Eddie Cross's Website

A Queue 7,2 Kilometers Long!

At the AGM of the Tourist Council the other day, we were debating the conditions that confront the tourist industry in Zimbabwe and the subject of the fuel crisis came up. One delegate, furious at the casual attitude of the officials present said, 'I have just driven into Harare and passed a fuel queue that is 7,2 kilometers long!' Today as I left Harare after two days of business, we passed a queue of mini busses - the main form of transport here - that must have been all of 3 kilometers long. It stretched from the filling station down the road and then across an open field and out of sight.

I remember when the fuel crisis first emerged. At that time we were using about 5,5 million litres of liquid fuels a day - 70 per cent diesel and the balance petrol and other minor fuels such as aviation gas and paraffin. It came in via the pipeline (3 million litres a day) and by rail from South Africa. Government ministers promised us that the shortages were short term and we would soon see things back to normal. 7 years later, the situation is as bad as ever - with one exception, we can now buy fuel readily on the parallel market from private sector traders who have moved in to take over where the State has failed. When no alternative was available we either had to drive across the nearest border or sleep in our cars in endless queues outside empty filling stations.

The massive queues that we see here today are for fuel imported by the State at artificially low prices using foreign exchange taken from exporters at very low exchange rates. The current official exchange rate for example is 250 to 1 for the US dollar, as against almost 10 times that on the open market. Using these funds the State imports small amounts of fuel, which it then allocates to State enterprises, the security services and occasionally to a filling station with Zanu PF links. The retail price is just under Z$350 per litre as against Z$1800 to Z$2000 a litre on the open market.

The private sector does an amazing job of importing our fuel needs when you realize that the pipeline no longer operates in any significant way and the railways are dead in the water. We passed the huge marshalling yards outside Harare today and there was not one wagon on the lines - not one, it was completely empty.

When the MDC expected a clear victory in 2002 in the Presidential elections (MDC won by a two thirds majority and were denied victory by State rigging) we visited the major fuel firms to establish how quickly we could get the situation back to normal. They appointed a small team to investigate the capacities of Beira and the South African refineries and came back to us with the estimate that it would take 3 to 5 months to bring fuel into free supply. When the State finally gave in and simply allowed the 'illegal' importation and sale of fuel, the private sector had fuel back in free supply in weeks. An astonishing performance when you appreciate that no foreign exchange is allocated to this activity and there are no special financing arrangements.

In areas where the State does not 'allow' this sort of free enterprise, there is simply no fuel. This includes key locations such as the Victoria Falls and other tourist centers. At the Tourism Council meeting we urged the government to open up the market completely - float the dollar to eliminate the distortions and allow the private sector to supply all our fuel needs. The Minister sat there silent and glum and when he responded he did not say one word on the issue. Right now there is another major battle raging between the State and the private sector. The State is insisting on tight price controls to try and halt the spiraling rate of inflation. That is a complete waste of everyone's time and energies as the primary causes of inflation are the very activities of the State that last year drove the budget deficit to 63 per cent of GDP! With the printing presses running 24/7 at the Reserve Bank no other outcome is possible.

So this week milk has disappeared off the market shelves, the weight of a loaf of bread has fallen on average to 400 or 500 grams - it should be 700 grams. Cooking oil has disappeared and at least one major food company has threatened to close its factories if the State does not ease up on this kind of nonsensical activity.

Years ago I recall visiting Arusha, Tanzania for a major conference and when I went into the town and visited the stores I found the largest supermarket had 5 items on its shelves - I recall they were a few plastic containers, some aluminum foil, some salt and beans and fruit juice in cans. Fully staffed, I asked why no products - they just shrugged their shoulders and smiled at me. Price and foreign exchange controls have done more damage to the interests of consumers than any other policies since independence. Most African States have moved on and adopted market driven exchange rates and prices. Such shortages are a thing of the past - prices may be higher, but there is no parallel market and inflation is under control.

An IMF team is coming soon - we expect to meet them and to discuss with them the state of the economy and possible ways of getting us out of the mess we are in. It is not a simple issue - there are many different aspects and they must be tackled in an integrated and holistic way. Zanu PF is tearing itself apart and seems totally absorbed in the issue of who is going to drive the gravy train after Mr. Mugabe goes. In my own view this is a totally futile exercise as this gravy train is going nowhere and is likely to derail in a big way next year. Certainly I see no sign of the regime coming to its senses and starting to make the tough decisions that would be required to get us back on track.

I saw a couple of days ago that 10,3 million 'visitors' to South Africa have not left the country after entry. Over 2 million have been deported but what about the millions who are not recorded anywhere? I was in Johannesburg on business last week and had meals in five different restaurants - in every one of them Zimbabweans working there in one capacity or another greeted me. It is easy to believe that over 3 million Zimbabweans now live in South Africa illegally.

Last week there was an outcry in South Africa over statistics - just how many murders are committed there each year? The Police statistics point to declining numbers with the total falling through the 20 000 ceiling at last. However the Medical Council stated last week that their own figures put it well over 30 000 a year. Whatever the true numbers - Southern Africa is making the headlines for all the wrong reasons. Zimbabwe as a failed State - South Africa as the crime destination of the world. The link between these two tragedies has surely occurred to someone in authority in Pretoria?

Eddie Cross
Bulawayo30th November 2006