us that he is now committed to
retirement in March 2008, if not sooner. A recurrent Zanu PF nightmare is that he might become incapacitated sooner than March 2008, leaving Zanu unprepared for the succession battles that will follow.
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Cross posted on Global Voices

Following recent reports chronicling the decline in Zimbabwe’s HIV/AIDS prevalence, the spotlight has now been turned on to the effect anti-AIDS campaigns have wrought on traditional Zimbabwean morals and values:

Zimbabwe’s lead in condom use and condom sale worldwide has produced mixed reactions, with some sections of society welcoming the development, while others see it as a sign of “moral decay”.

Zimbabwe is the leading country in Africa in male condom use and sales — selling over 163 million male condoms and 3,8 million female condoms over the past five years. The 163 million male condoms sold represent the highest figure in Africa, while the 3,8 million female condoms figure sold represents the highest number of female condoms sold in the world.

A total of 900 000 female condoms were sold in 2005 alone, representing the highest per capita in any programme in the world so far.

But in an entry decrying the absence of service by the Harare City Council, Taurai at Kubatana illustrates how deeply mired the the pro-condom message can sometimes be,

There are some garbage bins in Harare that display colorful adverts for Protector Plus condoms. Part of the advert reads, “What the smart guys are wearing”: a great message but what a pity that most of the bins are overflowing with garbage that hasn’t been collected for days.

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Eddie Cross: Price Control Arrests

The Arbitrary Arrest of Businesspersons.

During the past week many hundreds of businessmen and women have been arrested and detained for short periods by the Police and other StateAgents. In addition literally thousands of businesses have been raided –some on a daily basis, in an effort to intimidate and force wholesalers and retailers to reduce prices and margins.

One business that I know personally has had individuals from State agencies literally camped on the premises for more than 10 days. They issue tickets and when managers have gone to the local Police Station to pay “Admission of guilt” fines they have been confronted with a wide range of arbitrary
charges.

Three such charges that I have seen read: –

Docket number 3627023 “Wrongfully and unlawfully offering for sale”

Docket number 3625426 “Failure to furnish information”

Docket number 3625427 “ Failure to display prices”

In each case a fine was paid of Z$10 000.00 – much cheaper to pay the fine than go to Court with all that that involves. The authorities are trying to enforce a maximum retail mark up on a wide range of goods of 10 per cent. What they are demanding at wholesale level is anyone’s guess – perhaps 5 per cent?

By my calculation a wholesaler must operate a net (after taxes) margin on at least 15 to 20 per cent and turn their stock every month to make enough money to pay taxes, finance new stock (at significantly higher prices) and pay overheads and direct costs. A retailer requires double that level of margin, as their sales are smaller and costs higher.

If you do not make these sorts of margin then you might cover costs but will not generate the additional funds to buy new stocks. If I take sugar as an example, I bought 7 tonnes of sugar in November 2005 for Z$94 000.00. Today sugar costs Z$351.00 per kilo – my 7 tonnes would cost Z$2 457 000.00 – that is 26 times what it cost just 12 months ago. If I bought 7 tonnes every two
weeks my mark-up at 10 per cent would only finance a small part of this huge increase in the unit costs. The rest would have to be financed from borrowings or from margins on other products.

You can see this happening to retailers and wholesalers – they stay open but their stocks shrink. If I borrowed the funds to pay for the higher costs, interest at today’s rates would cost me Z$25 000 a day on 7 tones of sugar –in 14 days that is Z$350 000 or much more than 10 per cent of the cost of
the product.

One or two reports say that the officials carrying out these raids have shown copies of the Notice that established their right to act in this way. The one report said the new authority would expire at the month end. Directors of business are obliged by law to trade in such a way as to protect the business. They may not trade under conditions that would knowingly lead to the firm’s insolvency and threaten creditors interests.

Most managers are now out on bail. It will be fascinating to see what happens when they get in front of a magistrate.

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All is not well on the Zimbabwean Front

The mud cake thick charade that is Zimbabwe sunk to it’s lowest yesterday when Botswana’s president Festus Mogae officially opened the Harare Agricultural Show. That Mogae played along is no surprise, it is the audacity by Mugabe and his cronies in government to hold up a non existant relationship with a country that has made no secret of their contempt of Zimbabweans that is galling.

Years after independece in Zimbabweans and the batswana cultivated a famously cordial relationship. After all, most if not all residents of Matebeleland South province in Zimbabwe have lineages span across Zimbabwe and Botswana’s boarders. Many a Tswana were educated at Zimbabwe’s colleges university and returned to their home country for a job. Reciprocally, many a trained Zimbabwe established themselves in Botswana’s smaller, but much more stable economy during the first fifteen years of our independence.

So it only seemed natural when things turned sour in Zimbabwe, that a mass exodus for Botswana beginning first in the south of Zimbabwe became one of the most plied routes to “greener pastures” for desperate Zimbabweans. For a while, our neighbors in Botswana tolerated the surging influx of Zimbo’s. It wasn’t anything new, our countries had mutually exchanged people, skills and resources for much of the last 20 years. I can even remember a family vacation in Gaborone, Botswana’s capitol back in the day. And, if I am not mistaken, I remember my mother buying me my first “safari suit” outfit on that trip. Mugabe made safari suits popular to seven year old Zimbabwean boys in the mid-eighties.

After years of sustained heightened influx from their northern neighbors, the Batswana’s longsuffering patience began to run. They had watched better qualified Zimbabweans come and take their jobs and enjoy a better quality of life in their own country and had had enough. Right around 2000, word of Batswana’s targeted hostility began to leak out. Pretty soon after that it became news. Zimbabwean’s were being murdered by angry Tswana’s; Botswana was reipartriating Zimbabweans by the truckload everyday; Botswana was couping despertate Zimbabweans in inhumane animal pens for miniscule offences and the litany continues. There’s one headline that definitively marked a new era in the relations between our countries and our people; Botswana erected an electric fence to slow down the tidal wave of Zimbabweans.

Despite their best diplomatic efforts to project the new fence is nothing more than a measure to stem the spread of foot and mouth disease between cattle heards close to the boarders, Botswana’s government received several protests from their colleagues in Harare. All the while Zimbabwean border jumpers had figured out how isolate the portions of the fence long enough so that they could sneak back into what had become a promised land; Botswana. This controversy is well articulated in the PBS Wide Angle documentary Border Jumpers
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Eddie Cross: Let my people go

The story of Moses in the Old Testament chronicles the time when the people of Israel liberated themselves from slavery in Egypt. In the story, Moses goes to Pharaoh and demands that he allow the Jews to leave Egypt and travel to a land that has been promised to them by God. Seven times this demand was made and in an unusual aside, the Bible says that God “hardened Pharaoh’s heart” and he denied them their freedom.

There was more to that of course – there were nearly 3 million Jews in Egypt and they formed the backbone of the indentured labour and much of the administrative skills needed to run the country. It was only after every Egyptian family had lost a child that the Egyptians drove the Jews out and they were able to flee into the desert and eventually enter to Promised Land.

I do not want in any way to draw a parallel to this story and the struggle for freedom that we are engaged in here, but there are similarities. We have prayed, our people have suffered and we have had no outside help and indeed cannot expect any help. We are virtual slaves to Zanu PF who run a kleptocratic State that keeps the rest of us working hard and poor.
say that each time we have challenged Pharaoh he has simply hardened his heart and increased our burdens. Will this final challenge be the one that breaks the back of Pharaoh’s will and sparks a willingness to let our people go? Perhaps it is that point in our story.

Certainly if God was working behind the scenes you can see the results. On Monday we see the old bearer cheques lose their value and there is consensus that this will lead to chaos. People in the remote rural areas have not even heard the news, the Banks are simply swamped, there are not enough of the new notes available to exchange with the old. Trillions of dollars will be wiped out and fortunes lost on Monday – and it will not be the rich and powerful or the crooks who suffer, they have their positions well covered, it is going to be the millions of the poor and disadvantaged who will be the main victims.

Right now, just to compound the problems of the people, there is no maize meal available. I think Zanu PF actually believed their own fiction that we had grown 1,7 to 1,8 million tonnes of maize. We have stated as often as we can that this is pure fiction and make believe. If, as I estimated some months ago, we have only gown about the same as last year (750 000 tonnes) then this will have already been exhausted as people will have held onto stocks for their own use and what little surplus would have been traded or eaten by now. The price of this basic staple has doubled overnight – if you can get some. We brought a truckload of maize meal into town yesterday and it was sold out in 30 minutes.

I bought some Rand for a trip to South Africa last week – at 65 000 to 1. When I came home 6 days later, the price was 90 000 to 1. Fuel is in very short supply and prices rise daily. The army officer who runs our Energy Ministry declared this week that fuel prices would be fixed at half or less their present value and that they “had plenty of fuel to meet our needs”. The immediate reaction of the trade was to simply stop trading. The Minister of Industry weighed in and declared a 3-week price freeze – in an environment where our prices are doubling every two months. He was ignored.

We must pay our staff on Friday next week – 850 000 workers expect to be paid their pittances, 10 days later we must pay school fees for three million kids. Nearly all of these transactions will be in cash. We simply do not have the smaller denominations needed for these payments. There is no sign of them being available. I will try to draw change on Monday, but I have little expectation that it will be available. Yesterday we were still trading at about 90 per cent in the old notes.
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Chaos as zero deadline arrives

Today is the day Gono set to be the final day ofuse of the “old” bearer cheques, which have been sporadically introduced over the last two years. Not surprisingly, the poorly planned currency change over has been so hectic and stressful that it is going to be impossible to complete the transition as neatly as Gono might have wanted.

The nauseating disregard for ample planning as evinced by untold inconvenience experienced by Zimbabweans across the board is infuriating. It smacks of the narcissistic arrogance that has been the mantra of the Mugabe regime especially over the last few years.

For illustrative and realistic purposes, travel with me if you will, to Bveke communal area in the northeastern district of Mount Darwin. Here we find subsistence farmers and other rural people who will ultimately be denied just opportunity to exchange their “old” currency for the new. Why? Because Gono et al simply didn’t think enough of these people to warrant a more intense planning so to cover the following scenario.

In Zimbabwe’s highly centralized government, Gono’s announcement that he was changing the currency probaly still hasn’t been heard by everyone in the Bveke area even though it has been three weeks now. Such policy announcements are usually carried through the media, which in Zimbabwe leaves only two options; the Herald and Zimbabwe Broadcasting Holdings.

If you live in Bveke, you probably have scant access to both of these. Both radio and television coverage are essentially non-existent in this remote area of Zimbabwe for two reasons. First and most importantly, with Zimbabwe’s tattered and rapidly regressing economy, hardly anyone in the rural outskirts can afford to mantain a radio much less a television set. It is just too expensive and simply not a high enough priority. Second and probably much more frustrating, if you own a television set and/or a radio in Bveke, those two are most likely the most underused pieces of equipment in your household. Bveke is just too far out to receive signal from Zimbabwe’s sole broadcaster, Zimbabwe Broadcasting Holdings. So even if you turned it on, the T.V. or radio will probaly pickup nothing.

People just didn’t know the change was going to happen as fast as it has. Gono knew this and did little to alleviate the mass confusion that resulted. I’ll explain that in a little bit.
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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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