
A whorl of cosmos
The rains are over for this season and the cosmos (Cosmos bipinnatus) is fading, still attractive but not as flamboyant as 3 weeks ago. We had good rains for once; 1020mm at the nursery which is probably not a record but certainly substantial. The cosmos was just as showy as ever – it doesn’t seem to mind if it’s a drought year or not.
The government press has predictably predicted a “bumper” harvest but that is far from certain as it will be at least another month or more before the crops are in and there is a lot more to farming than a good rainy season. The fall army worm also made an appearance this year. New to Zimbabwe it has a voracious appetite for maize and is difficult to control once the crop gets large so the small scale farmers are likely to have had a hard time.
The current financial crisis continues to deepen. US dollars (cash) are commanding a premium discount with some outlets offering up to 20% off for the greenbacks. Even the much maligned bond notes are becoming scarce but I have yet to get a discount for using them instead of a debit card.
Two weeks ago I finally received a large outstanding payment for a contract of gum trees that we did last year. Normally I would spend it on raw material – the coir pith we favour for propagating seedlings comes from India and is bizarrely about 60% of the cost of the local milled pine bark medium. It’s also reliable quality and we have yet to experience any significant problems with it. Not something we can say for the local product.
I got hold of the business manager at one of the banks I deal with and asked him what the chances were of getting money out to pay for a container of coir pith; all of US$9600 for 24 tonnes delivered to Beira docks in Mozambique. He was direct (I appreciate directness).
“Do you export?” he asked.
“No’
“Have you been depositing US dollars cash into your account?”
Was this a serious question? “No I haven’t”. I was tempted to add “you weren’t expecting me to say yes were you?” but I remained quiet.
“Then no. If you bring us the cash we will make the application to the Reserve Bank”.
Hmm, like anyone trusts them. He went onto assure me that if the request was refused I would get my cash back in US dollars, not bond notes, and that they’d never had an application for a request of this nature turned down.
I should point out that I have never had, to my knowledge, anything but US dollars deposited into my account and here I was being told that in fact the bank did not believe that. It says at the top of my statement that it is a US dollar account – but it’s only useful in Zimbabwe.
When the Reserve Bank announced last year that it was introducing the now notorious bond notes, with a value equivalent to the US dollar, in order to alleviate the cash shortage (true, a lot of cash had disappeared from circulation) the populace panicked. Rumours that it was an attempt to re-introduce the defunct Zimbabwe dollar flourished in the fertile rumour environment and a run on the banks began. People slept on the pavements for cash withdrawals that progressively dwindled to a paltry $30 or less. Yesterday at another of the banks that I use there were people sleeping on the pavement but now it’s for bond notes. Yes, there has been a massive switch to electronic money but some things still require cash. Schools in rural areas, which are cheaper, don’t have bank accounts and unscrupulous landlords demand cash.
The amount of bond notes issued is pitifully small, some $10m to start with and then another 30m or so. That they have been issued entirely in $2 and $5 denominations is telling – it was never intended to do much. $10 and $20 would have had far more impact. Initially the Reserve Bank stated that the bond notes were guaranteed by a loan of $200m from the Afrexim bank in Egypt, but this has been nearly impossible to ascertain. $200 million in a GDP of some $11 bn is not going to do much (see this Forbes article) and anyway, if all that was needed was cash why not just buy it from the USA? We all know the Zimbabwe government is broke so it cannot buy cash. However what could be easier than adding a few zeros to electronic money? Electronic money is not based on anything which is why the bank manager I was talking to wanted to know if I could pay in US cash for the import of raw material. He wanted to know that if his bank were to deplete its precious nostro account (held outside the country) was being backed by real crispies (well, once upon a time they were crisp – long ago) and not some figment of a government official’s imagination. So where does that leave me?
Last Thursday there was a workshop at the Tobacco Research Board (TRB) near the airport. They were promoting the growing of vegetable seedlings. Not much to do with tobacco research to be sure but the seedlings of both crops can be grown in polystyrene trays floating on shallow ponds in which fertilizer has been dissolved. The TRB manufactures the trays, has a local company make up the fertilizer solution and is in a joint venture to manufacture the pine bark based medium in which the seedlings are grown. So they are looking to expand their market. I was concerned that I was going to have a lot of competition for my business. It was time to check out the potential competition and I was also curious to see what the TRB, once a world-renowned research organization, had been doing on vegetable seedling research.
I was not over-awed but I had to admit that their seedling tray quality had improved since I last bought any. The presentations were not very impressive and their idea of seedling quality was lacking some fundamental concepts. Their growing medium appeared to be reasonable quality but was expensive but they were willing to take any sort of money, cash or electronic. I will have to try some.
Logic dictates that if the medium is acceptable that I buy it in bulk with currency that I can only use within the country i.e. my locally held accounts even though it’s relatively expensive. If however the quality is poor then I will have to look at sourcing “real” dollars (anything is possible in Zimbabwe) and getting in the coir pith medium from India that I trust. Quite what I’ll spend my local money on then I really don’t know.
Next Tuesday, 18th April, is our independence day. Two weeks ago, as is customary, I received a letter of request from the local ZANU-PF (ruling party) office asking for donations in “cash or kind” for the celebrations they were going to host where “800” people were expected. It was shoved into the top left drawer of my desk – they would have to ask in person. In the past I have fought with them over this with arguments such as; “Why don’t you go into the shopping centres and ask for donations there?” but they know the white farmers feel vulnerable and are soft targets, so yes I inevitable buckle and donate.
I was driving back from the gym yesterday after lunch when the inevitable call came – they were at my business and what was I going to donate? It certainly was NOT going to be cash so they accepted $100 through mobile banking. I cursed myself for being weak then just consoled myself with the thought that they’d got the least value money option available. It was a cost of staying in business in Zimbabwe.
A letter to America
5 02 2023Hi Robin,
Our weather has become increasingly erratic over the last 15 years or so. I put it down to climate change. Right now we are in the middle of a relatively normal rainy season. That means that the ITCZ (Inter-Tropical Convergence Zone) moves over the country and it rains – quite a lot. Most of our rains happen from mid November to the end of March which in Harare means some 700 to 800mm. The rain can be quite intense – we had 75mm (3 inches) in several hours last week which meant all the rivers around town were up and one of the reservoirs that supplies town was spilling. As a country we’ve had good rain for the last 3 years due to the la Niña effect though it has been quite variable over the country and Harare, which is in a high rainfall area, received less than average. We are due for a drought and I see that there is a el Niño predicted later in the year which is a reliable indicator.
There’s rain around as I type this and yesterday afternoon we had quite a storm with high winds and hail and of course the power went off. It’s still off but we are geared for this eventuality and have solar panels and two lithium batteries to get us through the night. Power outages for other reasons, mainly incompetence and over-use of Lake Kariba as a hydro source, are common so everyone who can has a solar backup plan. Solar water heating makes a lot of sense in our climate so we have three solar heaters, one for us, one for the cottage tenants and one on the domestic employee’s rooms. In the cloudless, hot days of August and September the water can easily boil.
I see your weather has been erratic too. Mt Washington in the north-east of the USA hit a record -70C a few days back and Europe had an unseasonably warm Christmas. It seems that California has had some heavy rains too; the default weather app on my new iPad is set to the Apple headquarters in Cupertino and they had flood warnings out recently.
Planned, and I use that word loosely, power outages are called “load shedding” in this part of the world. Towards the end of last year it was announced that Lake Kariba, which is our major source of hydro power, had got to it’s minimum level permitted for generation due to over-use by the Zimbabwe power authority and load shedding would become a daily occurrence. We have another major thermal power station at Hwange in the west of the country but it has become a byword for mismanagement and cannot take up the shortfall. We also import a lot of power from Mozambique and South Africa but have managed to get into a lot of debt so the aforementioned countries are fed-up and restricting our supply. South Africa has its own power supply issues (again due to mismanagement by the state-run utility) and is also imposing load shedding but at least it sticks to a schedule. In Zimbabwe the power generally goes off in the suburbs about 6.30 a.m. and comes back on around 10 p.m. Businesses are not exempt either and incur heavy costs due to diesel generators. It’s not unusual for some to run just on night shifts.
Our swimming pool was an early casualty of the power cuts. It’s essential to keep the filter running which the solar panels can do on a sunny day but those are rare in the rainy season so it’s more green than clear these days. Marianne was muttering about the cost of more chemicals to try and clear it. I pointed out that we could always fill it in but it wouldn’t be a cheap procedure and then we’d lose some 70,000 litres of stored water that would be very useful in a drought. We have decided to live with it being more green than not (it is covered over in winter when not in use).
The book you asked about is, I think, “The Shackled Continent” by Robert Guest who was an Africa correspondent for The Economist for a number of years. I found it fascinating and very insightful. Maybe I should read it again.
My business muddles along. I have a lot of outstanding debtors and it’s not so simple as insisting that they pay up front for their orders. I hate having to get nasty but it may eventually come to getting professional debt collectors in as I need to get the money to pay for imports of the coir “peat” raw material that we use to grow the seedlings. I obviously cannot use Zimbabwe dollars but fortunately I did invoice in US dollars which once again is becoming the currency du jour. The government is still trying desperately to keep the local dollar alive but with an official exchange rate of 740 to the US dollar compared with a “parallel”, i.e. street, rate of 1,100 to the dollar, it doesn’t have much of a chance. The local currency is still used, and has to be offered, as a payment method but most outlets make it very attractive to use the US$ by offering massive discounts . Government departments don’t do this so get paid almost entirely in local currency which means they are perpetually in financial difficulties – hence the disastrous state of the power supply, roads, rail links and anything else they are involved in. Am I making sense?
The government is also trying to stifle speculation on the currency markets by lending money at vast interest rates, 110% in November 2022, which makes doing business very difficult and one of the reasons that I use to explain why my business is so flat. The other is the proliferation of competition, often informal, which cut lots of corners allowing them to undercut my prices. Their quality is dismal but people either don’t care or see it as an acceptable consequence of the cheap prices. My prices haven’t changed in four years despite the rising costs of inputs in real (US dollar) terms. It doesn’t make for attractive business. Curiously the construction business is booming with cluster homes (small, single level apartments – several to a property) and other developments being built throughout the suburbs. Quite where the money is coming from I cannot ascertain – but in an economy as moribund as ours it’s almost certainly dirty.
Yes, us Zimbabweans are a resourceful lot and I guess in that respect Diana remained true to her heritage. My workroom/office is full of junk that I cannot throw away just in case I find a use for it in years to come. It must be a hold-over from the days when Zimbabwe was Rhodesia and under sanctions so nearly everything that could be was recycled. It’s probably an attitude of my generation rather than today’s “youngsters” – I drive past a municipal rubbish tip on the way to work and there’s never a shortage of trucks pulling in to offload. I suppose people do make a living out of recycling here though it’s not as fashionable as in the developed world. An elution plant (recycling gold from electronics) has recently been constructed at the former rubbish dump. It’s also not unusual to see carts being pushed around the suburbs and having one’s gate bell being rung by the owners looking for scrap metal.
I guess our “big” news for this year is that we’re going over to the UK in May to attend a rock concert! I’ve never been to one as standing for a long time in rowdy crowds is obviously not possible for me but this is Mike & The Mechanics who are not as popular as they used to be so seating is an option. Time to tick off the bucket list.
Then we are going to stay on the Cote d’Azur with an old girlfriend and her husband for four days. Apparently we’ll be quite close to St Tropez. Marianne is keen to go and see how the ultra-rich live but I may give it a miss. Really looking forward to it and we’re brushing up our rudimentary French in anticipation.
Well, on that positive note I’ll sign off and wish you all the best for this year. Forget the snow shoveling, go skiing and may it be exceptional.
Ciao
Andrew
Note: this is a genuine reply to a friend in Washington State U.S.A. who was a good friend to my sister Diana, and helped look after her in the terminal stage of her cancer three years ago.
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Tags: el Nino, load shedding, power cuts, solar power, Zimbabwe, zimbabwe dollar
Categories : Business, Economics, Social commentary