Zimbabwe News Online (21) - 6/1/98

Zimbabwe News Online (21) - 6/1/98


Edition #21 1 June 1998

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Zimbabweans eagerly await reshuffle
1. Zimdollar weakens further
2. Parliamentarians demand audited accounts
3. Government seeks dialogue with ZCTU
4. Ruling party MPs query de-listing of farms
5. Bank victims seek political solution
6. Loss of tender angers indigenous businessmen
7. Board doubles maize buying price
8. Government clashes with fast food outlets over levy
9. Zimbabwe ranked fourth from last
10. Students plan to protest against Mugabe
11. MP remanded on stock theft charges


Zimbabweans eagerly await reshuffle

Since President Mugabe charged at his ruling party's central committee meeting about two months ago that there was a lot of dead wood among senior members of the party and government, Zimbabweans have been eagerly awaiting a cabinet reshuffle.

A cabinet reshuffle has long been overdue, not only because of the poor performance of some of the players in Mugabe's government, but because Zimbabweans see it as an opportunity for Mugabe to trim his bloated government which the fiscus cannot sustain.

However, while reshuffling his cabinet may improve his sagging popularity, political analysts point out that this may create new problems which Mugabe may find insurmountable. Common sense dictates that Mugabe needs to cut his government by almost half if he is to save the economy which is reeling under high interest and inflation rates, loss of investor confidence and a growing budget deficit, from collapse.

There is no doubt that most of the country's woes are a result of the government's profligacy which has seen the budget deficit growing to above 10 percent of the Gross Domestic Product. The huge size of the government is one of the major reasons which has dragged the once prosperous country into economic quagmire.

University of Zimbabwe lecturer, Alfred Nhema said the present size of the government was unsustainable and even if the president wanted to maintain the status quo, the economic situation demands that he reduces the size of the government so as to reduce the budget deficit and inflation, and at the same time rebuild people's confidence in his government with its popularity sagged to a bottom low.

Political analysts have expressed varying opinions on why Mugabe is taking so long to announce a reshuffle after publicly accusing some of his top government officials of being non-performers. A member of the opposition Zimbabwe Unity Movement, Tichaona Taendesa said Mugabe was afraid of worsening divisions already existing within his party. The party is beset with problems of factionalism in a number of provinces, the worst hit being Masvingo, Manicaland and Mashonaland Central.

Another political analyst who declined to be named said while the president might want to introduce new blood into government, he does not know what to do with the old guard, several of whom have been in cabinet since independence in 1980. This has prompted some South African newspapers to remark that Zimbabwe is the only country in the world where being a minister is a permanent job.

The analyst said while Mugabe might have already identified the people he wants to axe from cabinet, he is not sure of the consequences of such a move as this may create a strong anti-Mugabe lobby within the ruling party.

Should this happen, the president's new loyalists may not have the political clout to defend him against an onslaught by the old guard, the analyst said

At the same time, if Mugabe tries to maintain the status quo or make cosmetic changes when he reshuffles his cabinet, this may result in the already politically agitated Zimbabweans resorting to Indonesian-style disturbances which have seen Suharto climb down from the presidency in disgrace. Who knows, Mugabe may be forced out in an even more dramatic way if he does not act now to change the country's dwindling fortunes.

Generally, Zimbabweans would like to see the number of ministers drastically reduced. The government currently has two ageing vice presidents who people want retired and replaced by a much younger and energetic vice president. It has 28 ministers, six of whom are ministers of state, eight provincial governors with ministerial status and 15 deputy ministers.

Mugabe will also have to be careful about regional balance when he carries out a reshuffle. Currently the party is also dogged by divisions along regional lines, and should the reshuffle result in some regions having more ministers than others, this might create problems for Mugabe. Already there is disgruntlement that the government is dominated by Mugabe's tribe the Zezuru while some tribes like the Karanga are being alienated.

Two weeks ago a local weekly paper asked Mugabe to confirm whether or not a cabinet reshuffle was on the cards, and his answer was that he had never said a reshuffle was pending. He said cabinet reshuffles were a guarded secret which he never discussed with anyone.

However, one thing is certain, as much as Mugabe may need to maintain the status quo, the economic realities of the country demand that the size of the government be cut before the economy collapses totally. People have suffered enough while those in power are enjoying the fruits of independence alone. So it is a question of when Mugabe announce the reshuffle, and not whether he will or will not reshuffle his cabinet.

Judging by the political and social mood currently prevailing in the country, it is in Mugabe's own interest to reshuffle his cabinet sooner than later.


1.Zimdollar weakens further

The Zimbabwe dollar is under immense pressure and there are fears that the unit may further weaken, throwing the country's already battered economy into further turmoil.

The Zimdollar which depreciated by 40 percent against the US dollar last year, last week tumbled by 3,4 percent against the US dollar and financial analysts say it could slide further to a low of between 19 and 23 to the US dollar in the next fewweeks if tobacco prices do not improve.

Traditionally the Zimdollar firms up around this time of the year as the country earns forex from tobacco, the country's number one foreign currency earner. However, this year tobacco prices have fallen sharply, prompting all the country's tobacco sales floors to temporarily close down in protest. The central bank's foreign currency reserves are also low, with just over two months import cover.

Calls by the Zimbabwe Tobacco Association last week for farmers to boycott the tobacco selling floors until May 26 triggered the currency's fall from 17,9 against the US dollar last week, to 18,5 on Monday. This prompted the Reserve Bank to release foreign currency into the market to prevent the currency from sliding further.

Before the beginning of the tobacco selling season, Zimbabwe had forecast that it would earn about Z$9 billion from tobacco. The forecast was based on last year's prices. However, at current prices, the country is now expected to earn only Z$5 billion.

2.Parliamentarians demand audited accounts

The ruling ZANU PF party's top brass is under mounting pressure from its members and Parliamentarians to produce audited statements of its finances for the first time since independence in 1980.

A report carried by the Financial Gazette says the latest cries come in the wake of apprehension from various party structures, including the policy-making Politburo, that the party's balance sheet and investment portfolio, apparently known by only a few, be made public, particularly now that ZANU PF is funded by the taxpayers.

Since the introduction of the controversial Political Parties Finance Act in 1992, ZANU PF has received a total of Z$225 million in direct funding from taxpayers. Parliamentarians also want the office of the Comptroller and Auditor-General to be involved in the auditing of the finances of the party because public funds are involved.

A Politburo member who expressed concern at the lack of information on the party's finances said: "Ever since I have been in the Politburo since independence, I have not seen a detailed account of the party's finances and its investment portfolio.

"I mean those companies in which the party has bought shares and those in which it has disposed of its stake-holding and how the funds have been used. I am also not aware how money which has come in from the state and funds donated by well-wishers have been exhaustively used."

3.Government seeks dialogue with ZCTU

The Zimbabwe government notoriously known for its stubbornness, last week made a surprising about-turn and announced that it was now willing to negotiate with the Zimbabwe Congress of Trade Unions (ZCTU).

The militant trade union federation had threatened to call for a week long stayaway from work, a move which must have terrified the government which in the past had vowed never to negotiate with the ZCTU.

With memories of the March 3 to 4 stayaway still fresh, the Minister of Labour and Social Welfare, Florence Chitauro wrote to the labour movement about two weeks ago,requesting it to document its grievances so that she could organise a meeting with President Mugabe.

ZCTU secretary-general, Morgan Tsvangirai confirmed last week that an invitation had been received from the government. He said: "We received a letter from Minister Chitauro last week but one, inviting us to present our grievances so that a meeting between us and the president could be arranged." Tsvangirai said his organisation welcomed the move.

Among the ZCTU's major demands is the scrapping of a five percent development levy, a 2,5 percent sales tax increase introduced towards the end of last year, the tax on pension profits and the controlling of spiralling prices of basic commodities which prompted ugly riots in January this year.

4.Ruling party MPs query de-listing of farms

Some ZANU PF legislators have questioned the Minister of Lands and Agriculture Kumbirai Kangai on the criteria used to de-list some of the farms that had been designated for the resettlement of thousands of landless peasant families.

Out of the 1 436 designated last November and earmarked for compulsory acquisition, 626 have been de-listed. A province-by-province scrutiny of the de-listed farms shows that out of the de-listed 626 farms, Mashonaland West province, President Mugabe's home area has the largest number of 232 farms. Zimbabwe has eight administrative provinces.

A row has already erupted in Matabeleland North province where 16 of the 65 farms initially designated have been de-listed, allegedly due to interference from influential government officials trying to save close associates from losing their farms.

5.Bank victims seek political solution

Most of the banks and financial institutions holding onto Z$750 million of fake Cold Storage Company (CSC) bills allegedly issued by the United Merchant Bank (UMB) whose licence was cancelled by the government nearly a month ago are now seeking a political rather than legal solution to the crisis, the Financial Gazette has reported.

The paper quoted sources close to the UMB investigations as having said the banks and other financial institutions had argued that besides being time-consuming and costly, taking legal action would not achieve the desired results.

However, the Zimbabwe Independent has reported that Bard Discount House and Real Africa Durolink have already instituted legal proceedings against UMB, the CSC and the Ministry of Finance. Both companies have cited the Minister of Finance Herbert Murerwa as the first respondent because the bills were guaranteed by the government to the tune of Z$800 million.

Among those worst hit by the UMB scandal, the first to hit Zimbabwe's financial sector since independence, are some newly established discount houses and banks established by indigenous Zimbabweans which were holding on to fake commercial paper illegally released onto the market by UMB since 1995.

The government cancelled the UMB's licence and appointed an investigator after it was discovered that the UMB owned by black business tycoon, Roger Boka did not have enough money to meet depositors' and creditors' claims.

Meanwhile, British billionaire Roland "Tiny" Rowland is reported to have expressed interest in buying the collapsed bank. Rowland who made most of his fortune in Africa is said to have sent his financial advisor to Zimbabwe to hold discussions with Roger Boka.

6.Loss of tender angers indigenous businessmen

Indigenous companies' attempts to make a breakthrough into the white-dominated security industry have suffered a major set-back with the government-owned Cold Storage Company awarding a country-wide multi-million dollar security services contract to two well-established and white-owned companies.

Guard Alert and Securitas emerged the winners of the CSC tender, beating27 other bidders. The result has triggered a barrage of protests from indigenous security companies who felt the contract should have been awarded to indigenous companies in line with the government's declared indigenisation policy.

However, the CSC has dismissed the protests, saying it could not deviate from laid down procedures to accommodate companies whose services were not up to standard.

The Zimbabwe Indigenous National Security Association (ZINSA) has been riled by the outcome of the tender, and described it as a smack in the face of indigenisation.

"We were shocked that none of the indigenous companies had been awarded any contract during the CSC adjudication process despite having proven competence records. We would like to protest strongly against the award of the security services tender which we feel is unfair," said secretary general of ZINSA, Mr Brian Zvarivadza.

7.Board doubles maize buying price

The government has, through the Grain Marketing Board (GMB), doubled the price of maize from Z$1 200 a tonne to Z$ 2 400 for A grade white maize.

The new price was approved by Cabinet on Tuesday, and is aimed at the replenishment of the depleted strategic grain reserve. The move is expected to see more farmers putting a higher percentage of their land under maize and delivering it to the GMB since its price is now competitive.

Stocks in the government's Strategic Grain Reserve were badly depleted over the past two years as farmers switched to better paying crops such as cotton and soya beans or sold their maize to private dealers who paid better prices.

The Strategic Grain Reserve which is supposed to carry at least 500 000 tonnes of maize at any given time currently holds only 200 000 tonnes.

8.Government clashes with fast food outlets over levy

Zimbabwe's cash-strapped government has clashed with fast food franchise chains over its decision to impose a two percent tourism levy on fast food outlets.

Government says the levy to be collected through the Zimbabwe Tourism Authority (ZTA) will be used to improve tourism facilities, but the fast food franchises are arguing that they are not tourist facilities and will not benefit from the levy.

However, ZTA chief executive Joseph Chigwedere has argued that the fast food outlets were benefitting from tourism, citing how heavily they have invested in the country's major tourist resorts such as Victoria Falls. He also said that the outlets themselves would not be levied, but would be expected to charge the levy on customers and act as collecting agents for the ZTA.

Meanwhile, foreign airlines are also up in arms against the government's decision to introduce a 17,5 percent sales tax on foreign airline tickets sold in Zimbabwe. David Chapman the chief executive officer of the Board of Airline Representatives (BAR) which represents foreign airlines operating in Zimbabwe has said the board was negotiating with the government so that the correct interpretation of the Tax Act could be applied.

He said international airline tickets should not be taxed because they were not consumed in the country. The new tax directive for foreign airline tickets comes hot on the heels of a 35 percent price increase in airline tickets, and the combined effect has already hit local travel agents who have registered a 50 percent decline in monthly ticket sales.

Local travel agents said international tourists were already making their travel arrangements through foreign agents, especially in South Africa which, like the rest of the region does not charge sales tax on foreign airline tickets.

9.Zimbabwe ranked fourth from last

A report by the just ended World Economic Forum (WEF) held in Windhoek, Namibia, has ranked Zimbabwe number 20 in an economic competitiveness index of 23 African countries.

The report highlighted Zimbabwe's unstable macro-economic environment of high interest and inflation rates, the high incidence of HIV and unemployment as serious problems bedevillingthe economy. The report dampened the feelings of Zimbabwean business leaders who urged President Mugabe to lead them in restoring investor confidence and tell the world what the country is doing the correct the situation.

However, Mugabe dismissed the report as of subjective opinion and assured the worried businessmen that the country knew its proper standing in terms of economic performance.

The WEF report entitled "The Africa Competitiveness Report 1998" put Mauritius as number one, followed by Tunisia, Botswana, Namibia, Morocco and Egypt. South Africa was seventh, followed by Swaziland, Ghana and Lesotho in the top ten.

President Mugabe said the forum was an independent body with its own ideas and criteria of judgment which Zimbabwe was free to accept or refuse, and that local businessmen should not feel demoralised by the report.

10.US Students plan to protest against Mugabe

Students at the California State Polytechnic University, US, are said to be planning to demonstrate against President Robert Mugabe of Zimbabwe when he visits the university in June to be awarded an honorary degree, the Zimbabwe Independent has reported.

Mugabe is expected at the university on June 13 where he is due to receive an honorary degree in humane letters. However, according to the Independent, a powerful body of faculty members have opposed the move, saying Mugabe is an inappropriate recipient of such an award given his remarks about Jews and homosexuals.

Mugabe has been quoted in the United States media as saying Zimbabwe's white farmers had "hearts as hard as Jews" and has recently repeated his view that homosexuals had no legal rights despite guarantees provided in the constitution of equal rights for all citizens.

California Polytechnic's 39-member senate, the university's supreme body, passed a resolution opposing the award of the honorary degree to Mugabe. The resolution although not binding on the university authorities, is thought to reflect strong feelings on the California campus shared by students that Mugabe should not be recognised by a university which subscribes to freedoms regarded as fundamental in the United States.

Economics professor, Laurence Schute said honouring Mugabe "would signal his language and actions are okay".

11.MP remanded on stock theft charges

A Member of Parliament who is also a prominent businessman, Christopher Chigumba (53) was last week remanded out of custody on Z$800 bail on stock theft allegations.

Chigumba is facing allegations of receiving stolen cattle following the recovery of four carcasses from his butchery and two live beasts from a private abattoir. The animals had been stolen from a farm in Chivhu district.

The state is alleging that the animals were stolen by Chigumba's employees acting on his orders and ferried in his lorry. The lorry was impounded by the police while allegedly on another stock theft mission.

Chigumba is due to appear in court again on June 8.

Meanwhile, cattle rustlers have stolen more than 3 000 cattle worth almost Z$11 million, throughout the country since the beginning of the year, thwarting efforts to rebuild the national herd which dwindled during the historic drought of 1992.

Of the 3 152 cattle stolen mostly from commercial farms, only 543 worth about Z$1,8 million were recovered.


From: (Africa_news Network) Date: Mon, 13 Jul 1998 13:53:58 +0200 Subject: ZIMBABWE NEWS ONLINE #21 Message-ID: <>

Editor: Ali B. Ali-Dinar

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