Bond notes would drive the greenback out of circulation

LAST week, soon after the Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, unveiled a raft of measures to deal with an accelerating cash crisis in the economy, social media was abuzz with jokes and taunts over plans for an injection of bond notes, a form of new currency that will rank pari pasu with the greenback, into the tottering economy.
As if warning Mangudya of the likely fate of the bond notes, a message on WhatsApp, an over-the-top messaging platform now commonly used by millions of Zimbabweans, went uncontrollably viral; it spoke about the Gresham Law, which was described as a monetary principle stating that bad money drives out good.
It’s interesting when Zimbabweans chuckle about their plight, with everyone jostling to give expert interpretation on economic situations.
After all, did we not all become economic experts during the Zimbabwe dollar era, that ill-fated period of hyperinflation characterised by the daily erosion of the domestic currency? It taught many Zimbabweans the kind of economics many international citizens would find difficult to decipher!
The WhatsApp message explained: “In currency valuation, Gresham’s Law states that if a new coin (bad money) is assigned the same value as an older coin containing a higher amount of precious metal (good money), then the new coin will be used in circulation, while the old coin will be hoarded and will disappear from circulation.”
Indeed, it was apparently a poignant warning to the RBZ governor that the bond notes would simply drive the greenback out of circulation, and that people would spend using unwanted bond notes, and keep the US dollar in their pockets.
If that were to happen, there would be shortages of more than just cash: Supermarkets would start experiencing a decline in stock, most of which is currently being imported; local producers would get overwhelmed by the bond unit, which every retailer would certainly seek to get rid of as quickly as possible by passing it on to the manufacturers of goods.
Since they are dependent on imports for raw materials, the manufacturers would get stuck with the bond notes, and may be forced to pay off salaries using the unwanted currency.
That could affect morale, and consequently productivity.
Critics are not convinced Mangudya’s latest measures will better the economy.
For many, the new measures spell doom for a country still trying to recuperate from the hyperinflationary crisis, which only worsened in 2008 but had ruined the economy since 2000.
Due to the lack of confidence in the bond notes, the market is likely to give it its own value apart from that assigned by Mangudya. This, inevitably, would drive the notes into a parallel market, creating exchange rate distortions between the official bond notes rate and that on the parallel market.
What this will mean is that, rather than saving, people will make sure they spend their little incomes as fast as they can, on goods, or buy the US dollar as they flee the bond notes as a store of value.
In other words, they will shift their wealth into hard currency and durable goods.
The market rejection of the South African rand is a good example; it has completely been driven out of circulation despite initially starting off competitively circulating alongside the US dollar upon dollarisation in 2009.
The rand has become increasingly volatile, and lost significant value in the past few years. This forced Zimbabweans to shift to the greenback, which has been strengthening, therefore giving real gains to holders of the currency.
There is no doubt Mangudya is genuinely concerned with the health of the country’s frail economy, but still, doubts linger over the commitment of the political establishment, especially given the recent public bickering within government over the country’s re-engagement with the international community led by Finance and Economic Development Minister Patrick Chinamasa.
It was clear to all that the public row between Indigenisation Minister Patrick Zhuwao and Chinamasa was hurting confidence and undermining the economy.
It took a public statement by President Robert Mugabe to stop the fight. President Mugabe admitted this had cost the economy significantly.
Fears are that the ruling party could capitalise on the situation by ordering massive printing of the bond notes, which they could use to liquidate corporate and individual accounts with US dollars.
The notes could also be used to pay civil servants salaries, departing from the RBZ governor’s plan for these to be used only for the payment of incentives to exporters.
Vince Musewe, the secretary for finance and economic affairs for the People’s Democratic Party, said Mangudya’s measures reflected “a desperate economic situation with nowhere to go”.
“Zimbabwe’s economy will have negative growth this year because we are not producing enough to meet our needs. That is the fundamental problem we have to address and nothing else.

Finance Minister Patrick Chinamasa and RBZ Governor John Mangudya

“We are also not attracting the necessary investment capital due to the confusion created by the Indigenisation Act which is now being left to the President to interpret for us as he sees fit from time to time,” said Musewe.
He said despite Mangudya’s assurances, the country was “effectively going backward to foreign exchange and import controls but again we are using the wrong instruments”.
“If you restrict withdrawals or impose conditions on export earnings people will just stop using the banking system. It’s as simple as that,” he said, referring to withdrawal thresholds put in place by the RBZ as part of the measures.
Bankers said there was already a noticeable decline in deposits. Bulk clients had slowed down cash deposits as they mulled the new policy thrust.
One banker said they understood where the RBZ governor was coming from, but were not sure if Mangudya understood where depositors were also coming from.
“There is increasing scepticism,” he said, declining to be identified.
Apparently, Mangudya still had time to measure the reaction of the market to see if the latest policies would have stakeholder buy-in.
Already, he has started softening on a few policy measures — farmers’ withdrawal limits were raised to US$10 000 per day, from an initial limit of US$1 000, making them corporate clients.
A few more adjustments may follow, but the expectation is that he should deal harshly with known elements milking the economy of cash: Chinese businessmen crossing the border with bulk cash and depositing it with their country’s bank in South Africa.
So far, government and police have avoided arresting them on account of the fact that China is an “all-weather friend”.
But their friendly fire has been disastrous.
One banker said nationals from neighbouring Zambia, Malawi and Mozambique were also trooping into the country to get US dollars using international cards.
So, at some point, the RBZ had to act. But the question is: How?
What is clear is that current measures have already boomeranged.
But Mangudya believes his measures have been greatly misunderstood; he tried to impress upon the long-suffering population during a briefing of editors on Friday that the bond notes did not herald the dreaded comeback of the Zimbabwe dollar.
The bond notes, he said, had been introduced to stimulate production and exports, which would earn the country more foreign currency.
The bond notes were part of a structured export facility under which exporters would get a five percent incentive for exports, he said.
The bond notes, supported by a US$200 million African Export-Import Bank (Afreximbank) foreign exchange stabilisation facility, would only be used to pay exporters for the five percent bonus on exports, he said.
But the notes would be allowed to circulate in the economy once paid out to exporters, and would be redeemable from any bank on demand in US dollar equivalent by holders.
In his statement announcing the new measures, which he said were meant to deal with cash shortages while simultaneously stabilising and stimulating the economy, Mangudya said the cash crunch was due “to a number of intertwined factors”.
These, he said, included a dysfunctional multi-currency system in the economy caused by a strong US dollar.
“In the case of Zimbabwe, the US dollar has become more of a commodity, a safe haven currency or asset than a medium of exchange,” he said.
He said the low levels of use of plastic money and real time gross settlement (RTGS) platforms, which made the country a “predominantly cash economy”, had also precipitated the cash crisis.
The economy was also grappling with low levels of production to meet consumer demand, leading to higher demand for foreign currency to import consumer goods.
There was also low consumer and business confidence as reflected by the penchant to keep cash outside the banking system, said Mangudya, who highlighted that the economy was fraught with an “inefficient distribution and utilisation of scarce foreign exchange resources”.
He said a strong US dollar, now the predominant currency in the economy, had made Zimbabwe a high cost producing country; it had also become a very expensive tourist destination; a fertile ground for capital flight and externalisation; and highly dependent on the US dollar cash for almost all domestic transactions.
“The US dollar has replaced all the other currencies in the multi-currency basket, namely the rand, euro, the British pound, yuan, pula, Australian dollar, Indian rupee and Japanese yen,” he said.
Mangudya explained the adverse impact of these factors, which he said had “continued to put pressure on the country’s balance of payments position”.
“Whilst the country experienced balanced trade prior to 2003, as exports were aligned to imports, the situation changed from 2004. Since then, the country has continuously experienced trade deficits, which have increased from moderate levels of around US$400 million between 2004 and 2006 to the unsustainable levels of US$2,5 billion between 2011 and 2015. The persistent trade deficit has continued to drain liquidity or cash from the country,” he said.
Mangudya said the major sources of liquidity for the country were export of goods and services, Diaspora remittances, offshore lines of credit and foreign direct investment.
Of these, exports were the largest contributor to liquidity, with around 80 percent of exports or US$2,6 billion coming from five products, namely tobacco, gold, platinum, diamonds and ferrochrome.
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“Over 40 percent of Zimbabwe’s exports are to South Africa and around 60 percent of imports are from South Africa. Around 70 percent of tourists to Zimbabwe come through South Africa. As such, South Africa is an important trading partner to Zimbabwe and a major source of foreign exchange,” he said.
But he bemoaned the fact that currency utilisation levels under the multi-currency system had continued to be skewed towards the US dollar.
In fact, upon dollarisation in 2009, the South African rand competed favourably with the greenback on currency utilisation at 49 percent apiece, with other currencies accounting for two percent. By last year, the statistics favoured the US dollar at a currency utilisation rate of 70 percent, against 30 percent for the rand.
So far this year, the US dollar’s utilisation rate was at 95 percent, against five percent for the rand.
Other currencies had been completely obliterated from usage by 2013.

“Good and bad coin cannot circulate together”

Mangudya said it was therefore important to restore “the fundamental principles of the multi-currency system through increasing the availability and usage of the other currencies within the multi-currency basket”.
“The multi-currency system was designed to minimise concentration risk of exerting pressure on one currency in an economy,” he said.
The governor may, however, have missed the fact that people will always seek safe haven investments.
To restore and promote the wide-spread usage of currencies in the multi-currency basket, Mangudya said 40 percent of all new US dollar foreign exchange receipts from export of goods and services, including tobacco and gold sale proceeds, would be converted by the RBZ at the official exchange rate to rands and 10 percent to euros.
“This policy measure is designed to ensure that we spread the demand for cash amongst a wide range of currencies and in order to mitigate against concentration risk,” he said.
He then announced that the central bank had established a US$200 million foreign exchange and export incentive “supported by the Afreximbank to provide cushion on the high demand for foreign exchange and to provide an incentive facility of five percent on all foreign exchange receipts, including tobacco and gold sale proceeds”.
But that facility would be disbursed using bond coins and notes “to mitigate against possible abuses of this facility through capital flight”.
“This facility shall be granted to qualifying foreign exchange earners in bond coins and notes which shall continue to operate alongside the currencies within the multi-currency system and at par with the US dollar,” he said.
“The Zimbabwe bond notes of denominations of US$2, US$5, US$10 and US$20 shall, therefore be introduced in future, as an extension of the current family of bond coins for ease of portability in view of the size of the US$200 million backed facility. The facility shall also be used to discount trade related paper in order to provide liquidity for business trading operations,” he said.
That decision triggered uproar from the public, with many fearing the RBZ was bringing back the Zimbabwe dollar through the backdoor.
Mangudya has sought to allay these fears, saying he personally would never wish for the return of the domestic currency, which was abandoned after being afflicted by an unprecedented bout of hyperinflation, which triggered widespread shortages in the economy.
Supermarket shelves became empty, and fuel was so much in short supply that President Mugabe had to personally embark on several visits to international allies for barter arrangements.
Zimbabwe did not have the foreign currency to buy the fuel.
At one point, President Mugabe had angrily admitted the fuel crisis and the economic ruin had caused him ulcers.
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Movement for Democratic Change (MDC-T) leader Morgan Tsvangirai

OPPOSITION Movement for Democratic Change (MDC-T) leader Morgan Tsvangirai faces prospects of a messy internal revolt after members of his national executive reportedly defied his orders to dismiss Harare town clerk, James Mushore.
Council on Thursday last week suspended Mushore at the behest of Local Government Minister Saviour Kasukuwere who argues Mushore was illegally hired.
The MDC-T national executive has decided to stand up to Kasukuwere, resolving at a meeting last week to block the contentious ZANU-PF secretary for the commissariat’s interference.
But, sources within Zimbabwe’s main opposition party say Tsvangirai is not reading from the same page as his own executive, amid reports that Kasukuwere has threatened to evict him from the Highlands State mansion he has occupied since his days as prime minister if he fails to influence Mushore’s expulsion.
It is alleged Tsvangirai had earlier tried without success to impress on the executive to comply with Kasukuwere’s orders.
Tsvangirai, it is further alleged, agreed at that meeting to tow the party line, but allegedly went secretly to acting mayor, Chris Mbanga, and instructed him to get Mushore ousted.
Council then subsequently sent the town clerk on unpaid forced leave.
The decision has now angered MDC-T bigwigs who accuse Tsvangirai of being double-faced, saying he appears to be going along with the others publicly, but gives contrary instructions to Mbanga.
“Where do you think Mbanga is getting the power to defy the party position like that? It’s all coming from the top man,” said a senior MDC-T official who declined to be named.
There are now fears within the 17-year-old movement that the party could suffer yet another split as the national executive committee refuses to back down from its hard-line stance.
Some top party members are already appearing to doubt their party’s ability to win the forthcoming 2018 general elections that would allow them to govern the country.
“The whole thing is becoming a circus now. For a political party that aspires to form the next government, we can certainly do much better than this,” said another member of the MDC-T national executive committee who also declined to be identified.
Barely two years ago, the party plunged into turmoil after Tendai Biti — its former secretary-general led a rebellion against Tsvangirai — leading to the formation of a new party called the People’s Democratic Party which Biti is now leading as president.
This was the second split inside a decade.
When the MDC-T split in 2005, it was Welshman Ncube, the party’s then secretary-general, who fomented its fragmentation, unhappy with Tsvangirai’s style of leadership.
Impeccable sources told the Financial Gazette this week that on the same day that the Mbanga-led council suspended Mushore, MDC-T secretary general, Douglas Mwonzora, summoned all 35 MDC-T councillors to the party’s Harvest House headquarters in Harare and read the riot act.
Mwonzora is said to have strongly reprimanded the city fathers, ordering them to reverse Mushore’s suspension.
He also had them sign a petition to that effect.
The cowed councillors, sources said, are now expected to convene another special council meeting at Town House on Monday next week to call Mushore back at work after 33 councillors signed the petition.
“Mwonzora summoned them to Harvest House soon after they suspended Mushore and read them the riot act. He openly ordered them to bring Mushore back to work in compliance with the party position,” said another senior member of the MDC-T national executive committee.
“Mwonzora made it clear that the party would not hesitate to recall them should they disobey directives.
“He told them in no uncertain terms that they were not at large to do as they pleased because the rights of Harare residents were at stake because of Kasukuwere’s politics. He accused them of being sell outs who were giving in to Kasukuwere’s unconstitutional demands,” the source added.
Mwonzora confirmed summoning the councillors in an interview on Monday, but denied that it was meant to revolt against Tsvangirai.
“We are not in any way revolting against the president. In fact, Tsvangirai is against any breach of the Constitution from Kasukuwere or anyone. Those councillors should not have suspended Mushore in the first place given that the matter is still pending in court,” Mwonzora said.
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Empty shelves in a supermarket in Harare, on 09 October 2008

THE worsening liquidity crunch is plunging the country into an economic gridlock which could set off an unprecedented post-dollarisation socio-economic crisis.
For the umpteenth time, Treasury has postponed payment of civil servants’ pensions, a testament of a deepening cash crisis.
In a statement, head of the exchequer Patrick Chinamasa said the payment date had been moved from May 9 to today to allow for “the mobilisation of the requisite resources”.
This suggests that government is increasingly feeling the heat.
The development came days after top executives at the Zimbabwe Revenue Authority had been suspended for alleged indiscretions that could have conspired with a shrinking economy to deprive the fiscus of the desperately-needed revenue.
As symptomatic of the crisis, banks are running out of cash, resulting in depositors struggling to withdraw their money.
While the Reserve Bank of Zimbabwe (RBZ) has come up with a cocktail of measures to mitigate the crisis, the situation seems to be worsening instead of improving because of widespread skepticism over the policy measures.
The Confederation of Zimbabwe Industries (CZI) – the largest industrial representative body – this week said the situation has become challenging for business because payments were taking longer to be effected.
Nostro account balances are running low, which means that companies are now queuing to have their external payments for goods and services processed.
This is also affecting the importation of equipment to retool industries.
A nostro account is a bank account held in a foreign country by a domestic bank, denominated in the currency of that country.
Nostro accounts are used to facilitate settlement of foreign exchange and trade transactions.
While the central bank, in consultation with captains of industry and bankers — through the Bankers Association of Zimbabwe — has put together a list to guide banks on how payments should be prioritised, there is now a gridlock of payments.
Industry and commerce is equally feeling the heat.
One importer of mining equipment claims they have been failing to import critical machinery because of banks’ failure to fund imports from nostro accounts
As a result, their warehouses are emptying, and this could negatively affect their customers.
“Nostro accounts are very low and this is making it difficult to import raw materials and machinery,” said CZI president, Busisa Moyo.
“We need to grow our exports, attract foreign direct investment. Very little money is coming in and a lot is leaving.”
Economist, John Robertson, said commodities could start disappearing from supermarket shelves unless government quickly moves to rebuild confidence in the market.
“The damage has already been done and it won’t be long before fuel companies start finding it difficult to pay for their imports,” he said.
Robertson said the cash crisis reached tipping point when Indigenisation Minister, Patrick Zhuwao, threatened to shut down foreign-owned companies that failed to comply with the controversial law around March.
“By that time, people were already taking their money out of the country. The common feature has been the serious damage on confidence our policies have had,” said Robertson.
He doubted if the introduction of bond notes, backed by a US$200 million African Export Import Bank facility, would achieve anything since it has triggered unintended panic in the market.

Finance Minister Patrick Chinamasa

The bond notes are meant to stimulate exports by giving exporters a five percent incentive, while at the same time propping nostro account balances, which have been depleting owing to declining Diaspora remittances, poor exports and lack of foreign direct investment.
The RBZ initiative has, however, triggered panic amid speculation that the defunct Zimbabwe dollar could return on the market.
Individuals and corporates are therefore scrambling to mop up their cash from banks.
Corporates have significantly scaled down deposits.
Much of Zimbabwe’s crisis is stemming from a widening trade deficit.
The chasm between the country’s exports and imports has widened from an average US$400 million 10 years ago to an average of US$2,5 billion between 2011 and 2015.
Importing more than the country exports means   more money leaving the country than money coming in.
Zimbabwe has found itself in this situation because its industries are collapsing owing to unfavourable economic conditions that are scaring away potential investors and donors.
With the dollarisation of the country’s economy in 2009, there has been a skewed usage of the multi-currency regime, with the United States dollar dominating transactions, according to central bank governor, John Mangudya.
In fact, instead of being a medium of exchange, the greenback is now being considered a store of value because it has been appreciating against other currencies, he said.
That alone has also compounded Zimbabwe’s woes as the firming US dollar has made the country’s exports uncompetitive.
This has been worsened by the illicit  outflows of cash with the RBZ revealing recently that the country lost US$50 million in the first three months of this year.
Buy Zimbabwe, which promotes consumption of locally-produced products on the domestic market, said the country’s economy would continue on a downward trajectory as long as cash circulation  remains dire.
“Money is like blood. It needs to keep moving around to keep the economy going. When money is spent elsewhere, at big supermarkets in Dubai and Europe, non-locally owned utilities and other services such as on-line retailers, it flows out, like a wound. By shopping at the corner store instead of abroad or on imports, consumers keep their communities from perishing,” Buy Zimbabwe said in a statement.
The International Monetary Fund, whose board met last week to discuss the country’s economic reform initiatives, acknowledged that Zimbabwe’s economic difficulties were worsening.
The Bretton Woods institution highlighted: “Drought, erratic rains, and increasing temperatures, have reduced agricultural output and disrupted hydropower production and water supplies. Economic activity is severely constrained by tight liquidity conditions resulting from limited external inflows and lower commodity prices. Inflation remains in negative territory, because of the appreciating US dollar—the country’s main currency—and lower commodity prices. Zimbabwe remains in debt distress and the level of international reserves is low.”
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Local Government, Public Works and National Housing Minister Saviour Kasukuwere

THE Movement for Democratic Change (MDC-T) dominated Harare City Council (HCC) will be dissolved in the coming weeks to pave way for the appointment of a special commission led by current acting mayor, Chris Mbanga, the Financial Gazette can report.
Highly-placed ZANU-PF insiders revealed this week that combative Local Government Minister Saviour Kasukuwere, who is now working closely with Mbanga, was waiting for the MDC-T to recall the Highlands councillor before dissolving council and unleashing a commission sympathetic to the ruling ZANU-PF party to preside over the capital city’s affairs.
Mbanga has been a thorn in the MDC-T’s backside ..
Ever since his appointment as acting mayor last month, he has been complying with the Local Government Minister’s directives despite these flying in the face of positions communicated to council by the country’s main opposition party.
Last week, Mbanga sent town clerk James Mushore on unpaid forced leave in spite of an MDC-T directive instructing councillors to stand by the ex-banker.
Mushore’s appointment in April has become the source of serious intrusions by Kasukuwere into the running of the capital city — deep in the throes of a deterioration in service delivery.
Within two hours of his appointment, Kasukuwere rescinded the decision, alleging violation of the Urban Councils Act (UCA).
The Act compels municipalities to consult the Local Government Board (LGB) when making senior appointments, although the new Constitution now gives them autonomy to make those decisions on their own.
Council has been adamant that Mushore’s appointment would not be reversed because it was constitutional. Kasukuwere responded by sending mayor Bernard Manyenyeni packing and in the process, transmitting clear signals to other councillors that he would not spare the axe if anyone stood in his way.
And last week, the city fathers had to trade their masks of bravado for a humble coat as they hurried to send Mushore on unpaid leave at the behest of Mbanga.
Mbanga has now attracted the wrath of the MDC-T top brass, which is contemplating to recall him.
The MDC-T Harare Province made the first step this week by recommending Mbanga’s recall from council. It is now up to the top echelons of the party to either endorse or decline the recommendation. Insiders say Mbanga will not survive a recall.
Mbanga, according to council insiders, is not losing any sleep over his possible recall as he would respond by joining ZANU-PF, sources said.
Council insiders said Mbanga has been assured by the Local Government Minister that when a commission is instituted, he would take over its chairmanship.
Asked for a comment, Kasukuwere had this to say: “We will cross the bridge when we get there. I cannot pre-empt what government will do at the moment. We handle each situation at the necessary time.”
Section 80 of the Urban Council’s Act empowers the minister to dissolve council and appoint a commission to act as council for an initial period of six months.
“The minister may appoint a commission to act as council if at any time there are no councillors or all councillors for a specific council area have been suspended or imprisoned or are otherwise unable to exercise their functions as councillors,” reads sub-section 1 of Section 80 of the Act.
Sources said the commission, which will operate at Kasukuwere’s mercy, is meant to pave way for the engagement of a new town clerk favoured by the ruling party.
Indications are that ZANU-PF has already identified current Bindura Municipality town clerk, Shangwa Mavesera, for the job, although he was not among the 140 people who applied for the post late last year.
Kasukuwere has, previously intimated that the job would go to anyone who is approved by the LGB, adding that “even if Mushore succeeds at the Local Government Board, he will be town clerk”.

Harare Town House

In the coming days, the ZANU-PF political commissar is seen exerting pressure on the spineless city fathers to accept a forensic audit of council’s businesses that include farms, nurseries, real estate and parks as part of a plot to find something amiss that would justify his actions.
Kasukuwere also wants a skills audit for councillors.
History could repeat itself if Kasukuwere proceeds to appoint a Mbanga-led commission.
In 2004, the then Harare executive mayor, Elias Mudzuri, was fired by Ignatius Chombo, then local government minister, and was replaced by his then deputy, Sekesai Makwavarara, who led a commission that was set up soon after Mudzuri’s ouster.
Makwavarara would be expelled from the MDC and defected to ZANU-PF immediately afterwards.
The MDC-T, which parents HCC, has hit out at Kasukuwere, saying his moves were nothing but attempts by ZANU-PF to regain control of Harare by dismissing an elected council and replacing it with pro-ruling party commissioners.
The MDC-T is banking on the new Constitution to prevent Kasukuwere’s manoeuvres, particularly section 278 of the charter, which states that a minister can only suspend councillors after proven cases of gross incompetence, mental or physical incapacity, gross misconduct, criminal conviction and wilful violation of the law.
“In terms of section 278 of the Constitution, Kasukuwere has no power to unilaterally dissolve any local authority.
“An act of Parliament is yet to be enacted that will harmonise the existing Urban Councils Act to the new Constitution. So in the event that Kasukuwere decodes to subvert the Constitution, as he is apparently fond of doing, the MDC-T will take appropriate legal action.
“We have in fact filed a Constitutional Court application in which we are seeking to have 12 provisions of the law repelled,” said MDC-T spokesman, Obert Gutu, a practising lawyer.
Since his appointment to the Local Government portfolio, Kasukuwere has not made a secret of his intention to break up councils that do not capitulate to his demands.
He has not let a single council decision pass without poking his nose into it.
It is understood that ZANU-PF did not want Mushore for the job as he is closely related to the late former army general, Solomon Mujuru whose widow, former vice president Joice Mujuru was expelled from the ruling party on allegations of plotting to unconstitutionally unseat President Robert Mugabe from power.
The former vice president is now leading her own opposition party, Zimbabwe People First, and has vowed to dislodge President Mugabe from power come 2018 general elections.
Kasukuwere is understood to be under ZANU-PF instruction to make sure Mushore doesn’t return to Town House.
In an interview, Mushore appeared to suggest that he was being treated unfairly for his relationship with the Mujurus.
“If he (Kasukuwere) has issues with me, he should just tell me,” he said.
“You don’t choose your relatives. I was related to the late general Mujuru, something which I have great respect for. I had a good relationship with him, but that doesn’t mean I supported his politics.
“Being in this job, one is serving all the residents of the city and not members of just one party. I am not a member of any party and my own personal politics has nothing to do with this job,” he said.
But Kasukuwere said the issue was being needlessly politicised.
“People should not dramatise and politicise the situation. Let’s just respect the processes we have,” said Kasukuwere, who ironically is already regarding Mbanga as leading a commission.
“We are happy that the Mbanga commission has done the right thing (suspending Mushore),” said the abrasive minister.
He said he was closely following events at Town House and would make sure the law is followed.
“The law is the law,” he said, adding: “The process (of hiring the town clerk) must be carried out in terms of the law.
“There is no way as the Executive we can allow them to disregard the laws of the country. If they chose to defy the law, as they are intending to do, then we will meet them along the way.”
He insisted that his actions were done legally and that the UCA, on whose premise he rescinded Mushore’s appointment, remains operational until it is annulled by the Constitutional Court.
He also contended that individual interpretations of the Constitution are not valid unless there is a Constitutional Court verdict to that effect.
The MDC-T has since filed a Constitutional Court application seeking to have at least 12 provisions of the Act, particularly those giving the minister sweeping powers to interfere with the affairs of local authorities, nullified.
Kasukuwere has become infamous for taking decisive action against councils that disobey his orders.
Last year, soon after his appointment as Minister of Local Government, he gave marching orders to the entire Gweru council for resisting his demands.
Although the High Court later ruled that Kasukuwere had no powers to fire councillors as it is the duty of an appeals committee which is yet to be put in place, the Hamutendi Kombayi-led Gweru City Council has never set foot at the Midlands Town House.

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The central bank’s own schedule showed the growth of its TB securities held by commercial banks from $325,7 million in January last year to $1,126 billion in February this year.

ZIMBABWE’S cash crisis has led to questions about the government’s management of the country’s financial systems, with indications that its increasing borrowings on the domestic market have created a financial black hole for the banking sector and the economy.

The government, with no access to foreign funding, resuscitated the Treasury Bill (TB) market in October 2012. After initially struggling to convince a sceptical market,the market has become government’s primary vehicle for fundraising.

Under the TB system, the government issues “promissory notes” to raise money. The buyer of the bill expects a profit by redeeming the bill for less than what they paid for it. Worldwide, TBs are popular because, with government backing, they are virtually risk free. But this is only where markets work well.

Analysts say the effect of the TBs avalanche, especially between 2014 and 2015 and the state’s manipulation of the Real Time Gross Settlement (RTGS) is the primary cause of the cash shortage that is presently choking the economy.

In the latest quarterly bulletin, the Ministry of Finance said $245 million worth of TBs were issued in the domestic market during the first three months of the year, reflecting government’s huge appetite for cash. Of this amount, $15,9 million went towards financing the budget deficit while $229,1 million went towards debt repayment and other recurrent spending.

Annually, it projected domestic loan repayments of $678,6 million and a budget deficit of $150 million, result in a financing gap of $828,6 million for the year 2016.

Reserve Bank officials privately estimate the current amount of local debt in the form of TBs at over $4 billion, most of which is attributable to the Finance Ministry through its Public Debt Management Office.  The $4 billion gap is equivalent to the size of the entire 2016 national budget.

The central bank’s own schedule showed the growth of its TB securities held by commercial banks from $325,7 million in January last year to $1,126 billion in February this year.

Building societies held $65,6 million from $51,8 million over the same period.

According to analysts, those who are being paid through TBs were simply discounting the securities in the local market and wiring the real money out of the system, a practice which depleted nostro balances.

Zimbabwe’s ability to import cash is now limited because of the depleted nostro positions.

In October 2008, at the height of the hyperinflation era, former Reserve Bank governor Gideon Gono described the RTGS system as “a vehicle for illicit foreign exchange parallel market dealings that have distorted exchange rates beyond the wildest imagination.” The system had been introduced a few year earlier primarily to stem cash shortages, reduce cheque fraud risks and delays in customer payments.

Analysts say government has been the transgressor this time, paying for the maturing TBs and interest payments through the RTGS and starving the market of cash.

But the government’s problem is that the RTGS cannot fund nostro balances or be used to import cash. Under proper banking conditions, the RTGS position simply reflects cash held in vaults by RBZ and the nostro balances in RBZ’s accounts held with external banks. If a bank needs nostro funding, it will request the RBZ to credit its nostro account against a reduction in the bank’s RTGS position.

Cash has always been imported from the nostro positions.

It raises the question of how the RTGS position got to where it is now.

One analyst says the TB maturities are being honored at a time when revenue collection is much lower than recurrent expenditure — Q1 figures show a 16 percent disparity between collections and target — and were being met by pushing figures not backed by real cash. This means there is not enough notes and coins to back bank balances, a situation which should not occur in a market that does not print the currency.

Opposition Member of Parliament for Bulawayo South, Eddie Cross, suggests the government is being more Machiavellian.

“In 2015 the RTGS system (money transfers through the banks) handled $45 billion dollars – $170 million a day. This demonstrates the speed at which money circulates in any economy. Now what happens in this system is that when you fill in an RTGS form at your local bank, the bank processes the documentation and sends it, with a wire transfer of funds from YOUR account, to the Reserve Bank. In 2015 your money sat there for an average of three days before onwards transfer to your supplier/creditor or other beneficiary. 3 days at $170 million a day – average money in the account at the RBZ $500 million,” he wrote on his blog last week.
“Now I believe that the only credible explanation of the sudden cash shortage is that when (Finance Minister) Chinamasa cannot balance his books at the month end and needs cash, he has been dipping into the RTGS account at the Reserve Bank – replacing the funds with a simple IOU. This is patently illegal and puts every bank at risk because, when the commercial bank takes real dollars out of your account for transfer you expect them (you trust them) to deliver at the other end.”

Faced with a cash crunch, the government has sought to bring back a localized currency to create financial mobility in the market in the form of “bond notes.”

It has already successfully done so with bond coins since 2014 which, along with the proposed notes, derive their value comes from a bond facility from the Afreximbank. In 2014, Afreximbank put up a $50 million bond, a form of a loan, for bond coins introduced to ease the shortage of change in the economy. The planned bond notes are backed by a new $200 million loan, also from Afreximbank.

But a senior banker noted that the bond notes and coins are just a local currency by another name, suggesting their introduction was forced upon the central bank by the political establishment and explains the apex bank’s difficulty in selling their legitimacy to a suspicious market.

Whether by design or accident, Zimbabwe is in the local currency era and it is up to the market to decide whether to accept or reject it, the banker said.

It is worth noting that in February 2009, government only formally introduced the multi-currency era long after the market had rejected the hyperinflation ravaged local unit, the banker added. The Source

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RBZ Governor John Mangudya and Finance Minister Patrick Chinamasa

ZIMBABWE’S annual inflation for the month of April stood at -1,64 percent, after gaining 0,66 percentage points on the March rate of -2,31 percent, the Zimbabwe Statistical Agency (Zimstat) said on Monday.

On a monthly basis, the inflation rate was at -0.21 percent, after shedding 0.10 percentage points on March rate of -0.12 percent, the.

“The year on year food and non-alcoholic beverages inflation prone to transitory shocks stood at –4,02 percent whilst the Non-food inflation rate was -0,51 percent,” said Zimstat.

Zimstat said the month on month food and non-alcoholic beverages inflation rate stood at –0,51 percent in April 2016, shedding 0,37 percentage points on the March 2016 rate of -0,13 percent.

Last week the Zimbabwe Economic Policy Analysis and Research Unit (Zeparu) projected annual inflation to increase marginally in the second quarter of 2016 averaging -1,12 percent to about -1 percent.

“We expect annual inflation to increase marginally in the second quarter of 2016 averaging -1,12 percent. Thus inflation is forecasted to increase marginally from -2,3 percent in March 2016 to about -1 percent in June 2016. We expect that any deviations from the forecast to be within the range of the upper and lower limit at the 95 percent confidence level,” Zeparu said

Month on month non-food inflation rate stood at -0,08 percent in April, gaining 0,03 percentage points on the March 2016 rate of –0,11 percent.

“The CPI for the month ending April 2016 stood at 96,60 compared to 96,81 in March 2016 and 98,22 in April 2015,” Zimstat said.

According to a report by BMI Research, a Fitch Group company on Zimbabwe Country Risk released on Monday, inflationary pressures are seen returning to the Zimbabwean economy before year-end 2016, on the back of an increase in the money supply as a result of the government’s policy to introduce bond notes and the re-establishment of relations with multilateral lenders.

“We have revised our expectations for inflation on the back of a planned increase in the money supply through the printing of money and reestablishment of relations with multilateral lenders. We now expect inflation to reach 1,0 percent after two years of deflationary conditions,” the report says.

According to latest Reserve Bank of Zimbabwe (RBZ) monthly report, annual broad money   supply   growth   rate increased to 9,94 percent in February 2016, from 9,55 percent in January 2016.

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Chamber of Mines chief executive officer, Isaac Kwesu

ZIMBABWE recorded a 21 percent increase in gold production to five tonnes in the first quarter of the year after power supplies improved, figures released by the Chamber of Mines on Tuesday have shown.

Chief executive of the chamber, Isaac Kwesu, said more stable power supplies and higher deliveries from artisan miners — who accounted for 37 percent of total gold  produced during the quarter — where behind the increased output.

“Energy remains a challenge though we have seen some improvements which also may be one of the reasons why output increased in the first quarter,” Kwesu told journalists at a press conference ahead of the chamber’s annual meeting in Victoria Falls later this week.

“We anticipate that the energy sector remains fragile. We need to grow the energy sector so that we can sustain the growth of the mining sector.”

The chamber last December facilitated the importation of 300 megawatts from South Africa’s Eskom.

Small-scale producers delivered 1,876 tonnes compared to 1,215 tonnes during the same period last year.

“Gold, which benefited from both firm price and increased output, recorded a 17 percent increase in value to $189 million,” said Kwesu, adding that the country was on course to achieve the 24 tonnes target by year-end if current production levels were maintained.

Secondary producers, which include Unki, Mimosa and Zimplats, registered a 33 percent increase in production to 493 kg while output from large producers grew five percent to 2,735 kg.

During the first quarter of the year, prices for all minerals declined, with the exception of gold, platinum and iridium.

“Total at mine value for the minerals produced in the quarter declined by 3.4 percent to $419 million compared to the same period last year.”

Platinum production during the quarter was up 43 percent to 4,3 tonnes from 3 tonnes last year.

Earnings from the mineral also rose six percent to $108 million compared to $102 million in the same quarter last year. Iridium recorded a 38 percent increase in earnings to $1, 7 million from 1,671 tonnes.

Nickel, whose production was up 10 percent to 4, 8 tonnes, was among the hardest hit minerals recording a 31 percent decline in earnings to $30 million. The Source

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Local Government, Public Works and National Housing Minister Saviour Kasukuwere

THE Minister of Local Government, Saviour Kasukuwere, has gazetted a Bill that seeks to align with the Constitution the provisions of the laws that he administers.
Last week, Kasukuwere gazetted the Local Government Laws Amendment Bill, whose purpose is to align certain provisions of the Rural District Councils Act and the Urban Councils Act with section 278(2) and (3) of the Constitution — provisions which regulate the removal from office of mayors, rural district council chairpersons and urban and rural district councillors.
The move by Kasukuwere appears to have been caused by the realisation of legal challenges that stand in his way to permanently get rid of Harare mayor, Bernard Manyenyeni, as well as Gweru mayor Hamutendi Kombayi.
There have been suggestions that the ZANU-PF national commissar plans to replace opposition-dominated Movement for Democratic Change (MDC-T) councils with special commissions run by nominees of his ruling party as part of its elaborate groundwork for the 2018 elections.
Under the country’s new Constitution unveiled in 2013, elected local council office-bearers may only be removed from office only by an independent tribunal provided for by an Act of Parliament.
The outmoded Acts — which Kasukuwere relied on to suspend Manyenyeni and the entire Gweru City council — do not provide for the removal of elected councillors by an independent tribunal.
They provide for suspension and removal of councillors by the Minister of Local Government, Public Works and National Housing.
This has led to High Court battles between the minister and Kombayi and his councillors in Gweru, and Manyenyeni in Harare.
In the Gweru case, the High Court ruled that the Urban Councils Act’s provision was unconstitutional and void as to both suspension and removal from office.
Kasukuwere, however, simply ignored the two High Court rulings.
In the Harare case, a different High Court judge agreed there was no valid provision for removal from office, but upheld the validity of the 45-day suspension, adding that it would fall away at the end of the 45 days.
The Bill is government’s response to this situation.
It provides for suspension of an elected councillor by the minister; investigation of whether there is sufficient evidence for the issue of removal from office to be referred to an independent tribunal; and the setting of up of an ad hoc tribunal where the minister sees fit after an investigation to pursue the issue of removal.
Manyenyeni was suspended on April 21 for appointing banker James Mushore to the vacant position of town clerk without consulting the Local Government Board (LGB) as stipulated by the Urban Councils Act.
The Harare Council acted on the basis of the new national charter, which states that local authorities are free to make appointments without consulting the minister or the LGB.
Manyenyeni’s 45-day suspension expires in June, raising questions about what would happen to him.
The process of aligning the local government laws with the Constitution can take several months to complete and its only after the alignment that a legally binding process to remove Manyenyeni from office could start.
However, there are also several other legal bottlenecks that Kasukuwere faces.
Last week, legal and legislative watchdog, Veritas, published a detailed commentary of the legal hurdles Kasukuwere faces in getting rid of Manyenyeni and other elected councillors.
“The minister’s claim stretches the meaning of section 114 to the limit and, perhaps, beyond. It is hard to see how appointing a town clerk without approval amounts to ‘gross mismanagement’ unless the person appointed is so obviously unsuitable that no reasonable councillor would have dreamt of appointing him — and no one has suggested that that was the case here.
“The minister’s case becomes even shakier when one considers the rest of section 114 of the Act. It will be remembered that the section is headed ‘Suspension and dismissal of councillors’, and it goes on to say that after a councillor has been suspended the minister must cause the matter to be investigated within 45 days; if the investigator’s report establishes the grounds for the suspension, the minister may dismiss the councillor from office. So section 114 of the Act does not allow the minister to suspend a mayor or councillor and then do nothing further. The suspension must be followed by an investigation and, where appropriate, a dismissal by the minister within 45 days. The suspension, investigation and removal are inextricably linked together in the section. In the absence of the last two — an investigation and a decision on removal — there cannot be a suspension because the purpose of the suspension is impossible to achieve. On this ground alone, the minister’s action in suspending the mayor was illegal.
“We say ‘on this ground alone’ because there are other reasons for questioning the suspension. We have mentioned one — that the ground of suspension does not seem to fall within section 114 of the Urban Councils Act, much less the Constitution. It can also be argued that section 132 of the Urban Councils Act, which prohibits municipalities from appointing town clerks without the Local Government Board’s approval, infringes the autonomy that Chapter 14 of the Constitution confers on local authorities.”
In conclusion, Veritas said: “It is most regrettable that the Minister has persisted in trying to suspend councillors under section 114 of the Urban Councils Act after being told by two judges of the High Court that he has no power to do so. Whatever his motive, his conduct undermines the independence of local authorities and the devolution of governmental powers that are keynotes of Chapter 14 of the Constitution.”
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President Robert Mugabe

PRESIDENT Robert Mugabe is understood to have directed the ZANU-PF main wing to take over the organisation of the Youth League’s “million man” march, set to take place next week to avert a potential crisis after the event became a new frontier for factional hostilities simmering in the ruling party.
Events leading to the march took a surprise turn at the weekend with members of the main wing from various provinces suddenly announcing their interest.
Before the change of tact, the march was being organised by ZANU-PF youths ostensibly to reaffirm the league’s support for President Mugabe.
The planned march had initially been proposed as a vote of no confidence in Vice President Emmerson Munangagwa, thought to be positioning himself to succeed President Mugabe.
Youths belonging to Generation 40 (G40), a faction comprising youthful politicians seeking to renew ZANU-PF from within, had appeared to gain an upper hand over youths from Team Lacoste, another faction reportedly rooting for Mnangagwa to succeed President Mugabe.
The squabbles had left Mnangagwa’s camp heavily decimated after Pupurai Togarepi, who is Mnangagwa’s chief lieutenant in the youth league, had a vote of no confidence passed on him at the instigation of his deputy, Kudzanai Chipanga, a purported G40 supporter.
Chipanga has since taken over the reins of the youth league in the interim and has been the face behind the march.
Mnangagwa backers have been alleging victimisation, claiming that the march was targeted at Mnangagwa.
Other key forces in the ruling party such as war veterans, who have openly declared their dislike for G40, had threatened to boycott the march.
But last week, President Mugabe reportedly ordered the ex-combatants to join the march.
This was confirmed last week by Zimbabwe National Liberation War Veterans Association (ZNLWVA) national spokesman, Douglas Mahiya, who told the press that war veterans would attend the march only because the president had ordered them to do so.
“It is no longer a million-man march, but a parade that has been called by the President. Now as military people, we have decided that we will take part because it is our leader who has called on us and not some ideologically bankrupt group with ulterior motives,” a local daily quoted Mahiya as having said on Wednesday last week.
However, war veterans would appear to sing a different chorus at their retreat in Chinhoyi three days later on Saturday, with some of them saying the ex-combatants were still not interested in taking part.
The former freedom fighters, numbering more than 500, gathered in Chinhoyi, Mashonaland West province, on Saturday and stressed that they were unhappy with the tension between them and the youth league, particularly Chipanga who recently declared war on them and mocked them publicly as old and sickly.

ZANU-PF national spokesman, Simon Khaya Moyo

ZNLWVA secretary general, Victor Matemadanda, reportedly told the gathering that they would not be taking part in the march, describing it as poorly mobilised and ill conceived.
But ZANU PF sources said given the new scenario whereby President Mugabe has intervened, war veterans were now torn between attending the event and boycotting it.
“They are undecided now. They do not want to appear to be rallying behind the G40 initiative, but again they do not want to appear to be sabotaging the President who has said they should be there,” said a top ZANU-PF official who did not want to be named.
Tight lipped senior members of the Zimbabwe National Liberation War Veterans Association (ZNLWVA) told the Financial Gazette confidentially that they were still undecided about their participation in the march.
“We are peaceful people who went to war to fight the enemy and we have been with the product of that war effort for the last 36 years. What more demonstration of solidarity with the President can be asked of us,” queried one high ranking ZNLWVA member who declined to be named.
“We do not want to be seen participating in a march when there is no harmony. This is nothing but G40 to show the President how many they can mobilise to give the impression that he can do without the other faction. Given this deadlock, we do not find a space to participate. The hostility that has been directed at us makes it difficult for us to participate,” added the member.
Matemadanda was not answering calls on his mobile phone this week while Mahiya simply said: “I am not commenting on that.”
Chipanga insisted youths were still in charge of the march.
“There is nothing like that,” he declared when asked to comment on the reports.
“It remains a youth organised event but everyone is invited,” he added.
Asked to explain the sudden interest by members of the main wing, Chipanga said: “All the other organs of the party are in support of the event.”
“We just had a meeting of the national executive of the youth league today (Tuesday) and we are having the last one tomorrow,” said Chipanga.
ZANU-PF national spokesman, Simon Khaya Moyo said: “What I know is that the youths are organising it, but they are answerable to party elders and they will report to the leadership of the party from time to time and seek guidance there.”
ZANU-PF has since directed all its provincial structures to mobilise enough resources to transport 100 000 party cadres per province.
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Permanent secretary in the Ministry of Transport and Infrastructure Development, Munesushe Munodawafa

GUTU — In indigenous black folklore, kneeling before someone is an act of either reverence or fear.
But for Munesushe Munodawafa, the permanent secretary in the Ministry of Transport and Infrastructure Development, he had to do just that last week to put his case across to President Robert Mugabe, and possibly benefit from his benevolence.
He has been facing corruption allegations following an Air Zimbabwe (AirZim) insurance scam.
Although he was set free by a regional magistrate Hosiah Mujaya, who ruled that the case should proceed by way of summons after Munodawafa had been placed on remand for over six months, his fate in government currently hangs by a thread.
He was arrested last year over his alleged involvement in the US$305 000 AirZim fraud case which emanated from an accident involving an AirZim MA60 plane.
It is claimed that on November 3, 2009 the AirZim plane hit some wild pigs at the Harare International Airport resulting in the plane being written off. London-based re-insurer, Cartis Insurance Company then paid AirZim US$6,1 million in insurance claims.
However, in April 2010, Chartis, made a counter claim of exactly the same amount it paid AirZim, against the Civil Aviation Authority of Zimbabwe (CAAZ) for negligence by failing to institute safety measures at the airport.
The company also claimed a further US$2,4 million from CAAZ for loss of business by AirZim.
CAAZ then approached Munodawafa’s office for help over the matter, which led to the appointment of Navistar Insurance Brokers to go and negotiate an out of court settlement with Chartis in London. Navistar was reportedly appointed without going to tender.
When Navistar returned from London after successful negotiations with Chartis, Munodawafa is then alleged to have wrote a letter to AirZim’s accounting officer, Innocent Mavhunga, ordering him to pay Navistar a “success fee” of US$305 000.
With government leaving no stone unturned to punish those caught on the wrong side of the law, many believe that this case could signal Munodawafa’s last days in government.
But, some within the Transport Ministry said the only person who could save Munodawafa from the turbulence was none other than the appointing authority himself, President Mugabe.
And when he got the slightest opportunity to present his case before him in Gutu, Munodawafa did so while kneeling down.
Last Friday, he knelt before President Mugabe in front of several ZANU-PF officials and journalists at Chief Gutu, Edmund Masanganise’s homestead where the President had gone to console the family following the death of Anos Kasirai Masanganise, his uncle, three years ago.
In his speech, Chief Gutu told President Mugabe that Munodawafa had problems and wanted to meet the President to seek his intervention.
“President, pane mwana ari pano, Munodawafa, anoda rubatsiro rwenyu, anoda kukuonai (President, there is someone here who needs help and wishes to see you),” said Chief Gutu.
Before he had finished talking, Munodawafa sprang from where he was seated and went straight to where the President was seated, and kneeled before presenting his case in a hushed tone.
“I never said you can see the President here, I thought you can always make time to have a date with him,” added Chief Gutu upon seeing that Munodawafa had already gone to President Mugabe.
While addressing the gathering, President Mugabe seemed to confirm and suggest that Munodawafa’s job was hanging by a thread.
“Mukomana uye wamati ane nyaya, Munodawafa, ah ok, ndikati angaite nyaya yei secretary for transport? Kasi vari kuda kumutanda, kana kuti vari kuda kumuitei? (What issues can Munodawafa, the secretary for Transport possibly have? Do they want to fire him; what exactly do they want to do to him?” President Mugabe asked, before bursting into a mild laughter. He later promised to look into the matter.
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Currently, 72 percent of the population live below the national poverty line (living on less than US$1,25 per day).

ZIMBABWE’S food security situation is set to worsen as it emerged this week that the country’s meagre 2016 maize grain harvest would last three months.
The development comes as government’s emergency food relief programme was dealt a major blow after the World Food Programme (WFP) said it faced a US$200 million funding deficit for the country.
This would make it doubly difficult for the organisation to meet the country’s food and humanitarian needs until March 2017.
In its latest report released this week, WFP, Zimbabwe’s major food aid partner, said: “Increased rains in March-April have marginally improved harvests in some districts, but overall crop situation remains bleak, and food insecurity is anticipated to spike as from July in all districts, as available stocks deplete… WFP anticipates that 2015-16 maize production won’t cover more than three months of domestic consumption requirements (of annual 1,8 million tonnes).”
WFP also indicated that despite water availability and pasture conditions having improved following the late rains, cattle deaths were likely to continue.
With the country having already lost an estimated 25 000 cattle between October 2015 and March 2016, “half of all herds face poor body and health conditions”, said WFP.
WFP had put in place a 2016/2017 El Nino Response Plan, which is valued at US$229 million, for the next 12 months; it commenced last month and is targeting 2,8 million people in need of humanitarian assistance.
From P1
Currently, available resources are only adequate for the 2015/16 lean season assistance in 13 of 20 districts.
“With this contribution and available resources to date, WFP will be able to continue providing assistance for another six months in 13 of the 20 districts that were supported in March under the 2015/16 lean season assistance programme. Additional resources are urgently needed to allow WFP to extend the programme in the remaining seven districts beyond March and to reach its full planned coverage of 719 000 people in 20 districts in April.
“Over the next six months (April-September), WFP urgently requires US$28,6 million to be able to achieve its planned scale-up to 856 000 people by September, without which 407 700 people would be facing food insecurity in the worst affected districts,” WFP said. This means more than 400 000 people who currently have no food face starvation.
An El Nino-induced drought aggravated Zimbabwe’s already precarious food security situation after erratic rainfall and long dry spells contributed to large scale crop failure and livestock deaths across the country.
Although the present farming season’s drought was the worst ever, Zimbabwe has been struggling to properly feed itself for the past 20 years.
WFP describes the southern African nation as a “low-income, food deficit country ranked at 156 out of 187 on the 2014 UNDP Human Development Index”.
“Currently, 72 percent of the population live below the national poverty line (living on less than US$1,25 per day).
“Thirty percent of the rural poor are considered to be ‘food poor’, or ‘extremely poor’.
“Food and nutrition security remain fragile and subject to natural and economic shocks in Zimbabwe, chronic under nutrition remains relatively high, despite some improvements. Dietary diversity is generally poor and consumption of protein is insufficient. Only 11 percent of Zimbabwean children 6-23 months receive a minimum acceptable diet. One-third of Zimbabwe’s children are stunted or short for their age,” WFP noted.
Zimbabwe, which was once the breadbasket of the southern African region, quickly turned into a basket case after the controversial 2000 land reform programme as yields declined spectacularly from as high as 1,5 tonnes per hectare to 0,480 tonnes per hectare.
Zambia has taken over as the region’s breadbasket; Zambia’s crop forecasting survey revealed that the country would record an increased maize harvest of 2,8 million tonnes, from 2,6 million tonnes last year.
With a carryover stock amounting to 667 524 tonnes as at May 1, 2016, Zambia has a total of 3,5 million tonnes of maize in stock.
Despite keeping the results of its crop assessment report largely secretive, indications are that Zimbabwe’s maize production this season would be less than 60 percent of the five-year average of 800 000 tonnes.
Reduced availability of local maize, low carryover stocks from last season, increasing grain prices and limited to no green harvests would mean deteriorating household food security.
Government had planned to import between 500 000 and 700 000 tonnes of maize between April and September, while additional quantities were reportedly being imported by the private sector from Mexico.
WFP estimates the prevalence of food insecurity in the rural population is going to fluctuate from 30 percent in April to 49 percent (approximately 4,4 million people) during the peak of the lean season from January to March 2017. It plans to gradually scale up its 2016/17 El Nino response accordingly, to reach an estimated 2,2 million people by January 2017.
With no other crop to harvest after the 2015/2016 failed season, a quarter of the rural population is already food insecure as food prices for products like maize grain have increased by about eight percent since the beginning of the year.
In February, President Robert Mugabe declared the 2015/2016 agricultural season a national disaster.
The declaration was aimed at mobilising resources to ease food shortages by availing aid to hunger-stricken districts in the country.
Other United Nations agencies have also been providing humanitarian assistance to many vulnerable people, especially in the southern provinces of the country that have been hardest hit by the drought since last year.
WFP’s lean season assistance includes supplementary rations of super cereal, a nutritional maize and soya blend for households with children between the ages of six months and five years.
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Patterson Timba of ReNaissance

GOVERNMENT has blacklisted bankers whose institutions collapsed due to delinquency, effectively sealing the fate of former highfliers accused of precipitating the demise of several financial institutions and shaking public confidence in the sector.
According to the Banking Amendment Act 2015, which was gazetted last week, individuals implicated in the collapse of financial institutions in Zimbabwe can no longer assume directorship in any licensed banking institution in the country.
The legislation, meant to strengthen the financial services sector and restore public confidence battered by the collapse of nearly 30 banking institutions, including asset managers, since 2000, has also come up with heavy penalties for funding terrorism and money laundering.
The new law will also affect executives who ran non-banking institutions that directly controlled the collapsed banks; these have also been barred from sitting on the boards of banking institutions, unless they convince authorities that they were not responsible for the failure of banks under their watch.
The new law, which compels directors in banking institutions to declare their wealth on appointment, also now makes it a serious crime to hold shares in a bank where a close relative is a significant investor.
The Banking Amendment Act empowers bank chief executive officers (CEOs) to report all forms of abuse by shareholders to the registrar of banks at the Reserve Bank of Zimbabwe (RBZ), and gives the CEOs immunity from retribution.
The Act demonstrates government’s determination to bring sanity into the banking sector and is in line with recommendations by an International Monetary Fund for government to ensure financial sector stability in the country.
Banking institutions that have collapsed since 2004 include Trust Bank Corporation, Royal Bank, NDH Holdings, Interfin Banking Corporation, Barbican Bank, Genesis Bank, Capital Bank, Allied Bank, Century Holdings Limited, ReNaissance Financial Holdings, ENG Asset Management, Kingdom Financial Holdings Limited, CFX, Zimbabwe Allied Banking Group (ZABG), Intermarket Holdings Limited, First National Building Society (FNBS) and Tetrad Financial Holdings.
Intermarket Holdings and Kingdom Financial Holdings had commercial banking as well as building society operations. They also ran stock-broking arms, although these were not under the purview of the central bank.
These banks were mostly owned or operated by outstanding bankers, some of whom were considered astute dealmakers and led extravagant lifestyles using depositors’ money.
It would appear the new rules will also affect executives and board members at institutions such as the National Social Security Authority, which controlled Capital Bank before it closed two years ago.
Among prominent former CEOs who led failed banks were Samson Ruturi of FNBS; Jeffrey Mzwimbi of Royal Bank; Ntuli Ncube of Barbican; Patterson Timba of ReNaissance; William Nyemba of Trust Holdings; Eugene Mlambo of Tetrad; and Lynn Mukonoweshuro of Kingdom Financial Holdings, which had become AfrAsia Holdings after a Mauritian firm took over majority shareholding.
Financial officers in the affected banks have also been held liable for the collapse of the banks and will equally be affected by the new measures.

Eugene Mlambo of Tetrad

“The registrar shall not approve the appointment or reappointment of a person as a director of a banking institution or controlling company if the person was a director or principal officer of a banking institution or controlling company which, in Zimbabwe or elsewhere, was wound up, liquidated or placed under judicial management or curatorship on the grounds that it was unable to pay its debts or contravened any regulatory requirements applicable to it,” the Act states.
An affected person has to “satisfy the registrar by a sworn declaration that he or she was not responsible for the conduct which led to the institution or company being wound up, liquidated or placed under judicial management or curatorship,” if they are to be removed from the blacklist, the Banking Amendment Act said.
The central bank has blamed the majority of bank failures on shareholder and management delinquency, which resulted in abuse of depositors’ funds as well as unsecured insider loans.
Under the new law, individual shareholding in financial institutions would be restricted to 25 percent of the total nominal value of total voting rights of all issued shares.
Attempts to subvert the law would be met with punishment.
Bank CEOs and chief financial officers would be compelled to note any digression by directors and report any breach of banking regulations to the RBZ.
“No secrecy or confidentiality provision in any contract or law shall prevent a chief financial officer or any of the principal officers of a banking institution from furnishing the registrar with the information…and no banking institution… shall dismiss or in any other way penalise the chief financial officer or any principal officer for furnishing such information,” says the Act.
To deal with problems caused by excessive influence in bank management by owners, the Act compels shareholders to hold not more than 25 percent shareholding in banking institutions, and punishes those who violate the law.
The registrar would accept representations to justify exemptions to allow a shareholder to hold more shares in a banking institution than the stipulated thresholds.
A shareholder is equally liable for “shares in the banking institution or controlling company which are held by a close relative of the individual”. In other words, an investor has to declare shareholding held through a proxy.
“If a dividend is paid to or received by any person on any share that is held by him or her in contravention of (the Act), or any share that has been allotted, issued or transferred to the person or registered in his or her name in contravention of (the Act), such dividends shall, if not returned by the person concerned, constitute a debt due to the banking institution or controlling company concerned, and shall at any time after it becomes due, be recoverable in a court of competent jurisdiction by proceedings in the name of the banking institution,” the Act says.
“If the registrar is satisfied that a shareholder of a banking institution or controlling company has unlawfully or improperly influenced a decision of the board in the institution or company or any of its principal officers, or has attempted to influence such a decision, the registrar may, subject to (the Act), by written notice require the shareholder to divest himself or herself of all or any of his shares in the banking institution or controlling company concerned,” says the Act.
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Reserve Bank of Zimbabwe governor, John Mangudya

ZIMBABWE’S economic crisis is worsening, and government is beginning to feel the pinch as much as the governed.
The State, now the bellwether of the country’s economic health, has been scrounging for monthly salaries to pay civil servants.
Is the country, once a breadbasket in southern African, broke or broken?
Economists and analysts are divided, but many agree the situation is cause for grave concern.
While others agree that Zimbabwe is now broke, Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, insists it is not broke, but has been damaged by errant entrepreneurs and rogue dealers.
Mangudya said Zimbabwe had been ruined by charlatans mercilessly milking its economy.
“What I believe is that Zimbabwe is not broke but damaged by people who abuse (its) resources,” said Mangudya.
“People are taking the money out of the country. It’s leaking outside the country. The money is going out either through wire transfer or cash. I am concerned with the misuse of foreign exchange. We need to promote the use of plastic money,” he argued.
Industrialist, Busisa Moyo, disagrees.
“Zimbabwe is a broken economy that requires mending, healing and a new soul,” said Moyo, the Confederation of Zimbabwe Industries (CZI) president.
Moyo, the chief executive of United Refineries, a fast moving consumer goods manufacturer, said there was apprehension over current measures since the hyperinflationary period that ended with adoption of a multiple currency system in 2009 had “left a trail of destruction and in its wake — collapsed industries and institutions that could not operate in that environment”.
He was referring to the planned introduction of bond notes by the RBZ, which many view as the return of the Zimbabwe dollar through the backdoor.
Reflecting on the hyperinflationary period, Moyo said there was a “loss of skills, corporate governance and ethical behaviour that had been embedded in our way of life from the family to the corporate board room. (There was) nauseating levels of corruption and rent seeking behaviours that still continue the agenda of economic turnaround.”
Economist, Godfrey Kanyenze, said it was difficult to categorise the country as broke.
“(But) it is in paralysis, in stasis, logjam as a result of a predatory state,” he said.
“The presidential system where power is centralised in the Presidency promotes clientelism, cronyism and creates a dependency syndrome, and hence the dominant culture of consumption,” said Kanyenze.
John Robertson, an economic consultant, disagreed, saying Zimbabwe was “certainly broke”.
“The economy is certainly battered and bent, but all the damage can be fixed. Unfortunately, the nature of the damage can be largely described as the result of government interference,” said Robertson.
Robertson said government had for years imposed many regulations and controls designed to place its officials in positions of authority that allowed them to demand submissive obedience from the business sector.
“This has turned the country into a hostile environment for new businesses and a very discouraging place that has stopped most existing businesses from growing,” said Robertson.
Robertson said it was the amazing levels of ingenuity that had allowed millions of Zimbabweans to survive through a now-largely informal economy.
“They are determined never to become formal because that would place them directly under government’s licensing and permit requirements. But that means they have to remain small, unobtrusive and ready to disappear if anyone becomes too interested in what they are doing,” he observed.
“Most people will struggle for a few dollars a day, most will have difficulty paying school fees, paying rent, paying for transport services, paying for electricity or water.”
Accordingly, Robertson said, many Zimbabweans were hungry, living in “very poor conditions and completely distrustful of the authorities who constantly claim to be looking after their interests”.

CZI President Busisa Moyo

He added: “The answers are simple. We need policies that will help the people. What we have are policies that enable just the people at the top to help themselves to anything they want. With their authority to reject claims that the rest of the population has civil rights or property rights, they can now demonstrate that it is not their job to serve the people because, clearly, the people are content to spend their lives serving them. I suspect that the people are now making other plans.”
Since January 2009, Zimbabwe has used foreign currencies after ditching its own currency to deal with hyperinflation.
This led to an economic rebound which had been anchored by mining and agriculture, with mining emerging as the most dynamic sector, replacing agriculture in pre-crisis Zimbabwe.
The boom in the crucial mining sector has, however, sputtered, having borne the brunt of low commodity prices at the international market which tanked, cutting the value of local mines.
Farms are no longer as productive as they used to be.
When government declared all agricultural land to be the property of the State, Robertson said: “It cancelled the collateral value of billions of dollars-worth of the previously totally acceptable properties that were used to secure most of the bank lending.”
“Now, most of the land lies vacant, most of the factories cannot get the inputs they need unless they import them, most of the investors lack the confidence needed to invest, most of the banks are too nervous to lend to people who might not be able to repay the loans, most of the taxes paid have gone down and most of the people cannot find employment. And we all have to import most of what we need.”
Gross domestic product (GDP) growth had averaged 10 percent during the period between 2009 and 2012, but the country experienced a sharper than expected slow down with the new era coming to a shabby end.
GDP had declined to an estimated 4,5 percent in 2013, 3,8 percent in 2014, and 1,5 percent in 2015, reflecting the liquidity shortages in the economy. The slowdown has raised fears of a possible economic depression.
The general price level remained low, with year on year inflation having started at -1,3 percent in January 2015.
It reached -3,3 percent in October 2015, before decelerating slightly to -2,5 percent in December 2015.
This reflected weak aggregate demand, tight liquidity and the depreciation of the South African rand currency against the United States dollar.
Annual headline inflation averaged -2,4 percent for the period January and November 2015.
Zimbabwe is currently grappling with a liquidity crisis caused by largely inadequate supply of foreign currency in the economy.
Zimbabweans have preferred trading using the greenback.
The US dollar today dominates, with 95 percent of all transactions done using the American currency.
But those precious US dollars are running out, a situation which has sparked panic.
This growing shortage of foreign notes prompted the central bank to unveil fresh currency measures to ease the cash crisis. These include limiting withdrawals to US$1 000 per day and the introduction of bond notes, rated at par with the US dollar.
The idea to re-introduce a loathed local currency in the form of bond notes triggered a public outcry.
And the central bank chief spent the whole of last week trying to clarify his plan to introduce domestic notes which he said would be backed by a US$200 million African Export Import Bank (Afreximbank) bond facility, in a bid to ease cash shortages that have hit the economy.
Mangudya highlighted that he could not directly inject the US$200 million into the economy due to the problem of externalisation, which “is now a cause for concern to the RBZ”.
The central bank chief remains of the view that Zimbabwe is not broke, but damaged by its people who have taken billions out of the country.
The financial haemorrhage from capital flight, Mangudya said was exacerbated by the openness of the economy, which is susceptible to regional disruptive arbitrage activities.

Indigenisation Minister, Patrick Zhuwao

This position, he added was further worsened by the use of foreign exchange or reserve currency, mainly the US dollar, as the domestic currency, which is on high demand across the region as well as the challenging macroeconomic environment.
“In 2009, when we dollarised, we thought we had arrived, but it is estimated that Zimbabwe has lost US$3 billion through illicit financial flows (IFFs) in seven years, translating to an annual average of US$500 million.”
Fighting IFFs and corruption is a national collective responsibility. Good ethics and trust are the critical weapons that are needed to win the war.
Moyo told the Financial Gazette that the country had failed to tightly manage the US dollar under a multiple currency regime.
“(When we) dollarised in early 2009, this brought stability, but was not managed correctly,” said Moyo.
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“In fact the economy had dollarised by 2005, when a vibrant black market emerged through the use of the dollar in business decision making. The authorities tinkered around with periphery type interventions… The dollarisation was a mere confirmation of what economic players were already doing, that is shunning the Zimbabwe dollar,” he said.
Moyo added: “The lack of a formal agreement with the United States, World Bank and other supporting financial institutions on dollarisation means the dollars in our economy were generated from organic economic activity and there was no injection of dollars into the economy furthermore. There is no balance of payments support for government to exercise any form of sound monetary control, let alone expand economy.”
He said that re-engagement with the international community after years of isolation was of paramount importance and needed to be done sooner than later and with greater speed.
“Seven years later, we are still debating, as a country, whether we should re-engage or not. Our humble view is that that choice was made many years ago when the public lost faith in the Zimbabwe dollar. Engage we must, and (we must) regularise our debt position so that we access support.”
He urged government to push deep cutting reforms without fear because “what will happen without economic reforms is far worse that what will happen with reforms”.
“Top among these is creating fiscal space by cutting the salaries and wage bill, among the parastatals and commercialising and privatising all non-key parastatals and qausi-government institutions or shutting some down. (There is need to) genuinely expose and deal with graft and corruption at all levels, creating policies that are foreign direct investments (FDIs) friendly by overhauling and repealing certain laws that impede FDI, restoring agriculture value chains though bankable land title, scrapping the non-genetically modified organism (GMO) policy stance as the country is already consuming 50 percent GMO content products through imports.
“This requires the will to reform from government, the legislature, private sector and civic society because reforms will be painful, but they must be done and boldness will be required.”
The International Monetary Fund resident representative, Christian Beddies, said Zimbabwe was broke as “economic and financial conditions in the country remain difficult”.
Beddies said: “There is slow growth, rising unemployment, informalisation of the economy, a precarious external position and very low levels of international reserves, inadequate external flows and tight liquidity, debt distress, low commodity prices, an appreciating US dollar, and subdued external inflows, as well as domestic investment.
“The situation is worsened by the El Niño-induced drought, erratic power supply, fiscal challenges and policy implementation in a difficult political environment worsens the situation.”
Beddes added: “The fragile state of affairs increases the urgency of a broad-based policy response to raise growth and manage vulnerabilities. There is need to use headwinds as momentum for change. There is need for a three pronged approach to raise Zimbabwe’s growth-structural reforms, fiscal reforms and financial sector policies.”
He said dialogue in this whole process is key; government has to set priorities, explain goals and implement good policies.
“Good governance is also key to success,” he said.
Government needs to win back public and investor confidence to mend the broken country and recovery from its bankruptcy.
Confidence in the country’s financial institutions, which had somewhat recovered after the country ditched its currency in favour of a multiple currency regime, is starting to wane: Banks have introduced withdrawal limits as they try to control cash consumption, as a liquidity crunch, worsened by an ever growing trade deficit, worsens.
Unemployment has stubbornly reached more than 95 percent, creating political uncertainty in an economy fraught with widespread company closures.
The indigenisation campaign, under which Indigenisation Minister, Patrick Zhuwao, had sought to close foreign-owned banks that failed to comply with a law compelling them to cede controlling shareholding to blacks, worsened the cash crisis.
President Robert Mugabe had to intervene to calm markets, but this intervention may have been too little too late.
The damage had already been done.
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Deputy Minister for Ministry of Mining and Mining Development Fred Moyo

VICTORIA FALLS– Zimbabwe has exported 28 840 tonnes of chrome valued at US$2 million since lifting the ban on the exportation of raw chrome in June 2015.

In his keynote address at the 77th Chamber of Mines Annual General Meeting and Conference in Victoria Falls Deputy Minister for Ministry of Mining and Mining Development Fred Moyo said to date six smelting companies have been granted licences to export chrome ore.

“To date 28 840 tonnes have been exported at a value of US $2 040 540.Under this framework local chrome smelting companies are allowed to export raw chrome provided their installed capacities,” he said.

Moyo said Apple Bridge Investments has since started facilitating chrome ore exports under this facility with shipments having commenced in November 2015 following the repeal of the 20% chrome non beneficiation levy by treasury.

In addition to lifting of the ban, government also reviewed royalty fees for chrome ore to 5% from 2% while the export tax of 20% was removed.

Meanwhile Government has started the process of establishing a computerised Mining Cadastre for the management of the entire mining industry throughout the value chain that is from licensing, actual projects implementation and marketing including accounting of production by all mining and mineral entities.

Moyo said a successful mining industry is one that is supported by a computerized Management Information System.

“Such an MIS will facilitate appropriate planning, coordination, communication, control and decision making in the Ministry’s efforts to manage the country’s mineral resources. Such a system will result in the modernisation of the mining title management system in line with regional and international best practices to provide for a faster and more efficient system which also offers security of tenure to investors,” he said.

Moyo said currently consultations are being done with the consultant hired for the job and work is being done to ensure that the Cadastre Mining Title Management System becomes operational as soon as possible.

As the country migrates from the old system to the computerised Cadastre system, Moyo said there will be challenges of disputes due to overlapping of mining titles arising out of inherent inaccuracies.

“Transitional measures will be put in place to address these challenges. Information will be required from mining title holders to ensure that the transition is smooth,” he said.

Moyo therefore said the mining sector must strategize on how local companies can be capacitated to produce locally competitive goods and services.

Concerning tax in the mining industry Moyo said the Government is in the process of crafting a new mining fiscal regime that is meant to usher in transparency and competitive rates of taxes to support both the fiscus as well as attract investments. –FinX

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“We have 280 Zimbabweans on the Panama Papers which the Reserve Bank investigating”.

ZIMBABWE’S central bank said on Friday it had opened investigations into about 280 locals named in the Panama Papers, amid claims millions may have been externalised from the country.

The investigation comes as Harare battles to stem a blazing cash crisis precipitated by massive outflow of cash estimated by the central bank at $1,8 billion last year alone.

Prominent names from the list released early this month from the leaked documents of a Panama law firm, Mossack Fonseca, include Zimplats chief executive officer Alex Mhembere, property tycoon Ken Sharpe, former Aico chief executive HappymoreMapara, plus well known businessmen Billy Rautenbach and John Bredenkamp.

Several firms, including Innscor and Zimplats, have been named for paying executives through offshore companies and accounts, allegations they have denied.

The central bank noted that there were legal reasons for opening offshore account and said it would approach the issue with an open mind, as not everyone named could be guilty of crime. However, the bank has questioned the morality of transferring large amounts of cash to tax havens like the Cayman Islands and the British Virgin Islands.

“We have 280 Zimbabweans on the Panama Papers which the Reserve Bank investigating,” said Morris Mpofu, the central bank’s director for Exchange Control, addressing the 77th annual general meeting of the Chamber of Mines of Zimbabwe.

“We are surfing through that list. Some took funds to the British Virgin Islands and the Cayman Islands,” he said, noting that the introduction of the multicurrency system in 2009, which is credited with briefly stabilising the economy until 2012, had seen international criminal syndicates taking advantage of the country’s lax policing of its financial systems.

In one case, three foreign nationals had camped at a five star hotel in Harare, withdrawing $3,000 per day for 30 days, Mpofu said.

They then slipped out of the country after bribing officilals at the border post, he claimed.

In a crackdown on vice, the RBZ has tightened the screws on withdrawals, with individuals now permitted to withdraw a maximum of $1,000 per day, or R20,000.

Mpofudefended the limits, saying “we have been too generous, very few Zimbabweans earn $30,000 per month”.

“The challenges that we faced when we liberalised the economy, is that we opened up and became a safe haven for international criminals. Zimbabweans also became ill-disciplined as well. Zimbabwe has become a fishing pond of hard currency.”

“We have been using our foreign exchange irresponsibly over the past five years and that has also affected the situation we are in,” said Mpofu. The Source

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According to the African Economic Outlook, Zimbabwe’s real per capita GDP for 2016 will be -0,4 percent and will rebound to 0,8 percent in 2017.

ZIMBABWE’S economy will grow by 1.6 percent in 2016 but will improve in 2017, the African Development Bank (AfDB) said on Monday and noting the growth, though positive, will be lower than the continental average of 3,7 percent this year.

AfDB, in its 2016 African Economic Outlook (AEO), released on the side-lines of its on-going annual meeting in Zambia, said Zimbabwe’s economy will likely grow by 3,1 percent next year, but noted that it continued to face structural weaknesses which are constraining its ability to register sustainable growth.

“GDP (Gross Domestic Product) growth declined from 3.8 percent in 2014 to an estimated 1.5 percent in 2015 but is projected to slightly increase to 1.6 percent in 2016,” read the AEO.

“This improvement is due to an anticipated expansion in the tourism, construction and financial sectors.”

The AfDB’s prognosis for the year is largely in line with the government’s own revised forecast of 1.4 percent from an initial forecast of 2.7 percent.

The World Bank, on the other hand, has put the Harare’s economic growth projection for this year at 1.5 percent citing adverse weather conditions as impacting on the key agriculture sector.

The AEO, a joint annual publication of the AfDB, the Organisation for Economic Cooperation and Development and the United Nations Development Programme, analyses the state of affairs in Africa and provides a two-year forecast.

According to the AEO, Zimbabwe’s real per capita GDP for 2016 will be -0.4 percent and will rebound to 0.8 percent in 2017.

The 2016 AEO is running the theme, “Sustainable Cities and Structural Transformation” in which it is argued that the rate at which Africa urbanises will be critical in determining its future growth and development. The Source

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PRESIDENT Robert Mugabe and first lady Grace greet supporters of  ZANU PF party during the ‘Million Man March’ on Wednesday. Several thousand Zimbabweans joined the march  in support of President Mugabe.

Pictures by IDAH MHETU

According to USAID, more than 300 000 people who are in greatest need of food aid from the two provinces will benefit under ENSURE until March next year.

A FLEET of all terrain four-wheel drive vehicles raced down the Mutare-Chipinge highway, giving their occupants a comfortable country ride.
But soon the comfort was lost in dramatic fashion as the reality of the rugged roads of rustic Manicaland province dawned.
At Tanganda Tea Estates, the vehicles took an abrupt northward swing, abandoning the smooth tarred road to take on a rough dirt road which seemed to tear into nowhere.
Suddenly, the beautiful countryside gave in to an unforgiving terrain.
The road, curved on the mountain sides, meandered like a discarded old ribbon.
The road snaked the once lush mountain sides that have been reduced to jagged and uninspiring slopes by an El Nino-induced drought which has robbed the area of its green liberty.
The only vegetation to talk about included sporadic tufts of acacia, baobab, thirsty shrubbery and brittle grass.
Drivers sweated as they negotiated the steep slopes, skirted on either side by occasional basalt outcrops.
At one point, the cars suddenly halted while scaling a hill: Large outcropping of bundled roots from the remains of a dead baobab tree had broken free from the hard pack alongside the road and needed to be skilfully negotiated.
The first sign of human life in this outback came in the form of ecstatic singing which drifted into the ears once the vehicles were on the verge of completing yet another steep slope along the narrow and rocky descent.
The singing was from villagers who had gathered to welcome their guests for the day.
The visitors’ arrival was signalled by a cloud of fine dust tossed over the hazy horizon by the vehicles.
Few cars ever come to Birirano, this far flung settlement situated, by both geography and sociology, far from modernity.
Forgotten by both politicians and government bureaucrats, Birirano, in Chipinge Central, is one area whose people have had to live with nagging poverty and hunger for most of their lives.
The drought experienced during the past farming season further condemned villagers to the worst hunger in living memory.
Last week, they had gathered at a plateau to welcome delegates from the United States Agency for International Development (USAID), an organisation which has funded the construction of a small dam in the area.
The dam was erected over the Chidzadza River which flows through the dry part of Chipinge from wetter Chimanimani further north.
The dam is to usher in irrigation, with at least 120 initial small-scale farmers already completing land preparation as they wait for the completion of the on-going piping.
The Chidzadza irrigation scheme is one of the many corporative developments rolled out under a programme code named Enhancing Nutrition Stepping Up Resilience and Enterprise (ENSURE), funded to the tune of US$56 million for the next five years.
The initiative is being spearheaded by several partners, including humanitarian and aid development non-governmental organisations such as World Vision, Plan International, Christian Care and the Netherlands Development Organisation, which are part of ENSURE.
Government also comes in to assist in technical areas such as agricultural extension and veterinary services, while the private sector is supporting small-holder farmers with inputs and finance.
ENSURE is a multi-dimensional approach twining an immediate response to the obtaining famine with long term resilience programmes rolled out to help communities withstand future calamities long after the programme is gone.
It is mainly targeting six of Zimbabwe’s districts that are hardest hit by El Nino in Manicaland and Masvingo provinces.
The districts are Chimanimani, Buhera, Chipinge, Chivi, Zaka and Bikita.
The main implementing partners are World Vision (Manicaland) and Christian Care (Masvingo).
According to USAID, more than 300 000 people who are in greatest need of food aid from the two provinces will benefit under ENSURE until March next year.
Lactating mothers and pregnant women are also getting exclusive supplementary feeding.
But, by far the biggest development which has excited these drought prone areas is the investment in water infrastructure.
An additional US$56 million is being channelled to resuscitate irrigation schemes such as Nyanyadzi which has been left desolate for the past 16 years.
Under the same programme, some irrigation schemes are being expanded while new ones are coming up.
Chidzadza irrigation scheme, to be fed by the newly constructed dam, is one of the new irrigation schemes that have been established.
USAID, along with World Vision, its implementing partner, is targeting to boost small-holder farming in dry Manicaland, adding at least 24 000 new small-scale farmers to the list by end of year.
Nyanyadzi irrigation scheme is now operating at full capacity following rehabilitation of its canals and piping.
Driving past the area, one is greeted by a belt of lush fields which appear like an oasis in the Sahara.
Only two years ago, the irrigation scheme lay in waste.
“When we came here the whole system was desolate and we undertook to revamp and upgrade the entire water systems. What this area needed was someone who could help improve the water infrastructure so that they could resume operations,” said World Vision programme manager, Kenneth Munyaradzi.
“We are pleased that we had a hand in repairing the canals and reconstruction of storm drains that had been damaged by storms in 2000,” he added.
World Vision also had Mhakwe and Mutema irrigation schemes expanded to accommodate new farmers, who, in a new partnership forged with Cairns Foods, are growing Michigan pea beans on contract.
Before that enterprise, Cairns used to wholly import the beans from Ethiopia.
“In their first year (2015) after the partnership, they harvested 3,3 metric tonnes of Michigan pea beans and we expect the figure to grow as the farmers learn more and improve their farming methods. We have had to manage them well because people had a tendency of becoming dependant if you specialise in providing them with food rations. What you need is an investment which will sustain them long after ENSURE is gone,” said USAID Zimbabwe mission director, Stephany Funk, who toured projects in Chimanimani and Chpinge last week.
“Its (ENSURE) a way of helping them adapt to the change that is certainly coming. It demands that all people get involved. The situation requires us to rethink the way we have been doing business. We realised that we needed to tailor our responses so that they take care of the obtaining environment. It is that environment which dictates what we should do,” she added.
She said 11 dams will be completed by 2020 under the food for assets programme, which is specifically designed to address water challenges in Buhera, Chimanimani and Chipinge.
Interestingly, these communities have starved perennially yet they trail Zimbabwe’s biggest inland river, Save.
The irrigation schemes that were set up along the river during the colonial era were neglected and allowed to crumble over the years, forcing communities to largely depend on donor assistance.
Said USAID humanitarian assistance officer, Jason Taylor: “Giving people food aid will relieve them for a day or a week, but they need to be empowered and prepared for future disasters and this is why we have said we need to invest in water infrastructure.”
New dams are being constructed at Changazi, Chikukute, Dzotiro, Bangwe, Chinamira, Gurupa, Manyanga, Chinyamazizi and Tarwira, all of which are areas with tributaries feeding into Save River.
These facilities are expected to cater for at least 80 000 households by 2015, including those from Masvingo provinces where ENSURE is also taking hold.
Presently, it is benefitting 24 000 households in Manicaland province alone.
“Our projects are community-driven and that is why they have received so much buy-in. They identify with the people,” said Ability Charlie, the World Vision civil engineer who is behind the massive dam construction and irrigation rehabilitation.
Currently, most of the irrigation schemes are growing different varieties of beans under the Cairns contracts.
“We realised that we needed to capacitate them into becoming our regular customers. We are trying to balance that with the profit making matrix so that we grow together. You develop them and they become passionate about the programme. We have now managed to significantly reduce our Michigan beans import because of this programme,” said Cairns’ Mutare general manager, Joseph Mavhu.
He added that the contracts have encouraged farmers to do much more because they grow crops which they know have a ready market.
There is renewed hope in the communities who are seeing a saviour.
“We are in trouble here because of hunger. The rains have stopped falling in our area and we do not have money to start our own projects to improve our lives and so when we see people coming to help us like this, we are most grateful,” said Chief Steven Gudyanga of Chimanimani.
The ever sceptical government of Zimbabwe has previously had an uneasy relationship with Western-sponsored non-governmental organisations (NGOs), accusing them of being agents of regime change.
Previously, NGOs have been blocked from operating in some parts of the country after being accused of politically interfering with communities.
But with the biting effects of El Nino, government has made an indiscriminate passionate appeal to the international community to come and rescue people from starvation.
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ZANU-PF supporters march during the million man march on Africa Day.

PLACARDS were held aloft, and the city centre exploded as tens of thousands of supporters, young and old, took part in ZANU-PF’s million man march.
They played the late Simon Chimbetu’s music, accompanied by cheers and ululation.
The crowd, from all corners of the country, shouted, “Long live Gushungo”, chanting praises to President Robert Mugabe, Zimbabwe’s leader since independence in 1980, as they marched to what the ruling party named Robert Mugabe Square in 2014.
Ironically, it was the same venue which the Movement for Democratic Change (MDC-T), led by Morgan Tsvangirai, named “Freedom Square”, as the country’s main opposition party sought to wrest power from ZANU-PF in 2013.
The MDC-T had sought to gain inspiration from events in the former Soviet Union where Erivan was named Freedom Square in 1918 during the foundation of the First Georgian Republic following the collapse of the Russian Empire.
As fate would have it, the MDC-T was thoroughly embarrassed by ZANU-PF, when it lost the 2013 elections by a wide margin.
President Mugabe, for whom this million-man march was organised, must have left the Square, an open space adjacent to the Rainbow Towers Hotel, a hugely satisfied man due to the bumper crowd.
“This was the best act of all the acts that the party was capable of, done by the youths of the party; the youths performed well. It was well organised,” said a visibly elated President Mugabe, who punctuated his lengthy address with unusually generous tributes to Kudzai Chipanga, the ZANU-PF Youth League deputy secretary who was the brains behind the gathering.
If anything was achieved by the march, it was that President Mugabe, now 92 years old, should rule the country for life.
President Mugabe, his wife Grace and Chipanga were the only people to address the crowd and reiterate this message.
The President himself declared he was not going to leave office unless the “people said so”, and warned that any discussion about his departure amounted to treason.
“There should never be little groups to promote so and so. Those little groups are treasonous groups,” he thundered to the amusement of the crowd.
Chipanga swore by the gods that the youths would do anything possible to make sure President Mugabe does not leave office unless by death.
He said ructions in the party were being fomented by older members who have fed at the President’s trough for a long time, and now want him to go at the expense of the party youths who have just set themselves at the king’s table.
He even produced a US$20 note, inviting bets from anyone who would dare challenge the idea that President Mugabe would die in office.
And, as expected, no one came forth, prompting Chipanga to chant: “President Mugabe will rule till death do us part.”
The First Lady went even further to suggest that President Mugabe was so irreplaceable that he would practically rule the country even after death.
“We want you to lead this country from the grave, while you lie at the National Heroes’ Acre,” said the First Lady, to thunderous applause from the audience.
A few were, however, visibly shocked.
Their speeches were carefully coordinated and complemented each other.
This was a big statement considering the jockeying for his job from both within and outside ZANU-PF.
Within the party, factions have been fighting to position themselves to take over from him.
Outside, opposition parties, including the one now being led by his former long-serving lieutenant, Joice Mujuru, are circling overhead like a swarm of hungry vultures, ready to pounce.
There is now danger from all directions, and the million man march was meant to send a message that President Mugabe remained invincible, and there to stay.
It followed a protest march by the MDC-T that attracted about 2000 people.
The MDC-T still poses the biggest possible threat to President Mugabe’s presidency.
The party has planned another protest march in Bulawayo tomorrow, while others would be held in the coming months in different places leading to the crunch 2018 general elections. But they are currently without Tsvangirai, who is hospitalised in a South African hospital.
It can be argued that with the million man march, President Mugabe has sent a message to the world that he is still ahead of the game when it comes to mobilisation of the masses.
Whether or not the march or rally on Wednesday sounded the trumpet for the next general election, is a matter for another day, but President Mugabe’s fighting tone at the event was a clear sign that he is definitely readying himself for the big contest, be it from within or outside ZANU-PF.
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ReNaissance Merchant Bank Patterson Timba

PURSUANT to the enactment of the Banking Amendment Act, 2015, the Reserve Bank of Zimbabwe (RBZ) this week said it will leave no stone unturned to ensure that bad apples are not allowed to operate deposit-taking institutions.
John Mangudya, the RBZ governor, told the Financial Gazette yesterday that consistent with the amended law – gazetted a fortnight ago – the Registrar of Banking Institutions would rigorously vet persons considered for appointment as directors or executives of any financial institution operating within the central bank’s jurisdiction.
This is meant to ensure that all those who were associated with failed banks, and are deemed to have contributed to their demise, do not get the chance to handle depositors’ funds again.
More than 30 banks have twisted in the wind since 2003. Interestingly, the collapsed institutions were all indigenous.
An interrogation of the underlying causes of the bank failures heaped much of the blame on high levels of non-performing loans, with the bulk of them having been advanced to insiders without any form of collateral. Other factors that led to their collapse include poor capitalisation, week corporate governance practices and mismanagement.
“The old Act had its shortcomings, which shortcomings have now been addressed through the Banking Amendment Act, 2015. This new law puts a lot of emphasis on strict adherence to the tenets of corporate governance because deficiencies in this area largely contributed to the collapse of many of our banking institutions,” said Mangudya.
“As we apply this Act, we have adopted zero tolerance to such deficiencies. For example, the new law obligates us to sieve out the chaff from the wheat so that bad apples are not allowed to operate banks, be it as directors or as executives,” he added.
He said in terms of the amended Act, the Registrar of Banking Institutions would not approve the appointment or re-appointment of a person as director of a banking institution or controlling company if the person was a director or principal officer of a banking institution or controlling company which, in Zimbabwe or elsewhere, was wound up, liquidated or placed under judicial management or curatorship on the ground that it was unable to pay its debts or contravened any regulatory requirement applicable to it.
While this is the case, there shall be exceptions whereby the foregoing would not apply if the person satisfies the registrar by a sworn declaration that he or she was not responsible for the conduct which led to the institution or company being wound up, liquidated or placed under judicial management or curatorship.
The registrar is responsible for registering banking institutions as well as cancelling their registration in terms of the Act. The registrar can also perform other functions conferred or imposed upon him or her in terms of the Act or any other enactment.
Among the institutions that fell by the wayside between 2003 and 2015 are the following: Trust Bank Corporation, Royal Bank, NDH Holdings, Interfin Banking Corporation, Barbican Bank, Genesis Bank, Capital Bank, Allied Bank, Century Holdings Limited, ReNaissance Merchant Bank (RMB), ENG Asset Management, Kingdom Financial Holdings Limited (KFHL), CFX, Zimbabwe Allied Banking Group (Allied), Intermarket Holdings Limited, First National Building Society and Tetrad Financial Holdings.
Meanwhile, the central bank has since cleared a number of bank executives/directors who were associated with some of the failed banks.
Among those cleared are Patterson Timba, the founder of RMB and chief executive officer of ReNaissance Financial Holdings (RFHL); Lynn Mukonoweshuro, former group chief executive officer (CEO) of KFHL; and Nicholas Vingirai (Intermarket).
As with RFHL, the RBZ issued a corrective order on the institution in June 2011, its staff and shareholders, which it duly lifted on February 26, 2016. Subsequent to that, the dispute which was before the Administrative Court was withdrawn and effectively settled out of court, with each party meeting its own costs.
Still in February this year, the High Court also ruled that RMB’s curator, Reggie Saruchera, had acted outside the law in purporting to dispose RFHL’s assets to the National Social Security Authority, working with people who had been validly dismissed from the institution. The High Court effectively declared all those transactions null and void and of no legal force.
Regarding Vingirai’s case, the RBZ wrote to his lawyers advising them that “there is no indication of deliberate externalisation or exchange control related issues against him as was initially preferred….to this end, we have no hesitation in requesting you as his legal counsel to do everything legal and possible to get him to recover his assets and most urgently the farm…”
While Mukonoweshuro was the group CEO of KFHL, the RBZ has also cleared the banker because she was not responsible for the conduct that led to the collapse of the institution.
Last week, the Financial Gazette published a story titled “Bankers blacklisted”, which has been interpreted in some quarters as implying that Timba, Mukonoweshuro and others who were listed within the body of the story were blacklisted by the RBZ, when this was not the case.
The Financial Gazette therefore unreservedly apologises to these bankers, including their families and associates for the inconvenience such interpretation might have caused.
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