What will happen next?

Zimbabweans are a resilient lot and we have survived over the past decade by using our combined ingenuity and enterprise. But right now we are being tested to the limit. The latest measure taken by the Zanu PF regime in Harare is to try to force everyone who imports goods to use the official rate of exchange as the basis for costing the imports into production or for resale.

Since foreign exchange at the official rate of 30 000 to 1 is simply not available, even if you have a letter of support from the Reserve Bank, almost all business transactions take place at a rate that is either the street rate or at a premium to the street rate of anything up to 50 per cent. So for example the street rate for the US dollar today (cash) is about Z$1 million to one. The rate used for most major business transactions in nearer Z$1,5 million to one.

So if we (as we have been doing since supplies from local manufacturers dried up) buy foreign exchange on the open market, we do so, not at the rate of 30 000 to 1, but at 1 000 000 to 1. That is we pay 33 times the official rate for the foreign exchange we need. We then send a buying team to South Africa where they buy what we cannot get here - soap, washing powder, cosmetics, margarine, flour and rice etc. and we bring this through the border - pay the duty and various bribes to get through the maze of officialdom at the border and then bring it into the supermarket.

A bar of soap in South Africa might cost us 70 cents. That is Z$700 000.00. Our import costs would be about 10 per cent - another Z$70 000 and then our mark up (now controlled at 20 per cent) and that takes the retail price to Z$924 000. We charge VAT at 15 per cent - taking the final price to Z$1 062 600 on the shelf. The tax on that transaction, by the way, is a massive Z$138 000.00.

Now they are demanding that we use the 'official rate' to price these products - so the calculation is now a cost price of Z$21 000. Import costs take it to Z$23 100, the mark up takes it to Z$27 720 and then VAT to a final price of Z$31 868.00 - 3 per cent of the actual cost price.

When these new regulations became known, we instructed our staff to stop imports. The supply position for all local goods is still nearly impossible - tiny volumes and we have to search frantically every day for what is available. We will now all have to travel to South Africa or Botswana or Zambia or Mozambique and do a weekly or monthly shop for essentials - even toilet paper is in short supply.

For manufacturers or suppliers of industrial chemicals the situation is even worse. They are paying up to Z$1,5 million for a dollar and they will not be able to recover even 2 per cent of their final cost prices. So if you take just one product - chemicals for water purification - these will now disappear and the consequences for the urban population will be dire. It will be a deathblow to most manufacturers and many retailers and wholesalers.

This situation is being compounded by run away inflation. The official inflation rate for October was 14 000 percent - up from 7 800 the month before. In my group of companies our inflation rate in the first two weeks of November has surged dramatically to 47 000 percent. We are well on the way to the 100 000 predicted by the IMF some months ago.

The rains have started well - we have had about 75 mls and the veld is green and lush. Land preparation and planting should be going flat out. But there is no seed or fertilizer and fuel is in very short supply. So we face another year of food shortages and tight political controls on food distribution. Right now the basic staple, maize meal, is almost unobtainable and when it comes on the market it's at nearly 10 times to 'official price'.

On the political front the talks with Zanu PF limp along. What was supposed to take three months has now taken 8 months and there is no end in sight. Zanu PF has ignored the talks in the way in which they have behaved at home and every possible sort of political abuse is being experienced every day. T he torrent of propaganda is relentless in its attacks on all perceived enemies with the MDC as the main target. Political violence is taking place across the country and is savage and illegal and we are seeing no recourse or relief.

The State continues to drive potential voters out of the country into the arms of our neighbors - especially South Africa and hundreds of thousands are on the move. They have ignored the agreements reached in South Africa under the auspices of the SADC - the electoral Commission is being staffed with Zanu PF functionaries, military officers and security personnel. Business as usual! No sign that the media is being prepared for the new dispensation - radio jamming is as intense as ever, the State media only mention our names when linked to accusations of one kind or another, international media is more controlled than ever and the independent press seems to have been bought.

Food is being controlled on a political basis across the country. Even water is now being used as a weapon. Living conditions for the great majority are simply impossible.

We have raised these concerns at the talks and all we have got in return are platitudes, eventually our team said no more and used their veto on the proposed electoral arrangements. We have said that if they press these issues and try to force us to accept the proposals on the table, we will walk away from the whole process. This is the first time this has happened and we now wait to see what the facilitators will do to bring things back on track. But quite frankly, enough is enough.

If the SADC process is a charade then we should not be party to it. Our very presence gives the whole process credibility and the false promise of a different set of conditions for the 2008 vote. While South Africa has dilly-dallied over the talks, Zanu PF have been actively engaged in a programme of repression and brutality that has seen over 40 000 people arrested and imprisoned in 9 months. It has seen the economy slide into a state of near paralysis and corruption and all that goes with this process goes on unimpeded.

We cannot take much more of this punishment and South Africa must be told that if they want an agreement by the month's end and an election of any sort by March 2008, they have to become directly engaged and have to tell Zanu PF that it simply cannot be business as usual. It is time for change - democratic change, or Zimbabwe is gong to slide into the pit of collapse and become just another nasty failed state.

What we need is exactly what Mr. Mbeki said he was trying to secure at the talks when he briefed Parliament last week. An election where the people of Zimbabwe - every one of them, has the opportunity to vote freely and against the background of a political campaign that has allowed all Parties to campaign freely. An election where all Parties have had access to the State controlled media and there is a free exchange of ideas and views. An Electoral Commission that is professional and independent and has full control of every aspect of the election process itself. Anything less than that is just not acceptable.

Eddie Cross
Bulawayo, 15th November 2008