We have had the Commonwealth games on TV all this past week. It would
appear that Australia has again shown itself to be capable of hosting
these large events and the athletes have put on a great show for the
of us. Just this time Zimbabwe is not there - another example of our
growing political and diplomatic isolation. Botswana and all our
neighbors were there and added to the color and ceremony of the
South Africa made quite an impact.
It is sad when we see global events like this where our own sportsmen
women could compete and show the world what we are made of and we are
denied the privilege because our government is an international
Kirsty Coventry was in Harare this weekend at a national swimming
signing autographs for the kids participating - she almost certainly
have made gold in Australia.
It does not stop there - only two sectors of the Zimbabwe economy
have survived Zanu PF - the mining and financial services sectors. In
mining industry once you have made an investment in a hole in the
you are locked in - nothing much you can do about it except keep on
digging or close it down to come back later at huge expense or simply
An Australian firm saw the massive potential of the platinum reserves
Zimbabwe (we have a very large proportion of global reserves along
Great Dyke) and sunk US$600 million into a hole near Chegutu. They
complete town of houses for staff and a huge processing complex,
were opened up and hundreds of staff recruited. Three years later -
walked away and a small group of local investors bought the whole
shoot for a small payment - taking over what debts remained.
Anglo American - one of the largest mining companies in the world and
one stage holding nearly half of all the counters on the stock
quietly disinvested over the past 15 years. At one stage they were
everything - chrome, steel, coal, nickel and a wide swathe of
agro industrial firms. Now they operate out of a house in Harare and
a handful of investments and retain only their platinum mining assets
still in their embryonic state. They sold everything else - to
would buy the assets for a reasonable price.
The South African mining giant Implats eventually bought the Chegutu
operation from our local investors (who made a fortune on the deal)
announced a massive investment programme. Another South African
company (a company with black empowerment links) bought into the gold
industry. Now they are all wondering why they did such a dumb thing -
PF has moved to do what they have done to all other sectors, get
and destroy what is there.
After years of deliberation the Ministry of Mines made it known they
going to take a 25 per cent stake in all major mining companies -
compensation. In addition the same companies had to sell another 26
cent on the never never to either the State or a local black
group (read Zanu PF company in effect). Thus at one stroke they take
a controlling interest in all major mining companies. This goes well
beyond anything being done in South Africa and it violates clear,
legal agreements entered into with companies prior to their entry to
industry - especially in the platinum sector.
The industry has reacted with fury. At a meeting this week with the
Minister they spelled out what would happen - they would freeze all
investment and all major maintenance. Output would start to decline
short while and thereafter would decline rapidly with mine closures
inevitable. They also pointed out that as the principle stakeholder -
State or its local partners would have to find the resources for any
investment and if these involved hard currency, they would find it
difficult to do so.
The other sector that has survived (battered and bruised, but still
operating) is the financial services industry. We have a good
network of banks and other financial institutions that are basically
run and sound. Now the state has imposed huge statutory reserve
requirements on the remaining commercial banks - six have gone to the
in the past 4 years. But to compound the problem, the new reserves
be paid to the Reserve Bank in US dollars!
In addition the overnight accommodation rates have been raised to the
inflation rate (nearly 800 per cent), so that if a bank needs some
cover its obligations (a normal money market operation) it has to pay
punitive rate to the Reserve Bank for the facility. The smaller banks
all owned and operated by local investors, will all struggle with
new requirements. Already money is moving out of these institutions
those that are perceived as being "safe". Money is also moving back
the stock market where returns are still good and the funds secure
while - but stay out of mining counters for a bit).
With agriculture and tourism down to 20 or 30 per cent of what they
years ago, industry down to about 40 per cent, the action taken this
two weeks will undermine what is left of the economy. As it is, most
informed observers are predicting a further decline in national
output this year - the 7th consecutive year of negative growth.
A local colleague of mine now estimates inflation at 3000 per cent
annum - and rising. Certainly this week the increase in prices has
scary. In this environment, if you do not watch what you are doing
carefully, you simply go bust. One thing that we do know is that Zanu
and the collection of clowns that run the country, simply do not know
to do - from the evidence of their action in the past week, they are
committed to a process of self-destruction. Well, as far as I am
concerned, it cannot come soon enough.
Thank you to all of you who sent funds to us in time for the Congress
were able to help quite significantly. Now we are into the next phase
action on the streets to bring about change and we will need lots of
support - if you are outside the country there is only one way you
help - send some money. Every dollar helps. If you want a receipt or
direct your funds to a particular activity or group - just let us
Bulawayo, 24th March 2006.