Tweedle Dum and Tweedle Dee
Sometimes the antics of the Zimbabwe regime take on all the features of
rollicking farce. We have the Minister of Finance presenting what
like a professional review of the economy - except that not even he
half of what he had to read and then the President makes a speech and
his economics, defending practices that have landed us in the mess we
all in today.
There is no attempt to deal with the basics or the fundamentals just
the same formula that have driven the economy and the welfare of the
straight into the ground. For a start, the overall spending planned in
budget vastly outstrips our capacity to support such expenditure from
shrinking economy and contains a basic budget deficit that is equal to
half the total expenditure planned and a third of our GDP.
Add the combined losses of the State owned organisations (86 of them)
are also spending our money and the budget deficit goes ballistic -
of the same order of magnitude as in 2005 when the IMF stated that
estimate was that our deficit was 63 per cent of GDP. For the
among you, our sustainable deficit is probably about 3 per cent. So the
printing presses run and our inflation gallops along at 2000 per cent
Unperturbed by this situation and knowing who is responsible for
the regime attacks its business community. They have launched an
they call 'operation hurricane' and have hundreds of police,
and Ministry officials constantly visiting manufacturers and retail
establishments to ensure that they do not exceed 'controlled
are these prices? Simply what the Minister or the Ministry decides as
a 'reasonable' price for any given item or commodity. So bread will
at Z$295 a loaf (about 12 US cents) while the bakers argue that given
material costs, the price should be over Z$600 a loaf (a massive 24 US
cents!). No agreement and the largest bakery in the country exceeds the
stated price by Z$5 a loaf and their MD is thrown into jail for 6
two months suspended.
Some 6000 businesspersons from all walks of life face court hearings
imprisonment at this moment and they include many of the largest
operators and managers in the country. Many firms have simply stopped
trading in controlled products rather than face imprisonment or fines.
Then the regime decides to buy aircraft from its remaining friends in
world of aviation. They start by buying two aircraft from China and in
return were given one for 'free'. Only one remains flying - one
stripped down for spares and the other is waiting for spares. It was
discovered they were not new when purchased and no maintenance
were put in place. They are noisy and uncomfortable.
Then it was the turn of the Russians. The Minister responsible goes to
Moscow to negotiate the deal and the Governor of the Reserve Bank is
ensure the Russian mafia does not diddle him. They get to the final
of the deal and are presented with a demand for a US$25 million
deal until this is paid, in cash up front. They did not have that sort
money - were hoping for a deal on credit, asked for time to contact
and then both of them fled back to the safety of their Harare haven.
to death that the Russian mafia would not take non-performance very
Since Gonoís main friend in Moscow was gunned down by contract
months before, perhaps they had something to fear. But whom were they
dealing with for heavens sake! Perhaps birds of a feather!!
Then finally one of the many international court hearings on Zimbabwe
about to get under way in Paris. This case concerns a claim by 11 Dutch
nationals who had invested in Zimbabwe after 1980, protected by a
investment protection agreement and bought farms with 'certificates
interest' from the Zimbabwe government saying that the land was not
for land reform. Then along came the 'Fast Track Land Reform', in
simply an exercise to loot the assets of the large-scale commercial
and to destroy their political influence, and they were forcibly thrown
their farms and lost their entire investments.
They were not big players by any means - they are only claiming US$15
million, but it is their unique position as investors that makes this
so interesting. They are going to win their case - the Zimbabwe
has appointed top lawyers to defend their position but they too must
this is a lost cause. When they win, three things will happen - every
firm in Europe will be hunting for clients in a similar position with a
claim against the looters, the potential fee income is huge! Thousands
new cases will be forth coming as farmers, now spread across the globe
legal action to secure compensation in the currencies of their choice,
finally, no assets of the Zimbabwe regime will be safe, aircraft,
and even embassy motor vehicles will be subject to legal attachment. It
I have no idea how large the total liability will be but I am willing
it runs to many billions of US dollars and certainly exceeds our
international debt that we cannot service anyway! Nothing deterred,
and his pirates continue to loot farms and illegally seize assets from
investors - many also covered by bilateral investment agreements
the State before this madness.
The confirmation of title rights by international courts will
situation in southern Africa as a whole and even before the case is
finalized, is impacting on land and assets values in Zimbabwe. The sale
past week by Anglo American, of their last pre 1980 assets in the form
Hippo Valley Estates to Tongaat Huelett in South Africa for 17 per cent
its real value highlights this - it shows that Tongaat believes, like
myself, that one day soon this long nightmare will be over, asset
will recover and we will be able to rebuild our lives again. Hang onto
title deeds guys; you may need them soon.
Just to complicate their lives even further we have all the makings of
lousy wet season upon us. In the main cropping areas the rains are
month late and this is a much worse start to the season than last year.
Because of the poor harvest in 2005/06 we will have to import at least
million tonnes of maize as well as 300 000 tonnes of wheat and many
basic commodities to feed the country. It would appear that we will get
relief from the weather in the current season, even if we were prepared
a better harvest with all the required elements in place.
Bulawayo, 11 December 2006