Zimbabwe: Mutual Assured Destruction??

• NOCZIM: National Oil Company of Zimbabwe
• NRZ: National Railways of Zimbabwe
• the ZCTU: the Zimbabwe Congress of Trade Unions
• ZESA: Zimbabwe Electric Supply Authority
• SADC: Southern Africa Development Community

Zimbabwe's problems regarding the acquisition and use of everything from hard currency to public utilities

• South African banks Absa, Nedcor, and Standard Bank (all with major exposure to Zimbabwe) have admitted to concerns over the stability of the Zimbabwean banking sector. With annualized inflation over 600%, Zimbabwe Reserve Bank's governor Gideon Gono's threat to not bail out illiquid banks provoked interest rate hikes above the then-prevailing 150% to 375%- 450% at big banks, and to 600%-700% at small banks. This also entailed the suspension of six of Zimbabwe's sixteen banks from Zimbabwe's settlement system. Three unnamed major companies are reputed to not be accepting cheques from any Zimbabwean bank.
• ENG Capital Asset Management's discount house, Century Discount House (acquired from Century Holdings April 2003, although technicalities had prevented the sale's completion and also left Century Holdings materially involved in managing it post-April 2003) failed to pay its depositors on January 2, 2004 because ENG failed to repay them. This caused ENG to collapse, owing depositors over Z$100 billion against an asset base of Z$250 billion in equity, property, and vehicles. First Mutual Limited's subsidiary First Mutual Asset Management is owed Z$27 billion by ENG. It is unclear whether ENG financed Capital Alliance (Private) Limited's purchase of 840 million shares of First Mutual Limited's stock.

• Zimbabwe's official year-on-year inflation for November 2003 was 619.5%. Black market prices are overwhelming pensions; most pensioners receive no more than Z$15,000/month, while some get as little as Z$2,000 month. But a loaf of bread costs Z$3,000, five litres of cooking oil sell for Z$12,000. A family of six needs (according to the Consumer Council of Zimbabwe) at least Z$400,000 per month just for food.

• The IMF has initiated procedures to expel Zimbabwe. This is in response to Zimbabwe's failure to adopt policies required to address its macroeconomic collapse.

• The Zimbabwean government has cancelled all fourteen gold concessions issued to gold buyers in 2002 and 2003, due to insufficient gold received by the central bank (15kg instead of at least 500kg). This suggests that most of the gold has been diverted to the black market at over Z$50,000/oz, vs. the official price of Z$38,000/oz. [It is unclear whether government-controlled Gold Mining and Minerals Development Trust has had all of its concessions rescinded (Mazowe, Shamva, Mudzi, Mutare and Filabusi). It is definite that the following have had all concessions rescinded: Shipford Investments (trading as Golden Kopje Mine; most parts of Mashonaland West province), Needgate Investments (Chegutu), and Temba Transport (trading as Golden Syndicate; Kwekwe), Minerals Marketing Corporation of Zimbabwe (Gweru), Oleaster Investments (Gwanda), Rynwald Trading (Zvishavane), and SAD (Masvingo).]

• The onset of the rainy season is destroying Zimbabwe's wheat crop (at least, the part cultivated by resettled farmers). Their inability to hire combine harvesters has forced them to resort to using hand-held sickles to harvest. The worst-affected areas are Mushandike Irrigation Scheme in Masvingo Provice, and Mashonaland Central Province.
• Zimbabwe's agricultural sector is expected to decline by up to 50% in 2004 if no constructive action is taken. The Zimbabwean government does not have the the money to finance the 2003/2004 agricultural season, leaving farmers trying to acquire seed, fertilizer, and fuel one month after the beginning of the season. The 2002/2003 tobacco season sold only 81 million kg of tobacco for about U.S.$183 million -- about half of the 2001/2002 season. 2002/2003 wheat production was less than 150,000 tonnes, compared to a national requirement of 400,000 tonnes. Mugabe's land confiscation program has driven the demand for fertilizer up to about 1 million tonnes, from 400,000 tonnes. Furthermore, at least 30,000 tonnes of seed should be imported to augment local supplies, at about U.S.$2,000/tonne. The national herd (2003) is at 250,000 head, compared to 5.1 million in 1998. Restocking is unaffordable because of the price of stock feeds (official price Z$750,000/tonne, costs up to Z$2 million/tonne to import).

• Zimbabwe's Tobacco Industry and Marketing Board has proposed introducing contract tobacco growing, as well as auction tobacco growing. Tobacco farmers would be required to choose between the two options. In particular, contract growers would get input support from the contractor; also, contract growers would get the larger of the contract price for tobacco, or the current auction price for tobacco. Contractors would have to register by January 31, 2004.
• Many Zimbabwean industrial operations have started to import coal from South Africa, rather than attempt to rely on dramatically erratic supplies from the 40% government-owned Wankie Colliery Company. This includes tobacco, cement, sugar, and steel production, as well as fertiliser manufacturing. For instance, Pretoria Portland Cement adjusted the price of its cement by 100% in October 2003; the new price was Z$12,000 for 50kg on the official market, and Z$24,000 on the black market.

• Due to hyperinflation, most Zimbabwean real estate agents are now valuing properties in U.S.$ to avoid weekly reappraisals.

• Zimbabwe's NOCZIM has run out fuel, directly contradicting Zimbabwe's Minister of Energy and Power Development Ambassador Amos Midzi. The next deliveries are expected within a week.

• The Zimbabwe National Water Authority's [ZINWA] plans to disconnect water services to all towns owing it money poses a massive public health risk. This directly antagonizes Zimbabwe's Ministry of Health and Child Welfare. The initial six towns targeted in Matabeleland South are: Gwanda, the provincial capital (Z$37.4 million); Beitbridge, on the border with South Africa (Z$56.1 million); Plumtree, on the border of Botswana (Z$29 million); Esigodini, an agricultural and district capital about 50km southwest of Bulawayo; Kezi and Maphisa on the edge of Matopos National Park; and Filabusi, the district capital for Insiza constituency. In September 2003, ZINWA increased water tariffs by between 80% and 100%. For those who consume up to 10 m³ per month, the new tariff was Z$180/m³. For those who consume between 10 m³ and 25 m³ per month, the new tariff was Z$280/m³.

• Zimbabwe has introduced its first Z$1,000 bill. This is in conjunction with new-design Z$500 notes, and short-term "bearer cheques" valued at up to Z$20,000.

• Shangani Hospital in Matabeleland South was forced to not admit patients, because it ran out of food two weeks before. Even critically ill patients were refused admittal. The Grain Marketing Board depot in Filabusi (~80 km southeast of Bulawayo) is also empty, making the hospital's priority status meaningless. (Hospitals, prisons, orphanages, and other caregiving institutions are supposed to be allocated grain and maize flour before other customers.) More generally, Bulawayo reported that its health clinics and a referral hospital it runs were operating with only 50% of ideal staff because medical professionals continue to leave Zimbabwe for work in South Africa, Botswana, Europe, and the Americas. Ninety staffers had resigned from Bulawayo council services, fourteen have retired, and some have simply absconded between Jan. 2003 and Sept. 2003.

• Zimbabwe's parastatal District Development Fund [DDF] reported that more than half of its fleet of tractors was in disrepair due to the shortage of spare parts. This was aggravated earlier in 2003, when Tanaka Power (a Harare-based agricultural equipment and supplies company) withheld its services following DDF's failure to pay for 2002 services. The going rate for DDF to till ground is Z$32,000/hectare, with fuel extra at Z$200/litre. (At this price, filling the fuel tank is Z$80,000.) The current open-market price of fuel was reported as Z$2,000. Instead of having at least seven tractors assigned to each district, the DDF has not been able to assign even one tractor to all disticts. Some Matebeleland districts have two tractors assigned...but they do not have fuel either. Last week, the controlled price of a 10kg bag of seed maize was changed to Z$21,000. This is enough for 1 hectare...so it would cost Z$133,000 to even till and plant one hectare of farmland through the DDF.

• Zimbabwe has (officially) ended price controls on petroleum fuels. Private companies will be allowed to import fuel in a bid to end Zimbabwe's fuel shortages. diesel has immediately gone from Z$200/litre to Z$1,060/litre. Petrol has immediately gone from Z$450/litre to Z$1,170/litre. Earlier this week, Comoil (a company owned by the Zanu-PF politburo member Saviour Kasukuwere) had 35,000 litres of fuel impounded on charges of selling fuel at black-market prices.

• The German firm Giesecke & Devrient has asked for €6 million as down payment to print the October 2003 issue of Z$1,000 notes. (The total printing cost is thought to be about €30 million. The Zimbabwean government commissioned the printing from Giesecke & Devrient in July 2003.) Also, the current Z$500 will be replaced with one that is less expensive to print. However, the commercial banks enlisted by the Reserve Bank of Zimbabwe to hunt for the hard currency (as U.S.$) to pay Giesecke & Devrient have only managed to raise U.S.$4 million so far from the black market. While doing this, the black market exchange rate hit Z$6,000/U.S.$1.

• The Z$5 billion of travellers' checks issued by the banking system has failed to prevent long queues for legal cash. At some banks, lines form at 5AM in the morning to withdraw Z$5,000. Also, daily withdrawal limits in some places have been reduced from Z$100,000 to Z$10,000.

• The black market exchange rate went from Z$3,500/U.S.$ to Z$5,100/U.S.$ in one week. The British £ fell from Z$4,600/GB£ to a range of Z$5,000-Z$6,500/GB£. The spike is attributed to the Zimbabwean government sourcing hard currency to pay for the paper to print banknotes from the black market. Tobacco failed as a hard currency source; 2003 sales were 80-85 million kg, compared to 2002 sales of 160 million kg. The shortfall is directly due to Mugabe's land confiscation program.

• Zimbabwe's annualized inflation rate for July 2003 was 399.5%. In comparison, the January 2003 annualized rate was 208%; June 2002 was 123%; January 2002 was 116.7%.

• The following airports are scheduled for upgrading to standards suitable for use by international airlines: Harare International Airport, Victoria Falls, Joshua Mqabuko Nkomo and Buffalo Range. This is necessary to enable international tourism.
• One of the proposals Zimbabwe's Ministry of Finance is submitting to the Cabinet is the weakening of the official business exchange rate to Z$1,350/U.S.$1 from Z$824/U.S.$1. [This does not affect the normal exchange rate of Z$55/U.S.$1.]

• The black market exchange rates hit Z$6,000/U.S.$ and Z$8,000/UK£1 on August 6th, 2003. The two days before, the rate was Z$4,500/U.S.$.

• The black market exchange rates attained Z$3,000/$U.S.1 on July 25, 2003, and Z$3,900/U.S.$1 on July 30, 2003. It is plausible that NOCZIM is going to attempt to use the black market to raise hard currency, again. [When it did so in May 2003, the black market exchange rates hit Z$2,000/U.S.$1.]

• Almost all banks in Zimbabwe ran out of cash today. Anti-riot police were called in to prevent angry crowds from breaking into the banks in Harare and Mutare. In Harare, queues had started at 4AM. In general, withdrawals were limited to Z$5,000. While the Reserve Bank intends to inject Z$12 billion into circulation, it appears that this is not happening quickly: daily allocations for any given bank branch appear to be about Z$30 million.

• Zimbabwe does not have the hard currency required to import food and medical supplies for the rest of 2003. In particular, Zimbabwe expects to harvest almost 900,000 tonnes of maize, against a requirement of 1.9 million tonnes. 284,000 tonnes of maize are in stock, and the World Food Program is sending 120,000 tonnes of food assistance, leaving about 600,000 tonnes to account for -- somewhat under U.S.$142 million in value. U.S.$28 million in value of medical supplies also cannot be paid for to be imported.

• NOCZIM, through Syfrets Corporate & Merchant Bank, went to the open market to raise Z$10 billion to finance fuel imports. The original directions were for Z$60 billion, but historically there has not been a reasonable response to the petrofin bills. [Last week's attempt to raise Z$5 billion failed.] Fuel supplies from Libya's Tamoil have not yet visibly resumed.

• The Reserve Bank of Zimbabwe has released only U.S.$1.3 million to the Tobacco Grower's Trust (which finances imported inputs for resettled tobacco growers). Sales through June 17, 2003 were about U.S.$28 million, so the Tobacco Grower's Trust should have received 20% of that: U.S.$5.6 million. Total earnings are expected to be U.S.$180 million, down from the 2002 season's U.S.$380 million. The last season before Mugabe's land confiscation program, 2000, saw a total sale value of U.S.$526 million.

• The Libyan state news agency Jana has announced that Zimbabwe's fuel deal with Libya has been revived.

• Zimbabwe's President Robert Mugabe is in Libya, trying to resuscitate a fuel deal suspended because of Zimbabwean non-payment in agricultural goods (sugar, beef, and tobacco). Libya's Tamoil is reported to want to purchase Zimbabwean strategic assets in exchange for restarting the fuel deal. Price deadlocks include NOCZIM's 50% share in PetroZim (U.S.$100 million vs. U.S.$48 million), the Mutare-Harare pipeline and Msasa depot, and a number of service stations. Other desperation sources being considered include France's TotalFinaElf (a dominant company in Angola), Angola, Kuwait, United Arab Emirates, Sudan, Iran, South Africa, Botswana, and Nigeria.

• The Reserve Bank of Zimbabwe has finally started to release Z$24 billion of Z$500 notes into production. Unfortunately, there was no seignorage from this: it cost around Z$800 to print a Z$500 note. This makes the phaseout of new Z$500 notes fiscally required. They are expected to be replaced by Z$1000 notes in November 2003.

• ZESA reported that its monthly expenses were approximately U.S.$10.9 million. [U.S.$5 million each for power imports and debt service, U.S.$500,000 for wheeling charges, U.S.$350,000 for spare parts.] It would take U.S.$7.5 million to immediately upgrade all of its facilities in Zimbabwe. Foreign loans currently amount to U.S.$145.2 million, of which U.S.$109.7 million was in arrears. ZESA generation capacity is 1,770 MW; monthly imports were 650MW. [Hydro Cahora Bassa of Mozambique: owed U.S.$22 million, responsible for 400MW of imports; South Africa's Eskom: owed U.S.$11 million, responsible for 150MW of imports; Snel of the Democratic Republic of Congo: owed U.S.$5 million, responsible for 100MW of imports; EDM of Mozambique: owed U.S.$5 million; and Zesco of Zambia: owed U.S.$5 million]
• NRZ has been reduced to only 20% of its locomotives being in working condition. This is due to 95% of the spare parts being imported (and requiring hard currency).

• Harare terminated three companies contracts for garbage collection because they failed to procure the required trucks, etc. within 90 days: Wills Gara's Davexcorp, Miles Zata's MNF Environmental Services, and Tony Gara's Cleansing and Environmental Services. Joel Biggie Matiza's Encore Consolidated and Oliver Chidawo's Broadway Services (also newly contracted with Harare) were able to procure the required equipment within the required deadline.

• Zimbabwe is well on the way towards unofficial dollarization. Not only does ZESA bill in foreign currency, but rent, property sales, and airline fares are now often priced in U.S.$. Also, fuel is often priced in foreign currency.
• Smuggling petrol and diesel from Botswana to Zimbabwe is proving highly profitable. 500 litres of fuel may be purchased for about 1,200 Botswanan pula (official exchange rate Z$11.2/pula, black market Z$325/pula). 200 litres of fuel is reselling for as much as Z$500,000 on the black market.

• Insufficient diesel fuel and railway transportation have sabotaged Wankie Colliery's ability to supply coal to other industries. The tire manufacturer Dunlop Zimbabwe Limited was forced to close for an entire week, before acquiring sufficient supplies from middlemen to operate.
• The projected Zimbabwean wheat crop for 2003 is about 80,000 tonnes. 2002's wheat crop (at least, that delivered to the Grain Marketing Board) was 136,000 tonnes. Furthermore, it is controversial whether the new controlled price for a loaf of break (Z$250, up from Z$60 two weeks before) will allow bakers to make a profit.
• The MDC-driven stayway has stripped the black market of Z$. Exchange rates have fallen drastically as a result: Z$800/U.S.$, Z$2000/GBP, Z$180/South African rand, Z$250/Botswanan pula were attained. The week prior, rates were more like: Z$2000/U.S.$, Z$2500/GBP, Z$250/South African rand, Z$300/Botswanan pula.

• In general, Zimbabwe's banks were gridlocked today as many people attempt to withdraw enough cash to cover an entire week's worth of bills ahead of a planned nationwide strike. A number of ATM networks were shut down. Z$24 billion in Z$500 notes is expected to be printed (and put into circulation) by mid-June 2003.

• Finance Minister Herbert Murerwa's plans to review the exchange rate no later than the end of May 2003 have failed. It appears that unacceptable conditions tied to the last export devaluation of Z$824/U.S.$1 (normal is still Z$55/U.S.$1) have resulted in the near-total refusal to put hard currency in the control of the Reserve Bank of Zimbabwe.
• The Reserve Bank of Zimbabwe initiated crisis talks with bankers and exporters to discuss how to locate foreign currency to pay for imports of electricity and fuel. Also, some banks were reported as buying Z$ notes at a premium.
• The special paper required to print Z$ notes has arrived, and is expected to be used up very shortly. There are now plans to introduce a Z$1,000 note before the end of November 2003.
• Total milk production for 2003 is now projected at about 140 million litres, well below the 250 million litres expected to prevent shortages. The reduction since 2000 (44%) is about what is expected from the physical reduction in the dairy herd of cows.

• Some bank branches in Harare completely ran out of paper money. Those that did not were restricting cash withdrawals to Z$15,000 or Z$20,000.

• Zimbabwe's Grain Marketing Board has been completely failing to deliver its promised allocation of wheat to the three largest millers in Zimbabwe: National Foods, Blue Ribbon Foods, and Victoria Foods. Between the three, the total allocation is 6,000 tonnes/week. The wheat harvest was 140,000 tonnes, compared to government projections of 250,000 tonnes.
• The HIV i.e. AIDS pandemic has driven the Zimbabwean death rate to about 3,000/week. This is overloading the hospital mortuaries, especially since relatives are afraid to claim the bodies due to exorbitant hospital bills and burial costs. While a typical time before a body was subject to a pauper's burial was 90 days, some hospitals are changing their policy on this to 21 days.

• The Zimbabwean government has yet to respond to the National Railways of Zimbabwe's request for at least U.S.$27 million to upgrade its railway lines. U.S.$20 million is intended to revive the signalling system, while U.S.$7 million is needed for repair and replacement of tracks. In the absence of a functioning signalling system, ancient techniques such as allowing only the train driver with a given wood staff to enter a section of track, and deliberately setting gunpowder detonators before and after a stopped train, are being used to minimize the risk of collisions.
• Black market exchange rates hit Z$2,700/U.S.$1, Z$3,500/UK£1, and Z$270/1 South African rand. This is apparently due to ZESA and NOCZIM using the black market to acquire critical funding.

• Air Zimbabwe was reduced to 3 days supply of Jet A1 fuel, with no idea as to when the next delivery was. This prompted a decision to stop over in Lusaka, Zambia to refuel a London-Johannesburg flight that had taken off with only enough fuel to reach Harare.

• The black market exchange rate reached Z$1,700/U.S.$1. It had been stable since November 2002 between Z$1,200/U.S.$1 to Z$1,300/U.S.$1. The weakening is attributed to NOCZIM and ZESA, who must have more than U.S.$240 million to finance fuel and electricity imports. Tobacco auctions have failed to improve the foreign currency situation, due to a combination of fuel shortages and late planting.

• Zimbabwe has actually managed to reduce its domestic debt, starting from a peak of Z$372.4 billion on February 28, 2003. In particular, it was reported as Z$354.1 billion on March 21, 2003. A high proportion of this is Zimbabwean Treasury bills. While a substantial fraction of the deficit is driven by subsidies on fuel and food, removing these is politically unviable. Imports also pose a considerable obstacle to controlling the deficit.
• Zimbabwe's Ministry of Finance and Economic Development has failed to approve the budget proposed by the Reserve Bank of Zimbabwe. As a result, this bank has no foreign currency with which to import the ink and paper for printing money. It is hoped that this situation can be remediated by the end of June 2003.
• Circle Cement Ltd (Circem) has been reduced to one month of coal supply. Company chairman Ian Coulter noted that the company's continued viability required both an immediate price increase to cover costs of production (apparently, Z$511/bag is not enough to do this) and a reliable coal supply. The price review is scheduled for May 13, 2003.

• The tobacco selling season has failed to improve foreign currency supplies. It is currently physically impossible for the Reserve Bank of Zimbabwe to allocate enough foreign currency for fuel, electricity, grain, and pharmaceutical imports. ZESA has been completely cut off from the Congo's Snel (100 MW imports to zero). Mozambique's Hydro Cahorra Bassa has cut supplies from 450MW to 150 MW over non-payment, and Eskom's 150MW of imports is endangered by failure to pay. Also, alternate oil suppliers are needed: Kuwait's Independent Petroleum group is likely to cut off supplies over U.S.$70 million in debt. Libya's Tamoil has stopped supplying over nonpayment. Attempts to set up imports from Iran and Sudan have failed due to credit risk. Angola is still possible.
• Wankie Collerie had its last functional dragline break down about two weeks ago. This rendered it completely incapable of coal mining with the open cast technique. Remaining stocks of mined coal are reserved for the for Hwange Thermal Power Station. U.S.$5.3 million in funds being relayed through Jewel Bank from the African Export-Import Bank have yet to materialize. It is unclear whether the dragline has been repaired; it is definite that no companies other than Hwange Thermal Power Station have received coal for the past two weeks.

• Transport operators near Chiredzi are charging Z$19,000/km this year, in contrast to Z$152/km last year. This complicates the situation for the farmers created by Mugabe's land confiscation program, since they are expected to have over 500,000 tonnes of sugarcane to transport.
• Zimbabwe's soybean crop has dropped 28% year-on-year to 50,000 tonnes for the 2002-2003 growing season. Zimbabwe's annual requirement (at least, to avoid shortages) is 120,000 tonnes, which is split between domestic consumption, cooking oil, and stockfeed. This in dramatic contrast to 2000, when Zimbabwe grew 170,000 tonnes and exported 30,000 tonnes. Production in 2001 was 150,000 tonnes, and production in 2002 was 70,000 tonnes. The collapse in production in 2002 caused a trade deal between Zimbabwe and Malaysia, requiring 36,000 tonnes of soybeans to be exported, to collapse.
• Most filling stations in Harare have run out fuel. There are reports that NOCZIM's reserves have dried up, and that NOCZIM is trying to acquire foreign currency from all Zimbabwean banks to acquire fuel, without regard to exchange rate. The black market price for petrol is between Z$1,800/litre and Z$2,000/litre, while the black market price for diesel is about Z$1,000/litre. Taxi services are charging way above legal prices in order to cover the exorbitant fuel costs.
• The Reserve Bank of Zimbabwe used Z$21.6 billion to accomodate troubled banks during July 2002 to December 2002. The following banks were reported to have the lowest adjusted liquidity ratios (applicable in a systemwide crisis): Beverly Building Society [7.3%], First Merchant Bank (FMB) [4.8%], Zimbabwe Development Bank Finance (ZDBF) [4.8%], and Trustfin [2.4%]. The following banks were reported as having unusually high ratios of adversely classified loans to total loans: Metropolitan Bank [46%], Time Bank [79.9%], Genesis Investments [63.1%], and CFX [58.4%].

• Zimbabwe's last fuel import was apparently somewhen before April 26, 2003 (as of May 2, 2003). The consignment of 439,000 litres was diverted from Mutare to Bulawayo to ensure that Zimbabwe International Trade Fair delegates did not run out of fuel. No fuel imports are scheduled for the next two weeks, due to the Reserve Bank's external payments committee's inability to allocate foreign currency even to the main priorities of fuel, electricity, grain, and pharmaceuticals. It is suspected that Zimbabwe's last fuel consignment from Kuwait was not even paid for by the Zimbabwean government: Barclays bank had an offshore account in Jersey in the Channel Islands that was available. At least four other banks have bailed the Zimbabwean government out on fuel: Jewel Bank, NMB, ABC, and Trust Bank. Zimbabwean government guarantees for NOCZIM are now generally worthless. NOCZIM's debt has escalated to Z$21.6 billion, in spite of recent efforst to reduce the debt by Z$6.7 billion. Total debt owed by Zimbabwe to fuel suppliers is now thought to be over twice that of June 2002's U.S.$106.2 million. Libya accounts for over U.S.$170 million of this. Kuwait's Independent Petroleum Group accounts for over U.S.$70 million of this debt.

• Zimbabwe's tobacco auctions started today. Estimates of how much tobacco is available to be sold range from 110-120 million kg (Tobacco Industry Marketing Board) to no more than 85 million kg (Zimbabwe Tobacco Association). The deficit in production is apparently due to the inexperience and lack of support given to the farmers created by Mugabe's land confiscation program.

• The monopolistic phone company Tel.One has announced that all public coin-operated telephones are to be decommissioned, due to a wide variety of motivations. First, the manufacturer for the telephones has declared them obsolete, making it very difficult to obtain spare parts to maintain the phones. Second, the largest Zimbabwean coin in circulation, the Z$5 coin, is too small to pay for a basic phone call: it takes Z$25 to pay for a 3-minute local call. Public phones operated by phone cards will continue to operate -- but these phone cards are imported, thus hard to obtain. Also, Tel.One plans to set up more phone shops for those people who do not have their own phones. The lack of foreign currency prevents expanding the land-line exchanges' capacity, which has been at physical maximum for the past five years.

• Temporary arrangements have been made to continue electric power imports. ZESA has been concentrating the cuts on industrial customers, especially those that do not pay in hard currency. Some companies have introduced night shifts to avoid power outages.

• The price of diesel was changed from Z$119.43/litre to Z$250/litre. Leaded petrol was raised from Z$145/litre to Z$450/litre, while unleaded petrol was raised from $Z176.53/litre to Z$500/litre. This near-complete acquiescence to the petroleum industry explicitly sabotages the government's 10-point National Economic Recovery Programme, which intended to control inflation to a 96% annual rate by December 2003 by enforcing price stability.

• Davexcorp, one of the new contractors for Harare's garbage collection service, has found that it cannot be certain of the arrival of its trucks (from the United Kingdom) by a May 1, 2003 deadline. [At the moment, two months seems to be a fairly conservative estimated time of arrival.] Unfortunately, Harare's rates are already less than profitable for the extant firms, making it unviable to violate the terms of the contract with Harare by subcontracting.

• The Zimbabwean petroleum industry has asked for a raise in the pump price of petrol to Z$500/litre. This appears to be what is required to enable positive margins. This request had been denied in February 2003. Instead, increases for petrol from Z$74.47 to Z$145.20, and diesel from Z$66.39 to Z$119.43, were granted on February 25, 2003. It is speculated that the government is uneasy about this request because it would sabotage its entire price control system.

• Costs in the funeral assurance industry have gone up by over 350% over the past 12 months in Zimbabwe. This is forcing the dominant corporations (Doves-Crocker Morgan, Moonlight, First Funeral Assurance, and Nyaradzo) to either raise premiums (from Z$2/month to Z$300/month), or use the Insurace Act to cancel a policy by paying cash equivalent to the face value. Progressive Insurance Brokers (which handles policies on behalf of Doves) recommended that these firms review their policies before the end of August this year.

• South Africa's Eskom has joined Mozambique's Cahora Bassa in threatening to halt electricity supplies over ZESA's payment arrears, which are ultimately due to the Zimbabwean government's refusal to allocate foreign currency towards the payments.

• ZESA is said to have until Saturday (March 23, 2003) to pay debt arrears of over U.S.$6 million to Mozambique's power utility Hydro Cahora Bassa (HCB). The alternative is 100% termination of electricity exports to ZESA.
• The Finnish export credit agency FINNVERA has issued a default notice against Zimbabwe for failing to honor a government guarantee of US$3,116,376 million on a loan to ZESA. As a member of the Berne union, FINNVERA can only issue a default notice when the amount of funds in question exceeds U.S.$100,000. This is only 4 months after the Office National du Ducroire [OND], of Belgium, issued a notice against Zimbabwe for defaulting on a loan of U.S.$360 million. Efforts to establish whether the government had repaid the loan were unsuccessful this week as OND officials declined to release any information, citing client confidentiality.

• The Reserve Bank of Zimbabwe has again run short of foreign currency to import the paper for Z$500 notes. This time, they can print some of the notes...just not enough to completely satisfy current demand.

• Mugabe's land confiscation program has caused the following prices for produce in Bulawayo: Medium-sized pumpkins, Z$500-Z$700. 15kg of potatoes: Z$3,500 to Z$4,000, vs. Z$2,500 in Harare. Cabbages: Z$500/head. 15kg of onions: Z$3,500-Z$4,000.

• Harare has been forced to shut down virtually all non-essential services because of the total absence of both petrol and diesel. Ambulance and fire-fighting services are still working. Among other services, the following have been shut down as non-essential: refuse collection, road repair, street light repair, and grass cutting
• ZESA's failure to pay debts has reduced imports of electricity from South Africa's Eskom, Mozambique's Cahora Bassa, and the Democratic Republic of Congo's Snel from 50% of total supply to 35% of total supply. Eskom has openly classified ZESA as an interruptible customer, as well as raising its rates by 12.5%. The reduction in Mozambique's electricity exports apparently dates from June 30, 2002; two financing arrangements (debt swap, and U.S.$1.5 million/week) with Cahora Bassa have both collapsed. Snel has been demanding payment in foreign currency since April 2002. Wankie Colliery's cash flow problems are aggravated by unpaid debts of Z$300 million from ZESA and Z$1.6 billion by the Zimbabwe Iron and Steel Company.

• The Confederation of Zimbabwe Industries (CZI) said that ZESA is currently in debt to foreign electricity supplies by about U.S.$143 million. Load-shedding is apparently imminent, due to the inability of Wankie Colliery Company to supply coal to the nearby Hwange power station. [Wankie Colliery has been reduced to 50% capacity by foreign exchange shortage: it no longer can buy critical equipment or spares.] Also, the Southern African Power Pool arrangement prohibits a country from importing power from another member of the pool to compensate for supplies lost through failure to pay debts. While ZESA has applied for a US$350 million loan from an unnamed Indian bank, approval is said to be conditional on ZESA raising electricity rates. This requires a formal application to the Zimbabwean government, since they are price controlled.

• Murerwa's devaluation of the Z$ has passed, along with Z$100 billion in explicit subsidies.

• Finance Minister Herbert Murerwa has proposed a devaluation of the Z$, for all exporters, to Z$800/US$1. It appears that this is more politically tolerable than reintroducing bureaux of foreign exchange.
• Approximiately two weeks ago, a delegation from Mozambique's Cabora-Bassa Hydro-electricity project had visited Zimbabwe. They have already reduced electricity exports to Zimbabwe from 500MW to 200MW, and are considering completely discontinuing exports because of non-payment. ZESA is expected to have to load-shed if this happens.

• It appears that the Reserve Bank of Zimbabwe owes "several millions of American dollars" to a German paper firm that supplies the paper used to print Z$500 notes. It is very unlikely that further Z$500 notes will be printed, in their current format, until this arrears is dealt with.

• Police had to break up a riot in Bulawayo today. The riot was provoked when the state-controlled food distribution center refused to distribute maize-meal to people without Zanu PF membership cards.

• Bulawayo has completely run out of fuel (petrol and diesel) for so long that queues now only form at filling stations when a shipment is thought to be imminent.
• ZESA, and the union representing its workers, disagree on whether a strike by the union's workers is continuing. (Union says yes, ZESA says no.) The given cause was a difference over a proposed wage increase (management offers 70%, union wants 150%).

• Zimbabwe's banking system has run out of Z$500 notes. In particular, many ATMs were completely out of cash, and bank tellers were forced to use Z$100 and Z$50 notes for large sums of money. Apparently, the Reserve Bank of Zimbabwe is not in a position to import the paper required to print money. [Perhaps Zimbabwe should have learned from pre-dollarization Ecuador? At least the notes would be printed, even if they weren't fit for ATMs....]

• The shutdown of the non-bank bureaux of exchange has locked Zimbabwean parastatals out of the black currency market -- notably including NOCZIM, ZESA, and the Reserve Bank of Zimbabwe. (Hmm...perhaps this is what blanked Zimbabwe's fuel imports?). The net result has been to force companies with foreign exchange to move the bureaux of exchange overseas -- preventing most of the hard currency from ever reaching Zimbabwe.

• Zimbabwe has ended up in the dubious position of having stiffed all of its major oil suppliers, being reduced to payment-in-advance for them. Officially, Zimbabwe owes: Tamoil Trading of Libya, at most U.S.$20 million; the Independent Petroleum Group of Kuwait, U.S.$65 million; BP SA U.S.$17.8 million; Engen SA U.S.$12 million; Mobil Africa U.S.$1.1 million; Caltex U.S.$7.8 million; Libya Arab Foreign Bank U.S.$43 million; government of Botswana U.S.$4.4 million. While data is not available for Sasol, Sasol has also stopped shipping due to non-payment. Zimbabwe also owes the following in port charges: CFM railways US$1.4 million; BP Mozambique U.S.$1 million. Zimbabwe's major financiers are the Libyan Arab Foreign Bank and the Bank of Negara of Malaysia. The Tamoil deal collapsed when Zimbabwe refused to mortage more state assets for fuel.

• Most filling stations are out of fuel most of the time. It appears that NOCZIM is trying to renegotiate the Libyan fuel deal with Tamoil...but mortaging even more government assets may not be that politically viable. The black market price of fuel has reached Z$1,000/litre. [A shipment of 15,000 litres corresponds to a bit under 4,000 U.S. gallons -- that is, about half of what a gas station with a 10,000 U.S. gallon tank a major U.S. highway expects in a shipment of fuel two or three times a week. That the shipment typically lasts around 2-3 hours (without rationing), rather than around a full day, is indicative of the severe shortages.]

• Harare's supply of two water purification chemicals has fallen far below target. Lime has been reduced to a 3-day supply, apparently due to systematic underdeliveries by a local supplier since September 2002. The imported chemical 'ecol 2000' has completely run out; it is unclear whether the application to the Reserve Bank of Zimbabwe for funds to import this was submitted in a timely fashion.

• A number of South African seed distributors said that they cannot sell to Zimbabwe, due to pre-existing contracts. Monsanto South Africa (distributors of the Zadzamatura variety) is already committed for Zambia, Malawi, Angola, and other regional countries experiencing food shortages. Zimbabwe's four companies (Seedco, Pannar, Monsanto and National Tested Seeds) have run out, and are not expected to receive any imports before the maize planting deadline circa Dec. 15. A UN report indicated that on November 13, 2002, 30,600 tonnes of seed had been sold to farmers either via the Zimbabwean inputs credit scheme, or direct sales. This is enough for about 980,000 hectares, of of the 1.2 million hectares that could reasonably be planted based on known supplies. However, the projected yield is only 0.6t/ha (720,000 tonnes) to 0.8t/ha (960,000 tonnes). Zimbabwe's requirement is expected to be 1.8 million tonnes, excluding the strategic grain reserve.

• Zimbabwe's stock market has dropped 16% in the past three days. This is attributed to the increase in the direct percentage of foreign exchange earnings retained by the Reserve Bank of Zimbabwe from 40% to 50% announced on November 14, 2002 (as part of the budget speech by Herbert Murerwa).

• In an effort to choke off the black currency exchange market, Zimbabwe announced plans to totally shut down non-bank foreign exchange offices. It appears that the typical non-bank foreign exchange office had been using a blended exchange rate of 40% official, 60% black market.
• Zimbabwe has finally started to take steps to finance the relocated farmers...two weeks late. The agri-bond offer (effective interest rate 24.42%) is expected to end November 22, 2002. Mugabe has noted that the planning for the next growing season (2003-2004) should start in February 2003, not November 2003.

• The Libyan Ambassador to Harare, Mohammad Azzabi, formally explained that the Zimbabwe/Libya oil deal had collapsed for commercial reasons. He mentioned that Zimbabwe had paid U.S.$10 million recently and "not much was outstanding". Local (Zimbabwean/South African) fuel industry sources interpret that to mean that Zimbabwe still owes U.S.$80 million.
• Fuel shortages (both petrol and diesel) have resumed in Harare. The number of filling stations, in Harare, with any kind of fuel is "few".

• Continued transportation disruptions (due to lack of spare parts and fuel) have made supplies of cabbage erratic in the cities. Maize-meal, cooking oil, bread, and milk have already been erratic in the cities for some time...but not from transportation issues. The price of cabbage doubles just from being moved from a farm to the roadside (from Z$20 to Z$40 at this time), and gains yet another 50% in price (attaining a net tripling to Z$60 or Z$70) if it ever makes it into the cities.
• Total lack of food in Zimbabwe has prompted regions bordering South Africa to send crowds of at least one hundred into South Africa to buy food -- far in excess of the export-controlled quantities. Border patrols let these crowds bypass the posts in order to avoid committing mass murder (by starvation).

• The Reserve Bank of Zimbabwe has announced the creation of a Financial Intelligence Unit to investigate all (documented) cash transactions of over Z$500,000. This is part of an effort to identify why Z$ bills appear to be disappearing from circulation outright. [Interesting...the aphorism Gresham's Law states that bad money circulates in preference to good money. To put things cynically, what money makes the Z$ "good" with a black market exchange rate of Z$1800/U.S.$1?]

• Both the Zimbabwe Fertilizer Company, and the NRZ, are critically short of foreign exchange. In general, it has proved impossible to import sufficient raw materials to make standard fertilizers for agriculture. However, alternative formulae are in use. More problematic is that the NRZ's operations have been disrupted by inability to acquire and maintain locomotives and train wagons. This has made the supply of raw materials for all industries erratic.

• Gerry Johnson, the IMF's resident representative to Zimbabwe, stated that Mugabe's policies, if not totally reversed, would result in a hyperinflationary spiral. He mentioned that the IMF forecast of 522% inflation for 2003 was almost certainly a severe underestimate. Unfortunately, the IMF conditions on aid are political suicide for Zanu PF. This starts with fully agreeing with the charges that the current government criminally invalidated the March 2002 elections, and that Mugabe's presidency was obtained by mass murder and fraud. It's not going to happen....

• Quality control issues threaten to ruin the prices for cotton, one of Zimbabwe's export crops. It appears that quality control is much worse this year than last. Cottco chairman, Paddy Zhanda, has asked the Agricultural minister, Joseph Made, to start regulating the industry more formally.

• Zimbabwe's fuel deal with Libya has collapsed, due to nonpayment. While NOCZIM had switched over to the Independent Petroleum Group of Kuwait for 85 million litres of fuel, charges that NOCZIM had stolen 15 million litres of the above is likely to sabotage further supply from this source.

• President Mugabe has declared that multinational oil companies may no longer buy oil through NOCZIM. Instead, they must import it themselves...especially since they have more hard currency than Zimbabwe's government.

• Mugabe's land confiscation program had already reduced the yield of the 2002 tobacco crop to 162,000 metric tons, from 202,000 metric tons in 2001. [The 2000 harvest was 237,000 metric tons.] October 15 to November 15 is the critical season for transplanting tobacco seedlings. The rainy season usually starts around or after November 15. Unfortunately, a substantial proportion of tobacco farmers have no access to land: even if they have seedlings, they can't transplant! If no corrective action is taken, this is expected to reduce the 2003 tobacco crop by about 50%, i.e. to about 81,000 metric tons. This would be devastating to Zimbabwe's supply of foreign currency, starting in April 2003.

• Shortages of foreign currency have prevented the Zimbabwean government from spending on essential projects. This has reduced the budget deficit from the Z$114 billion target to Z$35 billion for January-June 2002. The Ministry of Finance and Economic Development reported, in particular, that only 5% of the funds intended to pay foreign debts actually were spent. Capital projects were underfunded by 5%.

• The Zimbabwe Farmers' Union reported that the seed price increases had helped supply. However, much supply has been diverted to Zimbabwe's input credit scheme, resulting in practical shortages. However, the shortages appear to be mostly a matter of distribution inefficiencies. For instance, the estimated demand for maize seed is 40,000 tonnes, compared to physical reserves of 47,518 tonnes. 7,000 tonnes of maize seed have been authorized for export. [Less than 30% of communal and small-scale farmers have access to the Zimbabwean input credit scheme.]

• Zimbabwe's Finance Minister Herbert Murerwa informed Zimbabwe's Parliament of several government guarantees to various local banks. Z$20,937,225,000 was guaranteed (for five years) to Trust Merchant Bank Limited, Commercial Bank of Zimbabwe Limited (CBZ), Interfin Merchant Bank Limited and First Banking Corporation Limited to cover local purchase and imports of Oct.-Dec.2002 maize and wheat imports by the Grain Marketing Board. A Z$6 billion guarantee (for ten years) was issued to Time Bank, Kingdom Bank, Trust Bank Corporation, CBZ and the curator-managed Genesis Investment Bank Limited to cover debts owed by Zimbabwe's Cold Storage Company. The alternative was having the banks seize this company's assets. Z$1.7 billion was guaranteed to CBZ for debts owed by the Zimbabwe Broadcasting Corporation. Unfortunately, there is a very real risk that at some point, the Mugabe regime may have to renege on any or all of these guarantees.

• Over 50% of the 400,000 head of Zimbabwean cattle in Masvingo province, in 2000, has been lost to a combination of cattle rustling and a critical shortage of pastures. The outbreak of foot-and-mouth disease (among others) was strengthened by the destruction of fences that would have otherwise prevented herds of livestock from intermingling. It has also proven impossible for commerical farmers to plant any crop, due to Mugabe's land confiscation program.

• Research by the SADC indicates that about 99% of Zimbabweans no longer have reasonable access to grains, even on the black market. Rice is unaffordable, while maize and wheat are not to be found.
• The Libyan fuel deal extension seems to have been in vain: both Bulawayo and Harare have only a few filling stations with either petrol or diesel. It is unclear whether this is due to logistical problems within Zimbabwe, or failure of the fuel to arrive in Zimbabwe. NOCZIM is certain that the Msasa depot (near Harare) not only has fuel, but that it is sending it out at the expected daily consumption quantities of 1.9 million litres of diesel and 1.2 million litres of petrol.

• About 94% of farmers that had intended to plant maize are reported to have no maize seed. About 60% don't have any estimate of when they would obtain the seed. Smallholder farmers created by Mugabe's land confiscation program have no seed at this time for any crops. Zimbabwean funding to support them is at Z$8.5 billion, as opposed to the Z$160 billion thought to actually be sufficient.

• Zimbabwe adjusted the controlled prices of seed for farmers. Maize was increased by 120%, groundnuts and sunflower seeds by 150%, sugar beans by 300%, and soybeans by 375%. These price increases, while they enable these to be sold on the market at all, are based on 15-month old prices. As such, the approximately 135% annual inflation rate has not been factored in.
• Climate has defeated the Mugabe regime's efforts to grow maize in winter. Even the hot and arid southern Lowveld region was not sufficient to make 1,500 to 1,800 hectares yield more than four tonnes per hectare. [The amount of land planted depends on which government source you consult. The land was dontated by the Triangle and Hippo Valley estates.] The resulting yield, 6,000 to 7,200 tonnes, is considered to be worth only one day or so of current maize demand (6,000 tonnes/day). Even the planned yield (ten tonnes/hectare) would have been worth less than four days of demand.

• Zimbabwe's fuel deal with Libya has been renewed. Libya, in exchange for petroleum product exports, will accept imports of beef, fruit, and tobacco. In addition, guarantees about the exchange rate from Z$ to foreign currency had to be made. Libya was also authorized to take corporate stakes in mining, besides the current ones in oil, tourism (e.g, Rainbow Tourism Group), and finance (e.g., Jewel Bank). It should be noted that foreign investment over 40% in a Zimbabwean corporation requires exchange control approval of the Reserve Bank of Zimbabwe.

• Liquid petroleum gas supplies have severely diminished in Harare since NOCZIM has been made the monopoly reseller. Since the beginning of September, it has been normal for less than one-fourth the adequate supply for a day to be shipped to local resellers from NOCZIM -- per week.
• ZESA has announced that all companies must pay their electric bills in foreign currency. This is expected to enable ZESA to pay more than U.S.$24 million to the Southern Africa Power Pool for electricity imports.

• Filling stations have started running out of both petrol and diesel. A few are completely dry, while many others only have one of petrol or diesel. Hopefully, the renegotiation efforts in Libya by Mugabe will be successful -- a huge debt (millions of U.S.$?) had not been settled before the last deal expired.
• Zimbabwe's cattle herd has been reduced from 1.25 million to 500,000 by massive destocking induced by Mugabe's land confiscation program. Unfortunately, the drought has resulted in massive overgrazing in Matabeleland South. Some villages (e.g., Hwali -- about 100 km south of Gwanda) have lost all of their cattle to drought.

• Bakers located in Bulawayo have almost completely stopped baking bread loaves, instead focusing on items like rolls, buns, and cakes which are not price-controlled. Those which still make bread sell it on conditions. One grocery store is requiring Z$300 in groceries for each loaf, while others are making it a "frequent buyer" or "large buyer" program reward.

• Fruits and vegetables will be in much greater shortage within two weeks, as virtually all small-scale farmers run out of well-water for irrigation. Delivery rates have already been impaired by irrigation water shortage and Mugabe's land confiscation program. In the past month, a box of tomatoes (high-priced end) has risen in price from Z$300/box to Z$500/box.
• Tobacco seed sales for this years crop are much less than last year's crop: 235 kg vs. last year's 304kg.

• The black market exchange rates are around Z$750/U.S.$1 and Z$1000/UK£. The record highs have been Z$1000/U.S.$1, Z$1250/UK£, and Z$75/South African rand.

• The black market price of bread has reached between Z$75 and Z$100 per loaf. For the past few months, people had been using bread as a substitute for maize-meal. The situation is not likely to improve until wheat stocks start to improve.

• ZESA has raised electricity rates by 40%. The first half of this was scheduled for July 1, 2002; the second half is scheduled for September 1, 2002. The rate increase is substantially less than the increase in prices of fuel. Coal went up 95.6% in price from January 2001 to October 2001. Diesel went up by 60% over the course of 2001. The annualized inflation rate has been near 117% since February 2002...none of which is accounted for in the price raises.

• Zimbabwe is renegotiating a U.S.$360 million fuel deal with Libya, which expires at the end of July 2002. Libya was to be compensated in both goods and shareholding in state-owned companies. However, the 12,000 tonnes of beef exports has yet to be completed.

• Zimbabwe has upgraded the priority of salt importers for foreign currency, after grocery stores ran out of iodized salt. Other sectors that have already been prioritized are medication imports, electric power, and petroleum products.
• The Zimbabwean dollar reached Z$850/U.S.$1 on the black market. This spike has been attributed to the Grain Marketing Board resorting to the black market to obtain U.S.$55 million for grain imports.

• The Zimbabwe Tobacco Association's request that tobacco farmers be paid in U.S.$ has been outright denied by the Finance Ministry. The current base price of U.S.$1.80/tonne, combined with a mild exchange rate support resulting in an effective official exchange rate of Z$99/U.S.$1, is enough to cover costs in U.S.$ -- but not in Z$. Cf. May 15, 2002.

• Mugabe's land confiscation program has already resulted in the slaughter of 30% of Zimbabwe's commerical cattle, and 45% of Zimbabwe's breeding cattle. It appears that any cattle farm that intends to respect a Section 8 notice usually has no option except to completely slaughter their cattle.
• Zimbabwe's Grain Marketing Board, under the pretext that bakers were hoarding flour, has cut wheat flour supplies to them by 50%-70%. It is more credible that Zimbabwean wheat stocks will run out before the end of July. Regardless of allegations, it is definite that the GMB is not receiving the wheat that the Mugabe regime has been forecasting: the current winter wheat harvest only has 30,000 hectares planted, with an estimated yield of 150,000 tonnes -- less than 3 month's supply at the normal usage rate of 35,000 tonnes month.
• Due to the inability of the NRZ to deliver coal to the state monopoly Zimbabwe Sugar Refineries (ZSR), sugar refining has been shut down since June 8, 2002 -- when the refinery ran out of coal. Lost production has reached 6,500 tonnes.

• The IMF declared Zimbabwe to be in non-cooperation with the IMF, in response to Zimbabwe's being in default since February 2001. This completely suspends IMF technical assistance. It is also expected to motivate similar positions from the World Bank and the African Development Bank. It is now extremely unlikely that interest rates will rise above inflation, since the government currently cannot source the hard currency required for food imports. Also, the exchange rate on the black market ranged between Z$750/U.S.$1 and Z$800/U.S.$1.

• The Zimbabwean dollar has reached Z$450/U.S.$1. The severe lack of foreign currency has caused the parastatals [ZESA, NOCZIM, etc.] to stop new infrastructure construction.

• Zimbabwean wheat stocks are expected to become non-existent within a month. The normal annual requirement for wheat is 380,000 to 400,000 tonnes; the 2001 winter wheat harvest was 314,000 tonnes. However, Mugabe's land confiscation program has reduced the wheat planting for the 2002 harvest to only 1/3 to 1/2 of the acreage of 2001. The lower bound is exactly the proportion of commercial farmers (the only substantial planters of winter wheat) who have not received Section 8 confiscation orders, whose compliance will totally prevent any harvest whatsoever. 60,000 hectacres were grown in 2001, with an estimated 20,000 to 30,000 hectares for 2002. This suggests that production from this will be 110,000 to 165,000 tonnes -- if Mugabe and Zanu PF do not sabotage the harvest.

• Basic commodities continue to be scarce in Harare. The black market price for a 10kg bag of maize-meal is between Z$600 and Z$650, in contrast to the controlled price of Z$248,05. For a 20kg bag of maize-meal, the black market price is around Z$700, in contrast to the controlled price of Z$491,84. Many supermarkets did not have cooking oil. One that did on May 30, 2002 [Food Chain Group's Robert Mugabe Way branch] also had a requirement that customers buy Z$500 of groceries for each 750ml of cooking oil. Cooking oil is being shipped -- in relatively insignificant quantities.

• The Zimbabwean dollar has been trading in the range of Z$385/U.S.$1 to Z$420/U.S.$1 on the black market, in spite of the opening of the tobacco marketing season on May 14, 2002. This season is expected to end in November 2002. Zimbabwe's government had substantial hard currency requirements to obtain before June 2002: it wants to pay off a U.S.$28.6 million debt owed by Air Zimbabwe to prevent repossession of aircraft by the Import Export Bank, and U.S.$23 million to even pay for imports of maize and wheat. The legal currency exchange market is backlogged on applications back to July 2001.

• Mugabe's land confiscation program is slashing the amount of land dedicated to next year's tobacco crop, by preventing the initial preparation of the land. It appears that most of the affected commercial farmland will be confiscated long before harvest time.

• Zimbabwe has decided that this year, the tobacco auctions shall be done entirely in foreign currency that was not obtained via the Zimbabwean banking system. Besides vastly simplifying collecting the 40% excise on foreign exchange, it allows the Zimbabwean government to convert the currency for the tobacco farmers at the official rate of Z$55/U.S.$1 . Unfortunately, the farmers must use black-market exchange rates when going the other way: two of Zimbabwe's three auction floors were completely shut down by hundreds of protesting farmers (most of whom would not be tobacco growers except by Mugabe's land confiscation program) over low prices -- insufficient to even cover transportation costs to the auction floors. [The Tobacco Sales Floor (TSF), and Zimbabwe Industry Tobacco Auction Centre (Zitac), were 100% shut down; Burley Marketing Zimbabwe (BMZ) was only 75% shut down. Zitac was shut down after the 23rd bale (it is indigenously operated), while TSF was shut down at 11 AM.] The TSF operations manager, Mr. Mark Impey, had to directly order the building security not to violently intervene against the protesters. Tobacco Industry and Marketing Board chairman, Mr. Njodzi Machirori, confirmed that all three would be closed while discussions were held with the Minister of Lands, Agriculture and Rural Resettlement, Cde Joseph Made, to resolve the issues. Zitac managing director, Mr. Artwell Seremani, mentioned that it costs Z$830,000 per hectare to grow tobacco, and the prices at the auction floors must account for this, rather than making paprika more profitable than tobacco. [Another way of looking at it: initial bids were on the order of Z$11/kg, while the cost of growing tobacco was around Z$300/kg at the black market exchange rate of Z$340/U.S.$1. At official exchange rates, the cost would be about Z$48 (rounding down). Clearly, even black market exchange rates would not save this auction. The Zimbabwe Tobacco Association believes that this could collapse Zimbabwe's tobacco industry.]
• A generator breakdown at Hwange in Zimbabwe, combined with two breakdowns in Zambia (Kafue and Kariba North) and diffuse technical problems in the Congo, has forced ZESA to apply rolling blackouts during peak load. This is expected to continue through the end of May. (The Kariba plant, in Zimbabwe, is also down for maintenance and refurbishment). South Africa and Mozambique are said to be exporting as much electric power as possible.

• The controlled retail price of bread has been adjusted from Z$48.50 to Z$60.44 per loaf effective today. The corresponding controlled wholesale price was adjusted from Z$44 to Z$54.95 per loaf. While this is a violation of a Herald campaign ad, the increases are insufficient to even temporarily make large-scale bread baking profitable -- that would have required a wholesale price of at least Z$63. Wholesale yeast prices have increased by 202% since Feb. 2002; wholesale prices of baking fats and oils were up by 26% in March 2002 compared to Feb. 2002. Wages were increased 21% in Oct. 2001.

• The ongoing maize shortages are disrupting the ostrich and poultry industries by preventing acquisition of adequate stock feed supplies. The amount of maize from birth to slaughter for ostriches has been reudced from the recommended 110kg-120 kg to 30 kg per bird. The ostrich industry has seen a decline of about 40% so far (compared to when?), between maize shortage and reduced demand for ostrich skin products. Most poultry producers have been shut down outright because of inability to substitute feed stocks. [Apparently, there aren't enough insectsto replace the cereal deficit for poultry.] Ostriches can use a number of alternative feed stocks, including maize and wheat bran, as well as soybean and cotton oil. Of course, the maize and wheat shortages automatically cause shortages in maize and wheat bran. Import costs for a tonne of stockfeed maize are estimated at U.S.$195 [of which U.S.$20 is the non-GMO ("not a Genetically Modified Organism") premium, since it is illegal to import GMO organisms into Zimbabwe.]

• ATM machine withdrawal limits have been adjusted in Zimbabwe. The range of limits now is Z$5,000 to Z$20,000. First Banking Corporation of Zimbabwe Limited (First Bank) has adjusted the ATM withdrawal limit to Z$20,000 this week; this matches NMB Bank Zimbabwe Limited. Standard Chartered Bank of Zimbabwe Limited (Stanchart) has an ATM limit of Z$$8,000 -- and charges Z$100 for any teller withdrawal less than Z$8,000. [The usual ATM charge of about Z$2 goes straight to the Zimbabwean government; this was introduced by Dr Herbert Murerwa as Minister of Finance.] Pairs of designer shoes have been observed at Z$27,000.

• The suppliers for Rusape General hospital have been refusing to honor Zimbabwean government requisitions since January 2002 due to non-payment. In spite of the Hospital Health Services Fund being diverted to food purchases, the normal hospital diet has been (cumulatively?) restricted to cabbages, milk, kapenta, beans and beef. The quantity of beef has been restricted to 40% of intended normal. [This is a balanced, if low-variety, diet.]

• The large disparity between the official and black-market exchange rates for the Zimbabwean dollar is causing the 40% government take on hard currency export earnings to disrupt Zimbabwean exports. There are suspicions that lowering this percentage might actually increase the amount of hard currency Zimbabwe collects. [I think the U.S. considered this back in the late 1980's for income taxes. While it was proposed under the Republicans (Ronald Reagan), it took a Democrat (Bill Clinton) to actually implement it. Of course, the U.S. budget surplus that Clinton attained for 2000 was immediately annihilated in 2001 -- it seems both military action (Al Queda) and Republican dominance correlate with increased spending.]

• The Department of Agricultural, Technical and Extension Services (Agritex) and the Commercial Farmers' Union (CFU) both agree that total area planted to crops to date for 2002 is 10% than both this time last year (2001) and the 1990's average. Of this, 60% has been planted to maize (2001 57%, 1990's average 63%), due to successful support by the Zimbabwean government for this crop in government-confiscated farmland. However, acreage decreases of 54% for tobacco, 44% for soybeans, and 56% for sunflower are forecast, mostly due to Zanu-PF-backed sabotage of commercial farms. Unfortunately, the forecast harvest of maize for 2002 is dismal -- less than 1 million tonnes.

• Out of current arrangements to import 160,000 tonnes of maize from South Africa, transportation has been arranged for only 10,000...of which 5,000 has already arrived. The World Food Programme accounts for 5,200 tonnes, and a U.S. donation of 8,450 tonnes is also scheduled for delivery through Tanzania. [Feb. 22, 2002: to prevent shortage, 150,000 tonnes/month is required: about 5,000 tonnes/day.]

• At least one supermarket has decided to stop carrying mealie-meal, because riot police are required for crowd control when it is in stock.

• Zimbabwe's GMB board chairman, Enoch Kamushinda, has joined efforts to secure financing from South Africa for an additional 300,000 tonnes of maize imports...that being the absolute minimum (on top of the 200,000 already scheduled) to prevent mass starvation. If nothing is done, at least 500,000 Zimbabweans are thought to be at risk.

• Harare grocery stores had their first shipment of corn meal in two weeks today. Police provided crowd control services, and restricted all purchases to one 10kg bag of corn meal per person. The shelves were stripped bare the same day. Zimbabwe's planned imports of grains (including corn) in progress were reported as 200,000 tons.

• The first 2,000 tonnes of Zimbabwe's planned 150,000 tonnes of imported maize are due to arrive from South Africa shortly. Unfortunately, there is no trace of who the other 148,000 tonnes will be imported from. Domestic output of maize was reported by the Grain Marketing Board as 1.48 million tonnes for the 2001 harvest, as compared to 2.04 million tonnes the prior season. The Zimbabwean government has started to confiscate animal feed maize from commercial farms who have not yet sold it; 36,000 tonnes was reported as having been confiscated so far, with 6,000 tonnes being confiscated from one German-owned farm in defiance of the German Embassy staff.

• The Economist Intelligence Unit forecasts a 5% decline in Zimbabwean GDP for 2002 compared to 2001, assuming that Mugabe's land confiscation program is unchecked and no substantial changes in Zimbabwe's macroeconomic policy happen. Even drastic macroeconomic reforms after the elections are expected to do no better than 1.2% GDP growth in 2003.

• Ashburner, chairman of the Zimbabwe Sugar Association, reported that Zimbabwe's sugar stocks were sufficient to last through April 2002. However, the spread between the official exchange rate and the black market exchange rates has promoted substantial exports to Zambia and Mozambique, requiring the criminalization of sugar exports because they were inducing shortages in Zimbabwe proper.

• Zimbabwe's Grain Marketing Board stock of maize fit for human consumption (70% of the Nov. 23rd figure of 96,096 tonnes) was subject to a purchase rate of about 20,000 tonnes per week. This has been completely exhausted, leading to probable shortages of the staple mealie-meal.
• The commercial bank African Banking Corporation (ABC) estimates that Zimbabwe's GDP will have declined 10% in 2001 compared to 2000. For comparison, Zimbabwe's official estimate is a 7.3% decline in GDP, while another commercial bank, Stanbic, is predicting an 11% decline in GDP.

• Libya's Muammar Gaddafi considers the challenge by several Zimbabwean politicians of Mugabe's offering Libya stakes in several state run firms, as part of the fuel/goods barter deal, to be a violation of terms. If this is not remedied, Libya is considering requiring payment in hard currency.
• Zimbabwe's November 2001 inflation rate was reported at 103.8%. A 100ml tube of toothpaste costs about Z$470, and the cheapest bar of soap cost about Z$100. Some Zimbabweans are reported to be using salt in place of toothpaste, as a money-conserving measure. The black market price of a bottle of cooking oil is about Z$200, in contrast to the controlled price of Z$148. This makes substituting margarine for cooking oil reasonable. Also, housing prices in the affluent suburbs of northern Harare are now around Z$70 million, as compared to Z$5 million at the beginning of 2001. Properties in the high-density areas are reported to be costing about Z$1 million, as compared to Z$600,000 in January 2001.

• Zimbabwe's total parastatal debt is expected to reach Z$60 billion for 2001, up from Z$45 billion for 2000. This debt is guaranteed by Zimbabwe's government, and is thus problematic for Zimbabwe's reputation in case of default.
• As of Nov. 23, 2001, official maize reserves were reported as 96,096 tonnes. A combination of foreign currency shortages, and other unspecified issues, have resulted in the Zimbabwean government not having yet locked in 150,000 tonnes of planned maize imports. An arrangement was reached with the United Nation's World Food Program in October 2001; the 60,000 tonnes of maize assistance is not likely to arrive before January 2002.

• The Zimbabwean Grain Marketing Board is hoping (based on the large early deliveries of winter wheat) for a possible 300,000 tonnes of winter wheat for this year's harvest. The current controlled selling price of wheat is Z$25,000/tonne, and the current controlled purchase price of wheat is Z$29,000/tonne. Mashonaland Central is reported to have filled its wheat silos with 80,000 tonnes already.

• Zimbabwe has opted for price controls on food and other essentials (translating to an immediate 33% cut in legal prices) with the consequent black markets and risk of business collapses, rather than risk massive rioting. This is not enough to counter the 76% monthly inflation reported for September 2001.

• It appears that at least Z$3 million worth of grain has been lost to fraudulent weigh bridge documenting the delivery of grain that was not physically delivered at Northern Products silos outside of Chinhoyi. [Others seem to be implicated; this is probably one of the larger documented ones.] Other cities and/or companies affected affected include Stentor, Gainful, Pamwechete, Old Citrus Estate, Majuta, and Biri. Particularly annoying (to the Zimbabwean government prosecutors) is the refusal of the local magistrates to try these crimes.

• The IMF has cut off Zimbabwe's access to loans under a program for nations suffering from high poverty rates, due to an arrears of over U.S.$50 million. The situation is expected to be reviewed in about three months.

• Sydney Mabika, an economist and assistant director at the Reserve Bank of Zimbabwe, announced that initial estimates of a Zimbabwean GDP decline of 2.8% for 2001 had been invalidated by severe problems in the agricultural sector. The official estimate is now an 8% decline; it is almost inconceivable that the decline could be less than 5%.

• The Reserve Bank of Zimbabwe, in an effort to handle as much hard currency as possible through official channels, is considering undoing the current Export Retention scheme, and forcing all foreign currency account holders to use the official currency exchange market (rather than permitting black-market currency exchanges at over Z$200/U.S.$1).

• Zimbabwe has been forced to raise the controlled price for buying maize from Z$7,500/tonne to Z$8,500/tonne, and the controlled price for buying maize from Z$8,500/tonne to Z$9,600/tonne. This is in agreement with the initial black market prices when Zimbabwe implemented price controls.

• Zimbabwe's stronger enforcement of currency exchange laws (official rate Z$55/U.S.$1, black market rate Z$350/U.S.$1) is threatening to shut down businesses that must use foreign exchange to acquire supplies.

• There is a severe divergence between Mugabe regime and corporate estimates of how much maize Zimbabwe needs to import. The Zimbabwean figure is 100,000 tonnes, while the corporate estimate is more like 700,000 tonnes.

• At least 33 million litres of assorted petroleum products have arrived in Zimbabwe, courtesy of a U.S.$360 million one-year contract with Libya. The Libyan contract is expected to supply 70% of Zimbabwe's requirements. Other extant contracts (e.g., Independent Petroleum Group of Kuwait, Petraf and Engen) are expected to cover the difference.

• Empirical data indicates that Mugabe's land confiscation program is severely reducing Zimbabwe's agricultural capacity. This threatens to reduce agriculture's contribution to Zimbabwe's GDP from 17% to about 8%. [This assumes, of course, that other sectors do not implode faster.] E.g., maize: the commercial farms that Mugabe is dismantling have been growing up to ten tonnes per acre, while the communal farmers that Mugabe is reallocating the land to are not doing better than 3 tonnes per acre. Estimates indicate that it will take 15 years to attain maximum productivity from the reallocated land -- as if there are fifteen years available.
• Dairibord Zimbabwe Ltd reported a 4% decline in milk supply for Jan.-June 2001 compared to Jan.-June 2000. This is directly tracable to Mugabe's land confiscation program, which is disrupting day-to-day activities on Dairibord's suppliers.

• The black market exchange rate hit Z$310/U.S.$1 .

• Details of a U.S.$360 million fuel deal to be financed by Libyan banks (including the Libya Arab Foreign Bank, which is the foreign branch of the Central Bank of Libya) are expected to be finalized soon. Coordination with the Reserve Bank of Zimbabwe is needed to ensure compliance with foreign exchange regulations.

• Zimbabwe's Finance Minister Simba Makoni reported that Zimbabwe's arrears on foreign debt had accumulated to U.S.$690.9 million.

• Computer technicians at Zimbabwe's state-controlled Posts and Telecommunications Corporation (PTC) are considering reinstating a sit-in circa August 16, 2001 unless their salary grades are revised to something closer to those at Net*One. Note: PTC is appealing a High Court ruling already requiring the maintenance of a 300% wage raise granted in 2000.
• Mugabe has overruled his finance minister (Makoni) regarding a possible official devaluation of the Zimbabwean dollar, indicating that this is not politically tenable until after the 2002 elections. [Makoni had proposed a devaluation to somewhere between Z$84/U.S.$1 and Z$104/U.S.$1...against a black market exchange rate of Z$240/U.S.$1.] There was speculation that both confiscating Foreign Currency Accounts, and a ban on "non-essential imports", were under consideration.

• The cost of bread was reported (after the last price hike) as being about Z$50 per loaf, in contrast to about Z$23 per loaf in January 2001. This is notably faster than Zimbabwe's nominal inflation rate of about 60%.

• NOCZIM reported that both South African refineries that normally sell it diesel are shut down: Sasol Natref Refinery (in Sasolburg) has been gutted by fire, and Engen Enref Refinery (in Durban) is undergoing routine maintenance.

• It appears that NOCZIM's last price increase assumed a black market exchange rate of Z$120/U.S.$1 . This is no longer viable.

• The Reserve Bank of Zimbabwe reported that the combined effects of the Gold Floor Price Support and Foreign Currency Account Retention programs has raised the production of gold from 44,766 oz of gold in April 2001 to 58,227 oz in May 2001. The Gold Floor Price Support program is maintaining a price of U.S.$343, versus a global market price around $U.S.260. The Foreign Currency Account Retention program was reported as providing U.S.$21.4 million to gold producers cumulative through April 2001. It is hoped that a reduction in corporate income tax rates from 35% to 25% will also help.

• Zimbabwe's National Bakers Association chairman Mark Prior reported that the miller Blue Ribbon is rationing wheat flour, and that the largest miller (National Foods) is considering rationing wheat flour. This is attributed to a wheat shortage aggravated by the Mugabe regime's refusal to assist with imports, forcing millers to get wheat from the black market.
• Zimbabwe's arrears with the IMF have grown to U.S.$30 million, and are projected to reach U.S.$52 million if no effective action is taken.
• Zimbabwe's Tobacco Industry and Marketing Board indicated that U.S.$181 million worth of tobacco had been committed for export. However, the hard currency inflow is not expected for at least six months, since it will take six months to cure the tobacco before exporting it. By comparision, oil imports have been running at U.S.$40 million a month, while ZESA's current power import costs are U.S.$86 million per year.
• The black market price of maize is already Z$8,000 to Z$9,500 per tonne, well above the official price of Z$7,500 per tonne.

• Junior and mid-level doctors joined a nationwide strike that the specialist doctors were already conducting. This strike was into its third week. Compliance appears to be roughly 80%.

• Black market exchange rates spiked to about Z$255/U.S.$1 earlier this week. Finance minister Simba Makoni made it clear to the local airlines that quoting rates using the black market exchange rates was not reasonable; it seems that the airlines consider the black market money exchange fully legal, however. Not even the Zimbabwean government can use the legal exchange rate of Z$55/U.S.$1, except for NOCZIM and ZESA export proceeds to be used for fuel and oil imports.

• Zimbabwe has arranged a contract with Libya which would allow importing U.S.$90 of petroleum products per quarter in exchange for Zimbabwean goods.

• Zimbabwe has declared maize, wheat, and wheat flour controlled products. The only legal exchange for these (in Zimbabwe) is now Zimbabwe's Grain Marketing Board.

• Martin Chingaira, administrator of Zimbabwe Building Contractors Association, reported that the construction industry would collapse further, since the Zimbabwean government has suspended a number of construction projects due to lack of funds.

• Zimbabwe has set up an inter-ministerial task force to oversee Zimbabwe's food security. Maize, wheat, and wheat flour have been declared controlled products; this is expected to take effect on July 18, 2001.

• Zimbabwe's Finance and Economic Development Minister Simba Makoni reported that Zimbabwe's expenditures had been successfully controlled to within target with the enhanced accounting rules he had introduced this year. However, Makoni reported that Zimbabwe needs to import about 600,000 tonnes of maize; he attributed this to an early dry spell followed by flooding. The latter claim is politically correct; the former directly contradicts Zimbabwe's Lands, Agriculture and Rural Resettlement Minister Joseph Made. [Note: Makoni is defying the Mugabe regime's official PR.]

• Preliminary results of the ZCTU strike indicate about 95% compliance overall (larger outside of Harare). About 80% of businesses and factories were shut down by the strike. The main strike-related violence has been inflicted by riot police attempting to protect individuals ignoring the strike.

• The Mugabe regime has declared the ZCTU's strike illegal and a direct threat to the government. However, no violence has been traced to the strikers.

• The ZCTU called for a two-day strike on June 3-4, 2001, to protest NOCZIM's refusal to totally reverse a 70% price increase in fuel by June 27, 2001.

• Lovemore Mbengeranwa, Harare's Director of Health Services, reported that hard currency shortages have put Harare's water supply at risk, prohibited adequate garbage collection, and prevented adequate treatment of sewage. Medical supplies cannot be reliably procured, and the stability of staff wages is now suspect.
• Zimbabwe's Central Bank has announced plans to print a Z$500 note and mint a Z$5 coin. This is apparently in response to rampant inflation, which has prompted the use of large and cumbersome bundles of Z$100 notes for routine shopping trips.

• Bulawayo has been reduced to less than a month's supply of the water purification chemicals chlorine (kill harmful microorganisms) and aluminum sulphate (precipitate debris out) by shortages of hard currency. The three companies tendered to supply these chemicals (Cernol Chemicals, Chemplex Corporation, and AI Davis and Company) cannot obtain enough hard currency to meet the requirements, forcing the city of Bulawayo to purchase these chemicals by alternative methods.

• Zimbabwe's Finance Minister Simba Makoni admitted that the difference between the official exchange rate (Z$55/U.S.$1) and black market rates ranging from Z$120/U.S.$1 to Z$200/U.S.$1 was endangering Zimbabwe's agriculture. [Agricultural products are bought at the official rate, but the inputs are purchased at black market rates.]

• Zimbabwe has stopped issuing gold buying licenses, due to evidence of massive illegal extraction of gold, and dominance by South African customers. [Of the recorded gold extraction of 22 million tonnes, over 10 million tonnes ended up in South Africa.] It also appears that the Gold Act (the basis for the licenses) needs to be revised to make it easier for small-scale extraction to be legal.

• The ZCTU plans to call a strike if NOCZIM does not completely annul its price increases for fuel. Danny Dube, president of the Zimbabwe National Chamber of Commerce, anticipated that the price increase would accelerate Zimbabwean business failures. Joseph Muzulu, chief economist at Zimbabwe Financial Holdings, reported that the fuel price increase invalidated his estimate for Zimbabwe's 2001 annual inflation rate of 80%.
• Maize prices on the privately run Zimbabwe Agricultural Commodity Exchange (ZIMACE) had firmed by Z$700/tonne since May 13, 2001. Z$300/tonne of this was since June 6, 2001. Industry groups are estimating the ideal level of Zimbabwean imports of maize as 800,000 tonnes, mostly from South Africa. (They are directly contradicting the Mugabe regime estimates by doing so). However, Grain SA (the overall organization for grain producers in South Africa) reports that this will break their supply and demand estimate for Zimbabwe; they had been using an estimate of 300,000 tonnes. South Africa is expecting to produce 6.967 million tonnes of maize this harvesting season, and has a carryover of about 2 million tonnes.

• Zimbabwe's Finance Minister Simba Makoni's rhetoric distancing the Zimbabwean government from Mugabe's land confiscation program proved futile. The IMF first deputy director, Stanley Fischer, made it clear in South Africa's Durban that IMF aid to Zimbabwe was frozen until a sustainable economic programme was actually intended, and "law and order was restored to Zimbabwe's land reform programme."
  • Translation: Mugabe must declare his land confiscation program illegal and renege on it. This is not feasible, since Zanu PF will lose most of its internal political support by doing so.
• NOCZIM boosted fuel prices (effective midnight June 12/June 13, 2001):
  • Diesel: Z$66.39/liter, up 68.4% from Z$39.60/liter
  • Unleaded gasoline: Z$77.42/liter, up 65.5%
  • Illuminating paraffin: Z$55, up 63.8%

• Seven financial bids from international companies tendering for a Z$5 billion digital phone project for Mashonaland and Manicaland were found stolen last month right before the tender was to start. Two senior Zimbabwe Tender Board (ZTB) officials - Howard Matimba and Ellen Ruparanganda - have been charged with the theft. The Japan Bank for International Cooperation (who is financing this) has mentioned that the project cannot be approved until the stolen bids are entered into the tender.
• Zimbabwe has apparently cut off debt service payments in order to finance oil and electricity imports. The IMF reported current arrears of U.S.$25 million; Finland has reported default on U.S.$8 million in debt. Germany did not provide figures, but did mention that arrears had been building for about a year now.

• NOCZIM finally paid U.S.$10 million to Kuwait Independent Petroleum Group to resume oil imports. This was after most taxis in Harare were grounded for lack of fuel, and harvests of tobacco and foodstuffs (maize and wheat, etc.) were endangered.

• NOCZIM lost a U.S.$90 million fuel deal financed by Marc Rich & Company via its subsidary Marc Rich Investments Ltd. In the words of an official with Marc Rich & Company, "We realised that these people were not serious." This is in stark contrast to the Congo, which Marc Rich & Company has had no problems with.
• It appears that Air Zimbabwe's fiscal difficulties included a massive scam that had the airline paying repeatedly for its own spare parts. This scam is presumed to involve top-level officials at the airline. Internal auditing procedures are virtually nil (by prior design).

• The Zimbabwe Council for Tourism's Chief Executive Elias Nyakunu reported that Zimbabwe's tourism industry was not recovering, contrary to initial predictions. More than sixty registered tour operators closed down in 2000. Nyakunu expected more than one hundred tourism operators to face closure in the first half of 2001. These figures do not include tourism operators not registered with the Zimbabwe Tourism Authority. [It appears that tourist arrivals were down 60% in 2000 compared to 1999; 1999 was up 8% from 1998 ()]

• NRZ has cancelled all passenger trains for the second day in a row, due to incredibly low fuel reserves. NRZ has also cancelled most of its cargo trains. The Confederation of Zimbabwe Industries also reported that most commuter and long-range buses have already been shut down by lack of fuel. It was projected that the crisis needed at least a stop-gap resolution within four days to prevent mass unemployment in the transportation industry.
• The Zimbabwe Independent (non-government-controlled media) reported that Zimbabwe's Grain Marketing Board is planning to import one million metric tonnes of maize and other small grains for the year 2001. This is a reversal of plans by the Grain Marketing Board, apparently in response to unexpected weather.

• Managing director of NOCZIM, Webster Muriritirwa, was reported by Zimbabwe's state-controlled Herald newspaper as saying "It's no use continuing to lie to members of the public regarding the fuel situation in the country. .... There is no solution yet in sight for the problem we are facing."

• The Independent Petroleum Group (IPG) of Kuwait has suspended supplies to the country because NOCZIM is in arrears of U.S.$30 million. IPG had been supplying 70% of Zimbabwe's fuel imports. The fuel shortages are deemed largely responsible for "the problems faced by the National Railways of Zimbabwe, the general public and industries which have been forced to operate below their maximum capacities. The ministries of mines and energy, finance and economic development, the Reserve Bank of Zimbabwe and NOCZIM are all working flat out to source foreign currency to pay IPG."

• NOCZIM's entire board of directors has resigned due to government (Mugabe regime) interference. In the past week the situation has worsened, with most Zimbabwean fuel stations having no supplies. Libya has been instrumental in arranging for short-term contracts, but Zimbabwe has usually failed to pay, forcing cancellation by suppliers. The latest contract for US$75 million from ABSA Bank of South Africa was aborted on or before Mar. 9, 2001 for this reason.

• South African power utility Eskom announced that ZESA is currently ahead of schedule in paying off its refinanced arrears. However, all purchases in excess of 150MW still must be made by cash in advance.
  • Due to the details of the regional Southern African Power Pool contracts, plus Eskom's imports of power from Zaire/Congo and Zambia through Zimbabwe: it is not practical for Eskom to completely cut off Zimbabwe.

• Much of Zimbabwe's early maize crop has been damaged by drought. The new estimated yield for 2000/2001 is 1.2 to 1.4 million metric tonnes, in contrast to the 1999/2000 harvest of 2.1 million metric tonnes. Zimbabwe typically uses 1.8 million metric tonnes of maize in a year.

• Assuming Mugabe's land confiscation program continues on course (plausible, since Mugabe has criminalized Zimbabwe's court system), Zimbabwe's macroeconomy is expected to shrink 10% in 2001. There is no particular reason to think this program will be altered, since it is part of the political price for Mugabe/Zanu PF to remain in power.

• Zimbabwe's Department of Agricultural, Technical and Extension Services (Agritex) reported that a prolonged dry spell in Jan. 2001 and early Feb. 2001 has rendered the early maize crop in most provinces a total write-off (it hit during the tasseling period). Agritex expects much of the late maize crop to have low yields. Tobacco is also affected, although not as severely as maize. Under these conditions, is is unclear whether the more expensive high-yield varieties of maize would have helped. [the communal farmers sector had to downgrade this year relative to last, according to the U.S.-based Famine Early Warning System (FEWS)].

• Some filling stations are starting to run dry again "in major towns in Zimbabwe" [Xinhua's classic lack of useful detail at work]. This is attributed to a combination of hard currency shortage (massive imports of maize are in progress to prevent starvation) and infrastructure limitations (the pipeline has insufficient capacity by itself, so road and rail are also being used to get the fuel in).

• The Civil Service Apex Council of Zimbabwe has called off the three-day strike [started Jan. 24?], in the interests of orderly negotiations. The statement was signed by "the Public Service Association President Givemore Masongorera, Zimbabwe Nurses' Association President Stella Zengwa and Zimbabwe Teachers' Association President Leonard Nkala."

• Givemore Masongerera, chairman of both the Civil Service Apex Council and the Public Service Association, reported that Zimbabwe's civil pay raise of 15% for 2001 [in contrast to between 80% and 90% on a sliding scale for 2000] was provoking civil unrest among the 170,000 public servants [government employees]. In order to avert a possible crisis, Givemore Masongerera wants to discuss a 60%-78% cost-of-living adjustment (and other issues) starting no later than Jan. 16, 2001. However, he is not certain that the leadership can suppress the currently-volatile situation for even that long.

• The black exchange market has seriously diverged from official rates again: Z$65-Z$70/U.S.$1, versus the official Z$55/U.S.$1. This is not expected to improve until the tobacco auctions.

• Black professionals -- doctors, nurses, engineers, lawyers, academics, and financial-sector -- have been emigrating from Zimbabwe this year. Primary countries they are fleeing to (from the Crash's destructive effects on Zimbabwe) include South Africa, the United Kingdom, New Zealand, the U.S., Ireland, Canada, and Australia. The official number is approximately 500 per month; this does not include those who give other reasons for leaving Zimbabwe, such as going abroad for study or a holiday vacation. In particular: out of 1,200 trained Zimbabwean doctors from 1990-1999, only 360 are practicing in Zimbabwe, according to Employers' Confederation of Zimbabwe president Joshua Nyoka.

• Zimbabwe's petrol imports are thought to be about U.S.$40 million/month. Zimbabwe's debt service costs for 2000 turned out to be Z$180 million/day; officially, this is expected to be Z$384 million/day for 2001. The unemployment rate has hit 60%. Tobacco production will be reduced to between 160 million and 180 million kg for 2001 (in contrast to 230 million kg for 2000): this is expected to reduce import revenues by Z$5.4 billion. Gold mining output has fallen by 20% for Jan.-Nov. 2000, compared to Jan.-Nov. 1999.

• Richard Mbaiwa, acting Director of the Zimbabwe Investment Center, reported that the number of investment projects in Zimbabwe fell by 80% from 1999 to 2000. The fall in such projects for the tourism, mining, and agricultural sectors apparently exceeded 80%, since they were worth commentary as "a particularly huge drop". [That is Xinhua's paraphrase, not Richard Mbaiwa.]

• Zimbabwe's year-on-year inflation rate was measured at 56% for Nov. 1999-Nov. 2000.

• At least 200 families whose crops were destroyed by Cyclone Eline in the "Chikombedzi communal lands, south of Chiredzi district in South Zimbabwe" have not received any aid from the Zimbabwean government -- three months after applying for it. The district administrator's office in Chiredzi confirmed this; it appears that the failure is at the national government level.

• Air Zimbabwe has been paralyzed by a strike involving all workers -- except pilots -- that is reaching nearly 100% compliance. One flight to Bulawayo and one flight to Johannesburg took off today; flights to Nairobi, Victoria Falls, and Johannesburg had been forced to not take off. Other airlines at Harare International Airport were forced to determine their schedules at departure time.

• Zimbabwe's new finance minister Simba Makoni, presented a distressingly accurate budget. Prior drafts are thought to have been so accurate that Mugabe squelched them. All major macroeconomic sectors are forecast to decline in 2001. The total budget size is Z$258.23 billion.
  • Makoni (in a reasonable appeal to the MDC for support) 'said the current suffering of the people invokes images of "the caricature of the lot of our people during the colonial era of our country."'
  • "Makoni attributed the negative performance of Zimbabwe's economy, once the second strongest in southern Africa, to the country's unpopular involvement in the war in the Democratic Republic of the Congo (DRC), a general breakdown of the rule of law in the country and uncertainty surrounding the controversial land acquisition and resettlement program."
  • The budget assumes a substantial reduction in the intensity of Zimbabwe's involvement in the Congo. Due to Zimbabwe's electric power arrangements, this is not completely in Zimbabwe's control.

• Zimbabwe's year-on-year inflation rate for Oct. 2000 was estimated to be 60.8%.

• South Africa's Eskom said that Zimbabwe's ZESA had worked out a plan to liquidate its debt to Eskom by the end of Dec. 2000. At the end of August, this was above 140 million rand. The current figure is classified, both because it could be damaging to Zimbabwean relations with South Africa.

• Zimbabwe's Grain Marketing Board failed to buy most of the maize from last season's crop, raising serious concerns about whether Zimbabwe's reserves will hold out through the May 2001 harvest. Mugabe's land confiscation program is expected to reduce overall plantings by up to 70% among Commerical Farmers Union members. This affects 38% of total production, for a potential overall reduction of 26% or so. There is a government guarantee that will allow Zimbabwe's Grain Marketing Board to purchase Z$5 billion more maize from last year's crop, but it has yet to be acted on. Wheat plantings are down by 28%, and imports of wheat [normally 1/3 of total used] have been totally shut down by Zimbabwe's lack of hard currency. Wheat reserves are expected to run out by May 2001; imports to compensate would be Z$15 million/month -- highly unrealistic, so the projection is that wheat will mostly run out by May 2001. It should be noted that Zimbabwe's Publicity and Information Minister, Jonathan Moyo, is making statements about this that appear totally disconnected from state-controlled media. Mr. Moyo, if you can honestly state "There is no question of a food shortage at all," then you must be confident that the events of Oct. 16-19 are a hallucination of the state-controlled media reporters.

• South Africa's Mbeki has publicly noted that South Africa cannot escape conseqences if Zimbabwe's macroeconomy collapses. In his opinion, South Africa is an obvious place for Zimbabwean refugees to flee to. Hard cash inflows (already insufficient) will collapse further when the tobacco selling season ends in ten days. It appears, from an academic viewpoint in South Africa, that at least one of fuel or electricity will run dangerously short in Zimbabwe. Mugabe's consistent violation of civilian property rights (land confiscation program) is not helping the situation.

• It appears that Zimbabwe's tobacco production has already been reduced by 25% via Mugabe's land confiscation program. Corn production appears to already have been reduced by at least 33%.

• Zimbabwe's police and army finally managed to inhibit a riot that ran for three days [Oct. 16-Oct. 18, 2000]. The provocation was a 30% rise in the price of bread and sugar from Oct. 8 to Oct. 15 (my interpretion of "in a week"). While the MDC does have the ability to organize such things, the MDC has strong incentives not to -- it tried to prevent the riots from expanding by persuasion.
• NOCZIM only has (Z?)$10 million available for fuel imports this month, about 25% of what is needed to avoid outright shortage.

• Zimbabwe has fallen more than 6 months behind on its (U.S.?)$889 million in loans to the World Bank. The World Bank has responding by reclassifying the loans on a "nonpayment status": overdue payments are now at (U.S.?)$47 million, and loan loss reserves have been increased by (U.S.?)$115 million.

• Zimbabwe's 2000 budget was announced as 67% larger than its 1999 budget, with revenues projected to grow by only 2.5%. Of this increase, Z$30.3 billion is for statuatory and constitutional provisions, which are presumably almost impossible to reduce. Zimbabwe's projected 2000 deficit is 24% of GDP. The ] 1999 budget predicted a deficit of 3.8% of GDP -- but in physical reality, salaries and wages were Z$55 billion, with a comparable amount for debt service, overwhelming 1999 revenue of $89.3 billion.

• Mugabe's land confiscation program is on track to reduce Zimbabwe's tobacco production by Z$5.4 billion, which would cost Zimbabwe U.S.$107 million in hard currency. Seed sales have been reduced by 23% (compared to this time in 1999). Initial projection would put this years' tobacco crop at 170 million kg, but Mugabe has reneged on pledges not to confiscate productive farms -- including farms responsible for 61 million kg of the above estimate, reducing the crop size to 109 million kg. That assume no further confiscations of planted cropland.

• Air BP reported that Air Zimbabwe defaulted defaulted on a $8 million debt(payment?) to Air BP. Air BP acted like this was not unusual for Air Zimbabwe. Air Zimbabwe's PR department claimed the Air BP fuel account was current.

• Several Zimbabweans (who have had relatives killed by Zanu PF in the weeks before the elections) have lawyers who have interesting insights...into U.S. law.
  • The U.S. Alien Tort Claims Act of 1789 gives foreigners the right to file civil suits in the United States for violations of international law. Zimbabwe's President Robert Mugabe has a fairly large exposure in this regard, because his land confiscation program involves thousands of personal authorizations of violations of international law.
  • Mugabe was served a lawsuit, in or near a Harlem church, based on the Alien Tort Claims Act of 1789. The plaintiffs are Zimabweans whose relatives have been assaulted or murdered by Zanu PF.

• Zimbabwe's Commercial Farmer's Union estimates that if Mugabe's land confiscation plan is not shut down, that Zimbabwe's GDP would fall by between 8% and 12% for 2000, compared to 1999. A significant factor is that the Zimbabwean banking system should refuse to lend to farmers whose land is in imminent danger of confiscation, or is being actively disrupted by Mugabe-supported vandals. Wheat planting is thought to be down by 23% because of this disruption. Cf. Zimbabwe National Chamber of Commerce, June 22, 2000.

• NOCZIM raised prices on illuminating paraffin [Z$30.20, 101% rise], leaded petrol [Z$40.80, 45% rise], diesel [Z$36.40 from Z$23.57], and Jet A1 [Z$28, 52.3% rise]. With the exception of the illuminating paraffin price boost, the changes appear mostly to compensate for the combined rise in oil price (in hard currency) and the official devaluation of Z$. In particular, the gross loss issue does not appear to have been dealt with, except for illuminating paraffin.
<