What Next?

What is Happening? Events move fast and yet too slowly for those of us who are actually here in Zimbabwe. It's January 2003 and it seems like yesterday when the present crisis started in 1997. At that time we were self sufficient in all foods, exporting on a scale that gave us enough foreign exchange to meet our needs. The economy was growing rapidly and it seemed as if the adjustment programs introduced in 1990 were at last starting to work. Now we are 5 years on - we are importing all our basic foods - even milk. 8 million people are suffering from serious shortages of food and malnutrition. Our economy is shrinking at 10 to 15 per cent per annum and our exports no longer cover even our most basic needs. Our currency has collapsed and nearly a third of all workers in the economy have lost their jobs. Our Government is no longer recognised by the major developed countries and will shortly face expulsion from the Commonwealth.

Almost all the basic rights taken as the norm in other countries are being denied Zimbabwean citizens. This week I must now include drought in this litany of problems and the failure to get anything like a decent crop into the ground this summer. Just how serious this is has not yet dawned on the majority of those who have responsibility for feeding Zimbabwe whilst we try to find a way back to normality. We are now two months into our normal wet season. Whilst we have had about a third of our normal rainfall, in many areas - especially here in the south of the country, the falls have been light and spaced by hot dry weather. I think we can now predict with some confidence that the southern half of the country will not reap any significant food crops this year unless they are irrigated.

In the north things have been a bit better - but we still face the reality that very little has been planted and what is in the ground is pretty pathetic. I doubt if we will in fact produce more than we grew last season -about 500 000 tonnes of grain over all. If this is the case then we are faced with the need to continue importing grain right through until June 2004.

Not just grain but oilseed or vegetable oils, fats and wheat. Unlike last year when we had ample stored water, this winter, unless it pours with rain from now on, will see real shortages of stored water across the country. In fact, in my view, Bulawayo should already be looking at restrictions. So we face another 18 months of the food crisis, the international community reluctant to provide the resources to fill the gap and the government continuing to restrict supplies of commercial grain to people it views as its opponents. Corruption within the food system is endemic and prices for what is available are three times the official prices laid down by the State.

South Africa is also caught up in this dry weather and it is now unlikely that they will have any surplus to export - in fact South Africa may have to import and this will further exacerbate the problem of rising basic food prices in South Africa. To break even, bakers in Zimbabwe must sell a loaf of bread for about Z$110.00. There is a lot of profiteering going on and actual market prices are well above this in many cases. Flour is still being supplied at about Z$65 per kilogram, subsidised by the GMB and local wheat producers who got a lower than break even price for the crop reaped last year. When this is finished (in February or March 2003) we then go onto 100 per cent imported wheat.

Unless this is also subsidised (either by using low cost foreign exchange forcibly taken from exporters or by printing money or simply allowing the GMB to borrow huge sums of money it can never repay) then flour will have to treble in price and we will see bread products rising to Z$400 per loaf or more, just to stay in business. In the next fortnight, business will face the task of reopening their factories under conditions where they will not be able to keep their doors open for very long if they obey the rules. If they are exporters they will find that virtually all their export proceeds are being converted by their banks at the official exchange rates and this will make all export activity totally unviable.

They will then have to consider what to do - break the law and keep their foreign earnings off shore or simply stop exporting - or do a deal with someone. Every business needing imports of one kind or another is going to find it virtually impossible to get foreign exchange from their banks and in the informal markets they will find what is available is so expensive that they simply cannot afford to buy it for local use. Already locally manufactured products are very much more expensive than they should be because of the huge premiums being paid in the market.

On top of these problems there is the issue of the price freeze. On the day before Christmas a new Gazette notice came out listing literally hundreds of products. In many cases the new prices are well below the actual cost of production. In a bizarre operation the Police are raiding retailers throughout the country and imposing fines on them for selling products above the controlled price even though the stock in question was purchased at much higher prices and well before the festive season. Manufacturers have only three options - sell at the controlled price and go bust, break the law and tell the authorities to take them to court or to do a deal. In the latter case it's always with a shadowy group of business people linked with Zanu PF and having good relations with those in positions of authority.

Then problems with foreign exchange and price control disappear and the business starts functioning again. The list of such deals grows daily and includes many of the best known names in the Zimbabwean economy. And then there is the problem of liquid fuels - aided by South Africa we can get by as far as electricity is concerned and in that case the demands for foreign exchange are only a fraction of the demand for liquid fuels. It now looks as if the Libyan deal is definitely dead and we are dependent on South African sources and the Kuwait Petroleum Group, IPG.

Whatever we do however, its cash up front in both cases and so far there are no signs of any help from South Africa. At present supply levels (20 per cent of normal demand) we simply cannot operate as a country. Our bus systems are shut down and most private vehicles spend their days in queues. Noczim is now notifying retailers that they will only be getting limited supplies and are making arrangements for bulk rationing on a long-term basis. Any one of these problems would confront a normal country with headaches - all together they now constitute an insurmountable hurdle.

A business executive said to me after the ANC meeting in Cape Town where Mbeki formally abandoned any pretext of impartiality in the contest for power in Zimbabwe - "well now Mbeki has to help overcome our problems or else those are empty words". We are about to find out which category they fit into. I think it's "D" day for the region and Zimbabwe. "D" standing for decision.

Eddie Cross Bulawayo
5th January 2003.