Tuesday, 15. Januar 1999

FREE of charge news and background service from the Norwegian Council for Africa. The Norwegian Council for Africa (Fellesr├ądet for Afrika) is a non-profit making NGO.

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1. Military ordered to release detained journalist

2. Slow growth seen unless govt mends relations with donors

3. Seized farms to be paid for in cash up-front

4. Printing costs skyrocketed by more than 300 percent

5. IMF stance leaves a lot to be desired

6. Probe into war fund looting widens

****************NEWS and BACKGROUND*************************

1. Military ordered to release detained journalist

Channel Africa (SA), 14 January 1999

Harare - Zimbabwe's high court has ordered the release of a local newspaper editor who was detained by the army last Tuesday. Military police arrested Mark Chavunduka, editor of the independent Standard, over a report that 23 soldiers had been arrested for an attempted coup in December.

The newspaper's managing director, Clive Wilson, said the court had ordered the military to immediately release and refrain from any contact with Chavunduka. But, the Zimbabwe Ministry's permanent secretary Job Whabira has said the military will move at its own pace and that it will not take instructions from a judge.


2. Slow growth seen unless govt mends relations with donors

The Financial Gazette (Zimbabwe), 14 January 1999

By Godfrey Mutizwa

Harare - Zimbabwe's economy will be condemned to another year of slack growth unless President Robert Mugabe's government repairs relations with key foreign donors by improving the country's governance, analysts said yesterday. "The economy will continue to underperform this year because of the numerous political hazards that lie ahead and, because of that, there will be no substantial improvement in confidence," said independent economic consultant Meryvn Ellis.

Economists reckon Zimbabwe's gross domestic product will expand by more than two percent this year despite a weak currency, high inflation and interest rates of over 45 percent.

Official estimates put 1998 growth at 2,4 percent compared to the 2,0 percent registered the previous year.

"This economy would have grown six to eight percent - not the two to three percent that we are talking about. The real challenge will be to improve governance," Ellis said.

The outlook has been clouded by soured relations with donors, particularly the International Monetary Fund (IMF), over Zimbabwe's controversial land reforms and a costly military venture into the former Zaire.

The IMF held up a cash handout in November following Mugabe's decision to seize land from white farmers and Zimbabwe's deployment of 6 000 troops to the Democratic Republic of Congo to back President Laurent Kabila in a civil war.

An IMF team this week recommended the release of funds, totalling US$53 million, when the fund's board sits in March.

But Zimbabwe's dollar has hardly taken notice, equalling its record low against the US dollar yesterday at 40,50/60.

Ellis said further delay in releasing the IMF funds would in turn also delay a revaluation of the Zimbabwe dollar which the central bank says is 50 percent undervalued against the US unit.

"It will prevent the exchange rate from appreciating. I believe there is a 70 percent chance that the exchange rate will continue trading around the 38 to 42 range," Ellis said, ruling out a crash similar to last year, when it halved in value.

Finance Minister Herbert Murerwa and Reserve Bank governor Leonard Tsumba told reporters this week they believed the currency was undervalued because of a loss of confidence.

Murerwa said the return of the IMF could unlock about US$800 million in aid from other donors and this, together with new measures he would announce soon, would help restore confidence.

But independent economist John Robertson said confidence could only return when the government clearly stated that it would respect property rights in its land redistribution programme.

"The agreement with the IMF will strengthen the exchange rate but the biggest obstacle remains the uncertainty on the land issue," Robertson said.

"Government needs to come up with a clear statement that it will respect property rights and then we can begin to see meaningful levels of investment. No foreign investment is coming in because of this issue," he added.

Economists say that while the government got it right on the fiscal front last year, investment and savings fell nonetheless because of high inflation and political uncertainty.

Tensions remain, with the government failing to agree with manufacturers on new higher prices for basic goods this week.

Zimbabwean unions, which last year organised a series of strikes to protest the escalating cost of living, have still to lift threats of further strike action to force the government to improve the macroeconomic environment.

"The economy will recover when the political environment recovers," Ellis said, adding that the only bright spots remained Zimbabwe's educated manpower base and the quality of its physical infrastructure.


3. Seized farms to be paid for in cash up-front

The Financial Gazette (Zimbabwe), 14 January 1999

By Nqobile Nyathi

Harare - THE government, alarmed by the lack of foreign currency inflows into the ailing economy and the acceleration of the local currency's fall, made a major policy about-turn this week by announcing that it will now pay cash up-front for all farms it is compulsorily acquiring from mainly white commercial farmers to resettle landless peasants.

In a move that contradicted comments on New Year's eve by President Robert Mugabe, Finance Minister Herbert Mu-rerwa told a team of visiting International Monetary Fund (IMF) officials on Tuesday the government would first pay for the farms before taking them over.

Mugabe only two weeks ago said the government would take the farms and pay later, if the money was found at all.

Murerwa's assurance this week appeared to have convinced the IMF officials, who immediately announced they were going to recommend to the powerful IMF board, due to meet in the first week of March, that the long-delayed tranche of US$53 million balance-of-payments support for Zimbabwe be finally released.

Michael Nowak, the IMF's programme officer for Zimbabwe, told a news conference also attended by Murerwa in Harare on Tuesday: "We are proceeding on the understanding that payment will be up-front - and in cash - and will reflect the market value of the land.

"Compensation will be paid once title deeds are transferred to the government. The titles will be transferred when the land is required to be resettled." The IMF had been holding on to its pledged aid for Zimbabwe since last August mainly because the government had not come out clearly to state its policy on its land reforms and to explain who was funding its military intervention in the Congo.

It also wanted to know how the government intended to finance its controversial deal for the sale of Hwange Power Station, Zimbabwe's largest, to Malaysia's YTL Corporation, and when state controls on prices of basic goods, slapped last year amid violent food riots, would be lifted.

The impasse with the IMF had delayed the release of other aid for Zimbabwe by Western donors and financial bodies worth US$800 million - aid which should be forthcoming now that agreement with the IMF has been reached.

The land question has been one of the most critical factors in the negotiations with the IMF and the situation has been confused by conflicting public statements made by different Cabinet ministers and Mugabe.

And the matter is not entirely settled as Murerwa was not very clear this week on whether the government would pay for the actual land or compensate the farmers only for the improvements made on the farms, a stance insisted upon by Mugabe.

However, some Cabinet ministers have said the government will deal with the matter of compensation according to the law. The revised Land Acquisition Act of 1996 provides for full compensation for land.

There were some rough verbal exchanges between Murerwa and journalists at Tuesday's news conference over Nowak's statement that payment would "reflect the market value of land".

Journalists said the statement contradicted the government's oft-stated stance that compensation would be for improvements made to the farms only.

Said Murerwa: "The position we have taken is that we will value the land on the basis of value that has been added to the land. We will pay for improvements that have been added to the land. Improvements plus value that has been added to the land - that adds up to `fair value'. That's the government's position." He said the government would issue a statement to farmers and stakeholders spelling out its land policy, which is one of the conditions set by the IMF for the release of the aid.

Goodall Gondwe, the IMF's director for Africa who was also at the news conference, said the statement must detail the government's policy on the land issue, especially compensation, as well as its intentions for the 841 farms "designated" in November.

The government should also give a timetable in the statement about when it plans to use the 841 farms, as well as explain which farms adjacent to communal areas would be used in the inception phase of the resettlement programme adopted last year. Said Gondwe: "There is need for the government to come up with a comprehensive statement that should answer every question that could be pertinent to the land issue. The government has agreed that that statement should be made and is in the process of being drafted. The statement will appear in any paper here or outside the country." The IMF team said it was now satisfied with the other issues that had to be clarified by the government before the release of funds. It was satisfied that the Congo war was not putting a strain on the country's resources and that the government would not subsidise the privatisation of the Hwange Station under a deal which would have seen Zimbabwe loaning YTL US$300 million repayable over 14 years at three percent interest.

The government has said that Laurent Kabila's government and that of Angola are paying for its military foray in the Congo, although Zimbabwe is still paying the salaries of its troops there.

"On the issue of the price controls on maize meal, the government has said it will review its policy at the end of the harvesting season, which is in June," Gondwe said. "We had asked for a review of the policy and they have provided us with that." The government's deal with the IMF, clinched after marathon and hectic meetings in the past two weeks, was announced as the local dollar, sapped by market concerns over government policies, Zimbabwe's low foreign reserves and galloping local inflation and interest rates, plumbed new historic lows in its free-fall triggered on November 14 1997.

Despite frenetic efforts by Murerwa and other officials earlier this week to try to re-assure the market that the IMF's aid is forthcoming, the dollar repeatedly sank to new record lows from Monday through to yesterday, when it tumbled 4,02 percent against the US dollar to end at 42,20/30 - its lowest ever level representing a one-day loss of $1,70 - after touching 49,50/60 on Tuesday.


4. Printing costs skyrocketed by more than 300 percent

Inter-Press Service (IPS), 14 January 1999

By Lewis Machipisa

Harare - Newsprint costs in Zimbabwe have skyrocketed by more than 300 percent over the past 12 months, forcing publishers to pass the increases on to the readers, most of whom are battling to make ends meet.

The increases have left most Zimbabweans with no choice but to read the state-owned newspapers. There is no independent radio, television or daily newspaper in the southern African country.

The situation has further been compounded by the fact that not many Zimbabweans have access to a radio or television. For example, in 1995, 89 people per 1000 had access to a radio, while only 27 per 1000 have access to a television, according to the 1998 UN Development Programme's (UNDP) Human Development Report.

Although the state-controlled media, too, has upped their prices by 75 percent, they still remain the cheapest. A copy of the 'Herald' newspaper costs seven Zimbabwe dollars.

One US Dollar is equal to 37 Zimbabwe dollars.

The privately-owned 'Zimbabwe Independent' weekly used to cost ten Zimbabwe dollars last June. The price has since shot up and by Jan. 8, a copy of the paper cost 20 dollars. By Zimbabwean standard this is very high.

In October, the independent weekly 'Financial Gazette' was costing ten Zimbabwe dollars but a month later, it jumped to 15 dollars.

According to Clive Murphy, its publisher, the price hikes have been necesitated by soaring production costs.

''We have been holding back but the cost pressures have just become too great. All our inputs have skyrocketed over the past six months in common with all other sectors of the economy,'' says Murphy.

According to him, an increasing number of the company's suppliers were now quoting their prices in US Dollars, with one of them having reserved the right to alter prices each week.

''It is becoming impossible to either maintain profitability or predict prices,'' says Murphy, who gets some of his newsprint material from South Africa. The Zimbabwean government has doubled import duty on most commodities.

The increases come at a time when Zimbabweans need greater diversity of news and opinions. Zimbabwe has sent troops to the Democratic Republic of Congo (DRC) to help that country's troops fight rebels seeking to overthrow the government of President Laurent-Desire Kabila.

What exactly is happening at the war front, depends on which paper one reads. But according to an ice-cream vendor, independent papers offer a ''much more objective view.''

''When you read The Herald, you get the impression that Zimbabwean troops are the only ones killing and are on top of the situation in the DRC, yet other papers report that they have incurred losses. Much more losses than reported in The Herald,'' said the vendor who refused to be named for security reasons.

Motor mechanic, Reuben Takarinda, says the increases have made it impossible for him to read a variety of newspapers. ''How can we buy newspapers when they have almost doubled ?'' he asks. ''Only the rich will now be able to buy the papers.''

The newspaper he was reading was left by the owner of the vehicle he was repairing. ''With seven dollars, I can buy vegetables for my family. The percentage increase is just too high,'' says Takarinda.

On Jan 14, the day 'The Herald' started selling for seven dollars, newspaper vendors complained of slow sells. ''Many people went away without buying as they complained that seven dollars was just too much,'' a vendor says. ''They said they would read the one at the office.''

A reader now needs 225 Zimbabwe dollars to buy a month's newspapers. With more than 62 percent of Zimbabwe's 12 million people living below poverty line, newspaper sells look set to decline. The minimum wage in Zimbabwe is 1,200 dollars.

Zimbabwe has two daily newspapers, all state-controlled. One of them, 'The Herald' circulates in the capital Harare and the other, 'The Chronicle' in based in Zimbabwe's second city, Bulawayo. There is also a host of weeklies and monthlies owned by the government.


5. IMF stance leaves a lot to be desired

The Financial Gazette (Zimbabwe), 14 January 1999

By Edmore Tobaiwa

Harare - The International Monetary Fund (IMF)'s attitude towards Zimbabwe within the standby credit facility arrangement over the past seven months leaves a lot to be desired, given that the country desperately needs forex injection from the Bretton Woods institution and other bilateral arrangements.

But no donor or multilateral institution will release the much-needed pledged funds unless the global financial giant, IMF, gives the nod and this is about to throw Zimbabwe more than 30 years backward in terms of socio-economic development, as IMF maintains stringent conditions for the release of the US$53 million second tranche balance-of-payments support. It is indeed sad that conditions for the release of the funds keep on changing, with the latest one, according to local Press, being the Zesa/YTL deal in which the government literally handed the most vital energy source for any country to the Malaysians on a silver platter. But the other conditions, which included among other things rationalisation of civil servants and privatisation of state-owned enterprises, though painstakingly slow, are in progress to the satisfaction of the Fund. The need for the release of balance-of-payments support is great especially for a late industrialising country like Zimbabwe with high levels of savings and foreign exchange constraints. People in Zimbabwe are suffering, especially the ordinary man and woman on the streets and in rural areas, with price increases becoming a monthly occurrence as the local currency continues to come under heavy pressure due to speculation and poor foreign reserves. Already there is a dark cloud hanging over the country, as the hard crime rate seems to be soaring by the day due to the economic hardships and social unrest slowly becoming the norm in a once peaceful society. The people-centred government policies over the past 18 years have largely fuelled macroeconomic instability characterised by high non-predictable inflation, exchange rate volatility, a runaway government expenditure, budget deficit oscillating above 10 percent as a percentage of Gross Domestic Product, and the Reserve Bank of Zimbabwe increasingly using credit from local money market to finance deficits.

Zimbabwe's private sector, the sacred cow, is on the verge of extinction since macroeconomic instability creates an atmosphere of uncertainty, making it difficult for economic agents to extract the correct signals from relative prices, such as the real returns to investment in both human and physical capital, and thus leading to inefficient resource allocation.

As much as there is an urgent need for the present-day government to expeditiously revisit its policies on land, energy and fiscal management in general, it is prudent that the Fund should not lose focus of the need to release the second tranche within the stand-by credit agreement. The opportunity cost of not undertaking this route is apparent, more than US$500 million will be needed to rebuild this country if its allowed to slide down to the socio-economic development levels of some very low per-capita income African countries. The Fund and its structural adjustment programmes will have yet again failed as it partially did in other regions of the world, notably the Far East.

Zimbabwe is key to the future industrialisation of sub-Saharan Africa and the Fund cannot allow this country to slide down the drain as it plays cat and mouse games with the government to the peril of 12 million lives. Yes the government has to urgently improve efficiency of resource allocation as well as expand the productive capacity of the economy. By improving the efficiency of economic resources utilisation, this entails measures that will reduce the existing wedges between prices and marginal costs, which typically arise from price control - unofficially in place at the present moment and include agricultural prices, imperfect competition, subsidies and tax exemptions, distortive taxes, and exchange and trade restrictions. As the IMF further deliberates on what course of action to take on Zimbabwe and as the government prepares yet again to meet the conditions of the IMF, it is important for the two players to realise that the future of Zimbabwe is at stake and millions of lives depend on the outcomes of these discussions.


6. Probe into war fund looting widens

The Financial Gazette (Zimbabwe), 14 January 1999

Harare - State investigations into the looting of the War Victims' Compensation Fund will be widened to include medical doctors who examined fund beneficiaries to check if the doctors might have possibly given false or misleading information on the medical condition of the claimants, the Financial Gazette learnt this week.

Sources close to the probe said a medical board, part of an official task force launched last year to investigate the scam in which millions of dollars of public funds were looted, would re-examine all fund beneficiaries to check if they might have been awarded exaggerated injury claims so as to qualify for more money than they were entitled to.

"This is the stage where a majority of cases are going to be determined, whether one is going to be prosecuted or not," a source said. "The medical board will determine how varying percentages of injuries were arrived at by doctors who examined most beneficiaries." Chenjerai Hunzvi, one of the doctors who examined some of the beneficiaries, is already in custody awaiting trial over charges he looted the fund of more than $400 000.

Many of the beneficiaries of the fund, established to benefit victims of Zimbabwe's 1970s independence war, were awarded financial claims based on doctors' assessments on a range of invisible injuries such as chest pains, backaches, stomach pains and post-traumatic stress disorders.

One source said the medical board would ask the doctors involved to give an account of how they arrived at the claimants' injury assessments.

The task force is to examine all compensation claims approved since Zimbabwe's independence in 1980 and up to1992 to establish the veracity of the injury claims.

In all, 52 407 Zimbabweans - about 50 000 of them former combatants in the war - claimed compensation in the past 18 years when more than $1,5 billion was withdrawn from the fund.

One of nine suspended government officers who had been responsible for fund payments in the Social Welfare Ministry has said that in some instances, the beneficiaries, especially top officials, would instruct that payments be made regardless and that the same pressure had apparently been exerted on doctors to award higher injury percentages.

The task force will have to probe this aspect as well, the sources said.

The Health Professions Council will be called upon to de-register doctors found guilty of manipulating the payments while the Public Service Commission will deal with all fund officers found to have been negligent in the processing of the claims.

The Chidyausiku Commission, which initially probed the abuse of the war fund, recommended that a government task force, the Ministry of Home Affairs and the office of the Attorney-General (AG) take charge of all further investigations and initiate prosecution where proven anomalies and cases of fraud were detected. Home Affairs Minister Dumiso Dabengwa said this week the investigations were inclusive and open-ended and that his ministry was working in liaison with the AG's office. He dismissed some public charges that the investigations might be politically motivated to target certain beneficiaries.

"The investigation into the abuse of the fund is inclusive. However, from time to time we get instructions from the Attorney-General's Office in cases which they think there was misuse of funds and want investigations to be undertaken . . . that is where we come in," Dabengwa said. "As of now, we are working on a number of cases which the AG has told us to look into," he told the Financial Gazette.

"There have also been anonymous letters sent to the police giving details about people who illegally got money from the fund. In most of these cases, people who were not even involved in the war would have claimed. In cases of this nature, police have launched separate investigations." Dabengwa said his ministry had also seconded competent investigators to government task force.

He said the Social Welfare Ministry, through the task force, had the overall responsibility of scrutinising all files of beneficiaries to ascertain elements of exaggerated and multiple compensation claims, claims for non-existent injuries and people who gave false statements in support of their claims and forged medical reports.