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The champagne went flat when it dawned on people that the World Bank might be assuming that we were all soon to be millionaires like in the days of the last Zim dollar. Or, more likely, the World Bank was not factoring in the vast disparity in income between the Zanu PF elite and the ordinary people living on an income far less that $1,790.

This ‘private opulence and public squalor’ was illustrated in the boastful display of wealth by Zanu PF MP Justice Mayor Wadyajena, who reportedly paid $420,000 for a Lamborghini, which he presumably is stupid enough to use on the pot-holed roads of Zimbabwe.

Anyway, it was business as normal for Finance Minister Ncube and Central Bank governor Mangudya who flew off to China in the hope of getting a financial bailout to ease the liquidity crisis, no doubt assuring the Chinese that we would soon start clearing our long overdue debts to them.

The problem is that the Chinese are not amused by the difficulties experienced by one of its investors in Zimbabwe, Sunny Yi Feng Tiles which has ploughed $50 million into its Norton factory which exports 70% of its tiles to SADC countries. The company says it has decided to abandon plans to expand because of persistent harassment and demands for bribes by politicians and government officials. It had been thinking of investing $1.2 billion in Zimbabwe but might now look to Zambia, Angola or Mozambique.

The new Chair of the Zimbabwe Anti-Corruption Commission, Loice Matanda-Moyo, says unbridled corruption is a major cause of the country’s economic crisis. She said she wanted the commission to deal with high profile members of society who had been putting up resistance.

The Vigil wishes Ms Matanda-Moyo luck. Apart from the big players, she won’t have far to look for corruption cases, given the suspension of the Masvingo Provincial Hospital Superintendent and his entire management committee in a scandal over the alleged direction of critical drugs to private pharmacies for resale in foreign currency (see: http://www.newsdzezimbabwe.co.uk/2019/07/entire-hosp-management-suspended-over.html). 

Other points

• On a lovely sunny day London was crowded for Gay Pride day. Many people signed our petition.
• Thanks to those who came early to help set up the front table today and put up the banners: Miriam Gasho, Beaulah Gore, Deborah Harry, Dambudzo Marimira, Margaret Munenge, Lucia Mungwari, Collen Mupazviriho, Hazvinei Saili and Ephraim Tapa. Thanks to Margaret, Lucia and Miriam for looking after the front table, to Hazvinei, Beaulah and Bridget Mupotsa for handing out flyers, to Margaret and Beaulah for drumming and to Deborah for photos.
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FOR THE RECORD: 17 signed the register.

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• ROHR sponsored walk. Saturday 27^th July. Contact: Esther Munyira 07492058109, Sipho Ndlovu 07400566013, Patricia Masamba and Farai Muroiwa 07365431776. More information as plans progress.
• The Restoration of Human Rights in Zimbabwe (ROHR) is the Vigil’s partner organization based in Zimbabwe. ROHR grew out of the need for the Vigil to have an organization on the ground in Zimbabwe which reflected the Vigil’s mission statement in a practical way. ROHR in the UK actively fundraises through membership subscriptions, events, sales etc to support the activities of ROHR in Zimbabwe. Please note that the official website of ROHR Zimbabwe is http://www.rohrzimbabwe.org/. Any other website claiming to be the official website of ROHR in no way represents us.
• The Vigil’s book ‘Zimbabwe Emergency’ is based on our weekly diaries. It records how events in Zimbabwe have unfolded as seen by the diaspora in the UK. It chronicles the economic disintegration, violence, growing oppression and political manoeuvring – and the tragic human cost involved. It is available at the Vigil. All proceeds go to the Vigil and our sister organisation the Restoration of Human Rights in Zimbabwe’s work in Zimbabwe. The book is also available from Amazon.

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Post published in: Featured

Mandy Chimuti looks at the menu board of the small cafe she manages in northern Harare and takes out a black marker. One by one she crosses items out. Coffee: no. Orange juice: no. Cheeseburger: no. Toasted sandwich: no. In the end only salad and homemade lemonade remain.

“No power,” she explains. “Welcome to Zimbabwe. No power, no water, no cash.”

Round the back is a small generator but the queue for diesel is five hours and she doesn’t have the US dollars required. She might have been able to do sandwiches but the country has run out of wheat. So scarce is bread that 500 loaves were stolen in an armed heist last week from a delivery truck in Harare.

Round the back is a small generator but the queue for diesel is five hours and she doesn’t have the
US dollars required. She might have been able to do sandwiches but the country has run out of
wheat. So scarce is bread that 500 loaves were stolen in an armed heist last week from a delivery
truck in Harare.

“We have gone back to olden days,” laughs Chimuti, 43, a single mother with four children.
“I used to have water from a tap; now I have to go to a well with a bucket. I used to switch on the
lights; now I light candles for my kids to do their homework. I used to turn on the heater [it is winter
in Zimbabwe and temperatures drop close to zero at night]; now I use a charcoal burner. I used to
cook on an oven; now I use firewood. We used to have toast for breakfast; now, if we have anything,
it’s a sweet potato.”

Astonishingly, Chimuti is talking about life for an educated working woman in a modern capital,
where you arrive at an airport that has a $150m Chinese-funded extension under construction even
though the national carrier now has only two functioning planes.

Yet when Robert Mugabe was ousted in November 2017 by his generals after 37 years of autocratic
rule, Chimuti celebrated alongside much of the country’s 17m population. “After all we’d been
through, never did I imagine it could be worse,” she said.
But last month inflation hit 98% and prices spiralled so much that a basic margherita pizza in St
Elmo’s cafe was priced at $180 on Friday, while a bottle of cooking oil was on special offer at $26 in
Spar.

For many the last straw came on Monday when the government announced on WhatsApp that it
was scrapping its multicurrency system, banning the use of US dollars and returning to the Zim
dollar, which was ditched in 2008 after inflation soared to 79bn per cent.

The move, officially aimed at ending speculation, came with absolutely no warning, leaving everyone
from businesses to embassies floundering as overnight they found themselves locked out of their US
dollar accounts. Shops and restaurants were forced to set prices in a currency that had yet to exist.
“In 2008 the shops were empty but we had money,” said Chimuti. “Now the shops are full and we
have nothing. This is the worst it has ever been.”

The Zanu-PF MP Justice Mayor Wadyajena with his ‘simply enthralling’ new Lamborghini
She says she should not have been surprised given that the “new dispensation”, as the country’s
rulers term themselves, are the same people who brought Zimbabwe to its knees.
For decades President Emmerson Mnangagwa had been Mugabe’s henchman, involved in some of
his worst atrocities, from the massacre in the 1980s in Matabeleland, in which at least 10,000 died,
to the violent rigging of elections.

However, on taking office he donned a cheerful rainbow knitted scarf, hired an Oxford professor as
finance minister, flew to Davos and declared Zimbabwe “open for business”. He convinced some,
such as the then British ambassador Catriona Laing, that he was a reformed character intent on
rebuilding his country.

Instead, within days of contentious elections last August, the military shot dead six people in the
central business district of Harare in broad daylight. Following protests over the tripling of fuel
prices, a brutal crackdown in January saw at least a dozen people killed and thousands rounded up
and beaten, including teenage girls dragged from their beds.

Primary school teacher Portia Kaya’s salary has shrunk to £1 a day – GRAEME WILLIAMS
With the regime unable to pay the US$87m owed for electricity to South Africa and Mozambique,
power cuts over the past two months have affected residents for 18 hours a day. Electricity comes
on only between 10pm and 4am. At Dandaro Retirement Village, this prompts bizarre scenes in
which elderly residents get up in the middle of the night to do their washing, mow their lawns, and
wash and dry their hair.

The bread shortage is the result of a failure to pay Belarus to release wheat imports from bonded
warehouses, Zimbabwe’s own production having plummeted.

“We used to have a political and economic crisis,” said Peter Mutasa, president of the Zimbabwe
Congress of Trade Unions (ZCTU). “Now we have a humanitarian crisis. The system has created a
whole sea of people living in abject poverty. Workers are literally starving in their houses.”
Yet some people profit from chaos and those with contacts in the ruling elite are doing extremely
well, selling on the black market. MPs do not pay import duty on cars and there is a Jaguar
showroom just down the road from the headquarters of the ruling Zanu-PF party.
Earlier this month Justice Mayor Wadyajena, a Zanu-PF MP and an associate of Mnangagwa, posted
a picture on Twitter of his new yellow Lamborghini. “I’m one hell of a satisfied customer,” he wrote.
“This Super SUV is unbelievable; that primordial roar is simply enthralling.” When someone
questioned how he got the US$210,000 reported by ZimLive to buy the supercar, he replied that it
actually cost double that figure.

This is beyond imagination to Portia Kaya, 42, a primary school teacher, whose salary has shrunk to
£1 a day. She invites me to her home in Glenwood, where she is cooking dinner of a pan of sadza
(cornmeal porridge) on a small fire outside her house. As dusk falls neighbours emerge with bundles
of firewood and hundreds of tiny fires are lit while others queue with buckets at the well for water.
Inside Kaya’s house are an oven, fridge-freezer and television. “We just sit and look at them,” she
laughs as she lights a candle to start her marking.

Cafe manager Mandy Chimuti: ‘This is the worst it has ever been’ – GRAEME WILLIAMS
In the past, after a day teaching a class of 60 six and seven-year-olds, she used to cook for her sister
and baby niece, with whom she shares two rooms. Then she would either study for her master’s or
put her feet up and watch TV. “It wasn’t much of a life but it was a life,” she says. “Now it’s just a
struggle.”

Her monthly salary is RTGS$600 (real-time gross settlement) — a virtual currency, transferred by
phone, an ingenious way for the government to avoid printing money. It was supposed to be worth
2½ to the dollar when introduced in February. However by last week the rate had fallen to 14,
equivalent to £1 a day.

From this she pays RTGS$160 for transport to school, RTGS$120 for rent in a house shared with
three other families and RTGS$100 that she sends to her ageing mother. Every day she pays
RTGS$2½ for a candle and between three and four for firewood. Sugar, washing powder and cooking
oil cost her RTGS$120.

In addition the government imposes a 2% levy on every transaction. She often has to borrow at
exorbitant rates to tide her over to the next month. Most days she leaves for work with no food,
leaving her exhausted while her pupils often faint from hunger.

“Some of my fellow teachers have had to pull their children from school because they can’t afford
the fees,” she said. Others supplement their income by working as prostitutes.

Those with contacts in the ruling Zanu-PF elite are doing extremely well – GRAEME WILLIAMS
“People are dying in their homes because they can’t afford medical care,” said Mutasa, the ZCTU
president. “And these are working men and women. Imagine those who are not.” Only 5.4% of the
workforce hold formal jobs. The rest eke out an existence at the roadside selling a few tomatoes,
sticks for firewood or sitting in the endless fuel queues.

It was apparently a fear of demonstrations and unrest in the barracks among soldiers, whose salaries
have also shrunk in value, that prompted an emergency meeting last weekend between the
president, the finance minister and the state bank governor. After making Monday’s currency
decision, of which even the International Monetary Fund wasn’t told, the last two immediately flew
to China to seek funding. Many believe the move could backfire.

“This is the biggest gamble since the coup,” said Tendai Murisa, who runs Citizens Watch, which
monitors the government.

Both business and unions condemned the move. The ZCTU is raising funds to challenge the move in
court and consulting members about protests such as a stayaway.

But its president knows only too well the dangers he faces. Over the past 18 months Mutasa has
been arrested three times and jailed twice. On Friday evening, after we met, he had to report to the
police because he is on bail accused of subversion of the constitution and inciting public violence,
which carries a sentence of 20 years.

“They are using all instruments of oppression to instil fear in people and specifically targeting
leaders,” he said. “Mugabe would beat and maim you but this new government is shooting people in
the streets.”

Despite the desperate economic situation, the government recently purchased a new arsenal,
including 3,343 AK-47 assault rifles, 600 sniper rifles and 58,500 grenades, posting pictures of them
on Facebook.

“Those ruling us only care about protecting their wealth,” said Mutasa, the trade union leader.
“Violence is the only language they understand. I think we need to fight back to create a base for our
kids even if we die in the process.”

Back at the cafe with only two items on sale, though, Mandy Chimuti is worried. “I guess in most
countries people would rise up, but here we fear what the regime would do,” she said.
“They’ve brought us down to zero — they know that. And if we die for no change, what will happen
to our children then?”

Reports of an armed gang robbing a bread truck during a delivery in Harare, and making off with 500 loaves of bread, has focused attention on the plight of Zimbabweans who are facing severe hunger.

This followed earlier reports that the largest bakery in the country has closed several of its outlets as it was unable to bake bread due to the shortage of wheat flour and other ingredients.

The Lobel’s Bakery group announced at the beginning of July that it will close its bakeries in Bulawayo and Harare indefinitely, reducing production by some 50%. Lobel’s said the closures were unavoidable because local flour mills were unable to supply enough flour to bake bread. A second bakery, Baker’s Inn, has reduced its production by 80% since the beginning of the year, citing a shortage of wheat and daily interruptions in electricity supply as reasons.

Wheat millers, in turn, say they are unable to secure supplies of wheat due to the shortage of foreign currency to pay for imports. The Grain Millers Association of Zimbabwe (GMAZ) said in a statement that the organisation asked the Zimbabwean government to prioritise its request for foreign currency to pay for the import of wheat. GMAZ says in its statement that millers urgently need $12.5 million to pay for wheat awaiting transport from Beira, Mozambique.

Apparently, Mozambique refuses to release wheat before it receives payment. Previously, it struggled to payment from Zimbabwe.

Zimbabwean newspapers and other news services, such as ZimLive, have reported that the price of bread has doubled within a few days a week ago, if bread was available at all. An investigation by Reuters has found that bread is just about unavailable in most shops in the bigger cities.

The serious shortage of bread and other foodstuffs seems to be largely the result of bungling government policy, exacerbated by unfavourable weather conditions since late last year.

While the country continues to suffer the impact of Zimbabwe’s controversial land reform programme under previous president Robert Mugabe, the situation has been made worse by subsequent policies introduced by a government ignorant of basic economic principles. When prices of basic foodstuff started to increase, government did not realise, or denied, that it was due to its land reform policy that reduced supply.

Its response to the crisis of higher food prices and the growing inability of its citizens to afford food was to introduce price controls on basic foods such as bread. Most governments understand the political and social effects of hungry people. Most governments of poor countries have had first-hand experience of bread riots and know, at least, that even the French revolution in 1789 was caused by high bread prices.

More recently, the so-called Egyptian spring protest in 2011 and the current upheaval in Sudan were the result of hefty increases in the price of bread.

But the Zimbabwean government did not believe economic textbooks and decided to follow the tried and tested route to failure – that of introducing price controls to force companies to produce wheat, flour and bread at lower prices – with the effect that supplies fell even further.

It is a simple fact that nobody can, or want to, produce products at a loss.

As one baker in Zimbabwe was quoted in the state-owned newspaper: “We switched to baking rolls and other products that are not regulated instead of baking bread at a loss under price controls.”

True to basic economic principles, the staple food of the poor disappeared off the shelves when the bread price was set artificially low and the supply of bread rolls and confectionery excluded from price control increased to the benefit of the rich. Or in the (close to last) words of the last queen of France, Marie Antoinette: “Let them eat cake.”

Last week, the Bakers’ Association of Zimbabwe said that the official price of bread is $2, while most bakers apparently sell bread for $2.30. That price refers to American dollars, with the price much higher for anybody who wished to pay in whatever local currency Zimbabwe is using now.

In reality, the actual bread price is a moving target as the Zimbabwean government has recently declared that only the Real Time Gross Settlement Dollar (RTGS) are allowed as legal tender for all transactions, ignoring more economic principles. In this case, any currency only serves a form of payment if it is accepted by both parties to the transaction.

In other words, the academic definition of money is anything that is acceptable for the payment of goods and services or the settlement of debt. The RTGS dollar is not, despite declarations by the president, finance minister or its central bank.

In SA, 10 cent pieces and Kruger rands are officially both legal tender, but most retailers would not accept either a gold coin or 10 000 copper coins at the till.

Meanwhile, the Zimbabwean (or any other) government cannot force millers, bakers and shops to produce bread and sell it at low prices for worthless pieces of paper. Economic theory predicts that such a policy would lead to high demand, low supply and big shortages.

The Food and Agricultural Organisation of the United Nations warned some six months ago in a Global Information and Early Warning System report that Zimbabweans will face severe food shortage this year.

The report predicted that food insecurity will affect 2.4 million people in the country around March 2019 while waiting for the wheat harvest to reach the market.

This compares to 1.05 million hungry people in the same so-called lean season of the previous year. That 2.4 million people are now suffering from hunger is due to a lower maize crop and the shortage of foreign currency to either agricultural inputs or wheat and other staple foodstuffs.

The UN report warned that the 2018 maize harvest was around 21% lower than in 2017 due to adverse weather conditions and confusion around a new government policy to support small farmers. The UN comes to the conclusion that approximately 28% of the rural population would require humanitarian food assistance this year. Food assistance would also be required in towns and cities.

Another recent report, by the US Department of Agriculture (USDA), forecasts that things will get worse. The report predicts that Zimbabwe’s maize harvest will fall by another 53% in 2019 to only 800 000 tons, which “is not even half of what Zimbabwe consumes in a year”. This forecast tallies with forecasts by other researchers.

The USDA says it is unclear where Zimbabwe will get the maize supplies from as harvests in South Africa and Zambia, usually, Southern Africa’s biggest maize exporters, are also expected to decrease. South Africa is expected to deliver about 1.1 million tons for the export market, but this will most likely go to Botswana, Namibia, Lesotho and Swaziland.

The organisation also warns SA consumers that “these factors will most probably add upward pressure on prices in the coming months when the demand from Zimbabwe and Zambia intensifies, especially in the case of white maize”.

In a bid to defend the new and fledgling Zimbabweandollar against black market speculation, the country’s finance minister on June 25 outlawed using United States dollars and other foreign currencies in local transactions. When news of the policy broke, Harare-based independent economist John Robertson thought it was a bad practical joke.

“I am not fully convinced it’s genuine,” Robertson told Al Jazeera. “This idea is so bad it’s a cause for concern. I fear it may be an attempt in government to cause someone embarrassment. We hope it is revised.”

Zimbabwe’s finance minister, Mthuli Ncube, had hinted on several occasions that a new Zimbabwean dollar was in the works. The country had already made a move toward it earlier this year, when it introduced an interim currency, the Real Time Gross Settlement (RTGS) dollar or “Zimdollar”.

But a decade after devastating hyperinflation prompted the country to “dollarise” its economy by allowing the US greenback and other foreign currencies to be used as legal tender, many Zimbabweans are sceptical about the stability of the country’s new currency and worried about what could happen if their livelihoods are tied to it.

Not even six months old, the fledgling Zimdollar has suffered from speculative attacks that saw its value plummet by more than 150% before recovering.

For 67-year-old David Mkono, the country’s new currency has just added to his myriad problems. Mkono worked as a boilerman for Zimbabwe’s power utility company for 47 years, paying into his pension in US dollars from 2009 until he retired last year.

“At retirement, I was going to get US$223 (about R3 100) per month. I am not sure how much I am going to get now with the new changes,” Mkono told Al Jazeera. “I really don’t know how to value this because I don’t know what $223 is now in RTGS.”

Some economists see Zimbabwe’s swift outlawing of the US dollar as justified, given most countries that dollarise their economies fail to successfully reintroduce a new local currency.

“It’s a chance to disprove the notion that once an economy dollarises, it can’t have its currency ever. Many countries have failed,” Kipson Gundani, a Harare-based economist and executive director of the CEO Africa Roundtable, told Al Jazeera.

While dollarisation can help stabilise an economy in the throes of hyperinflation, there are drawbacks. Local currencies are a powerful symbol of sovereignty and national identity. Countries that dollarise also lose the power to directly influence their own economy through monetary policy.

But Zimbabwe’s economy is not exactly fertile ground for a new currency to take root. The country is likely in recession and the International Monetary Fund predicts the economy could contract 5.2% his year. Industry is operating at less than half of its installed capacity. Reliance on imports – which become more expensive as the local currency weakens – is stubbornly high.

Mkono, who has two children aged 12 and 8, says soaring inflation is already making it difficult for him to provide food for his family. “The prices have gone up rapidly in the shops,” he said. “When I get my monthly allowance, we realise that we can’t buy basic things like mielie meal after paying for things like school fees.”

Mielie meal is Zimbabwe’s staple food, and is made from maize or corn.

But some economists maintain that Zimbabwe had to take bold steps to defend its sovereign currency, even if conditions weren’t perfect.

“Even if fundamentals were not yet right, the use of multi-currencies was not sustainable,” said Gundani. “We are not producing optimally, we are vulnerable on the import cover and our economy is in recession on a GDP level. But we are coming from a background where the RTGS was already in circulation along with other currencies and was depreciating against the US dollar at an alarming rate.”

And while confidence in the new currency may be in short supply, Gundani believes that if policymakers show discipline, the Zimdollar may yet have a shot.

Last week, the Reserve Bank of Zimbabwe removed US$1.4bn (about R19bn) from circulation to shore up the Zimdollar and announced it would inject US$48.7m (about R689m) into the economy. [These figures are based on black-market exchange rates calculated at the time of publication.]

A day after the announcement and the mop-up exercise, the Zimdollar recovered some 40% of its value against the US dollar on the black market.

“I believe this is an opportunity to create that confidence by doing the right things and desisting from doing the things that killed the first Zimbabwe dollar, such as printing money to finance budget deficits,” said Gundani. “It’s a big gamble that we cannot afford to lose.”

Post published in: Business

A report by TechCentral on Friday suggested that heavy debts and economic problems in Zimbabwe of $130 million (R1.8 billion) hitting Econet Media have led to the company going into administration.

The company, controlled by billionaire Strive Masiyiwa, often described as Zimbabwe’s richest man, was not able to pay suppliers and hired an insolvency practitioner, Ernst & Young, to try to save the business.

Masiyiwa is a London-based Zimbabwean businessman, entrepreneur, and philanthropist. He is the founder and executive chairman of diversified international telecommunications, media and technology group Econet Wireless.

Econet launched the Kwese Play internet streaming service in South Africa in 2017 and owns 20% of Kwese Free TV. This is a separate company and is believed to be largely unaffected. It still has until March 2021 to launch its free-to-air terrestrial broadcasting service, the first in South Africa to be licensed since e.tv in the 1990s.

Econet’s letter to creditors blamed the “current macroeconomic conditions in Zimbabwe” for its cash problems, adding “the company has been seriously affected by the currency regime” in the country.

Their letter said: “In the circumstances, the directors believe that it is in the best interests of the company and its creditors that (it) be placed into voluntary administration … and for an administrator to be appointed.”

They hope to keep operating or salvage as much as possible.

6.7.2019
18:34

by Nehanda TV

Zimbabwe ripe for another “coup”, says Biti – WATCH

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