Taxed if you do, taxed if you don’t

26 08 2023

It had to be a mistake, I couldn’t possibly owe the tax department (ZIMRA – Zimbabwe Revenue Authority) that amount. Even if I converted it to US dollars it would amount to an impossible figure – about 17,500 at the unofficial rate and 23,000 at the bank rate. I checked the email address – it was from a person with whom I’ve corresponded over the years. Then there was the wording; FINAL DEMAND. Where were the other demands? I did what any sensible person would have done and contacted my bookkeeper in a state of panic.

Alison was more than a bit puzzled but told me she couldn’t do anything without seeing how they’d got the figures. “Your are entitled to see what’s going on” she said. “Ask them for the ledger”

The last part of the ledger

The ledger was duly sent and the waters immediately became a lot murkier. It stated the figures were in US dollars and the numbers, if the currency was US dollars, were impossible. I sent it on to Alison. It was a while before she came back to me by which time my imagination had run riot. What if I really did owe 105 million dollars? I would have to buy it on the open market with my US dollars and would be left with no operating capital and nothing with which to pay wages. The company would be unlikely to survive.

Alison assured me that the figures on the ledger were Zimbabwe dollars and I probably did owe the 3,835,807 listed. She had no idea where the 105 million came from. “Ask them” she said. So I did.

The reply was abrupt; the 105 million was to be ignored (RTGS is another way of saying Zimbabwe dollars). The amount on the ledger was also incorrect as it didn’t account for some US$550 that I’d paid in presumptive tax (they are called Quarterly Payment Due or just QPD) which would have reduced the amount owed close to zero.

I speculated to Marianne that it was all just a bit of psychological bullying to get me to pay attention to the outstanding amount, then two days ago I bumped into Gary whose wife had had a strikingly similar experience.

Gary works for a seed company that occasionally uses my nursery to grow seedlings for various trials. They have a trial on ART Farm which is a neighbour to my nursery and I sometimes use it access my nursery so as to avoid the appalling direct road and take in a bit of soothing farm scenery on the way. Gary was having a look at one of their trials near the road so I stopped to chat.

We discussed various things then I related my experience with the tax authority. He said that Clare, his wife who works as a bookkeeper for a local church, had received a final letter of demand for payment from ZIMRA for an impossible amount about three months ago. She replied that as a church they were not liable for tax and any money made was given away to various charities and nothing more was heard. He agreed with me that as the government was desperate for money it was likely endorsing ZIMRA’s intimidation tactics to get in whatever money they could, maybe they were even giving a commission.

On getting to work I related the story to my senior foremen. They were decidedly cynical. “They are all on the take” opined Chingedzerai. “Yes”, added Fabian, “they see the rest of the government officials stealing and think that they should have some of the pie too. They see what they can bully you into paying and then split the extra between themselves”. It was obvious that they thought I was being naïve.

Marianne had been doing some questioning of her own and posted my problem on the local community WhatsApp group. Someone had responded with a name and phone number of a senior official at ZIMRA whom he thought would be able to help. I gave him a call and related my problem and asked if it was official ZIMRA policy to send out threatening demands based on nothing much at all. His indifference was striking; I should send him a copy of all the correspondence and documents and he’d forward it to the relevant manager. I duly sent him the copies but I am not expecting a reply.

It’s no secret that Zimbabwe is in deep financial trouble. Mismanagement, corruption and incompetence have seen our GDP plunge after the Mnangagwa government took power in a coup back in 2017.

At the time it was welcomed by the majority of the population who were relieved to be rid of the much hated and feared Mugabe regime but it was not long before the new government of E D Mnangagwa revealed its true colours of repression and corruption. Chingedzerai reminded me that the current administration has never bothered to investigate the estimated US$15 billion worth of diamonds that went unaccounted for from the Chiadzwa diamond fields in the east of the country in the latter part of the Mugabe era. More recently there was the gold smuggling exposé by al Jazeera that showed how top Zimbabwean officials were, with the highest approval, smuggling gold out of Zimbabwe and laundering the resulting cash. Indeed, for a country that is struggling financially, there is an eye-opening amount of property development around town. In the past this would have attracted the attention of ZIMRA who would have demanded to see the accounts of owners of expensive properties and made to account for the development. Now it’s easier, and more personally profitable, to send out threatening letters.

I paid wages on Tuesday. We chose the date years ago when getting cash from the bank at the end of the month meant enduring long queues and not getting the desired breakdown. Chingedzerai had heard the income tax limits had been increased and asked me to check on the internet before he entered the attendance and overtime figures on the computer. I was fairly sure it was only the Zimbabwe dollar tables that had changed but checked on the US dollar tables anyway (I have been paying my staff in the latter currency since August last year).

In Zimbabwe salaries are taxed monthly and the system is known by its acronym PAYE; Pay As You Earn. The rates are iniquitous. Wages are taxed from US$100 per month upwards! Given that the minimum agricultural wage starts at US$60 before any of the required allowances, most of my staff are taxed. Some do get age exemptions but the rest of them have to endure.

Such is the government’s demand for money that it has taken to taxing money transfers at 2% per transfer. It goes without saying that most transactions are cash though it’s not always possible. The government used to tax cash withdrawals from banks but gave up when it became evident that people were simply not depositing cash in order to avoid paying the tax.

Given the high cost of living and taxation in Zimbabwe one would assume that the majority of the population would be keen for a change of government. Indeed, given that we had a general and presidential election on Wednesday, one could be forgiven for thinking it imminent. With the recent exception of Zambia, southern African is not known for changing its governments and Zimbabwe is not about to become an exception too.

My foremen and I were all in agreement on this; the incumbent ZANU-PF party, which has maintained its grip on power since 1980 by means mostly foul, will certainly cheat its way to victory; only the level of the fiddle is not known. So far it’s been “limited” to delaying delivering voting papers to polling stations in regions known to be opposition strongholds, sending voters to polling stations where they found they weren’t registered, making sure one couldn’t check the online registration database and of course blatant intimidation. Few, if any, believe the logistical problems to be anything but deliberate. We remain cynical.


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The brick is back

7 05 2023
The bundles of 500 notes in bank wrappers were commonly known as bricks in 2008. Now it’s 2023 and they’re back!

The senior foreman said the customer wanted to pay in Zimbabwe dollars, cash, were we going to accept them? We didn’t have much of a choice as it is legal tender so I said yes and asked how much it was. 67,000 he replied. I groaned knowing they would be in small denominations. The biggest, $50, is worth all of US2.2c so I knew there would be quite a few bundles but the majority were $20 notes. We filled a medium-sized box.

Quite a few were in bank-sealed plastic bags of 500 notes which were called “bricks” back in the hyper inflation days of 2008. We didn’t bother counting them then and didn’t bother now. Back in those days the government attempted to get around the problem by printing ever larger denomination notes (an example is in the picture). Our inflation now is not quite that bad but anyway, local currency notes have largely been superseded by electronic money. It’s very easy to add zeros onto electronic money.

The other currency in Zimbabwe that is also legal tender is the US dollar. Having nothing to do with the government it is by far the most preferred. Although the government tries to set the exchange rate and can prosecute those not using it there is an easy work-around. It goes like this: the official rate is 1,097 Zimbabwe dollars to US$1 and with a few exceptions, fuel being one of them, businesses have to quote their prices in the local currency. On the unofficial market the rate is currently around 2,200 to one US dollar depending on to whom one is talking. Businesses price their goods in the Zimbabwe dollar and then offer a fat discount if you want to pay in US dollars – this effectively brings the official rate up to the unofficial one and it’s completely legal. Many businesses don’t bother with the official rate and just quote the unofficial one. My business is one of them and so far there hasn’t been a comeback.

There is a sense on around town that the unofficial rate is running again and people are offloading their Zimbabwe dollars. I sent the driver into town the day following the above deposit to get rid of the cash. In reality it was about US$30 so didn’t go far but I managed to find a fertilizer company accepting them and topped up with a bit of electronic money in the form of a debit card we managed to get a meaningful amount of agricultural chemicals bought.

The government is of course also looking for a dependable currency and has hit on tax as the easiest way to get in US dollars. All US$ cash deposits are levied at 20% and the government reimburses the amount in Zimbabwe dollars – at the official rate! This means that in reality the recipient can be losing 10% or more of the deposit in real terms. Exporters are levied 40% of the amount remitted to their forex accounts. It gets better; 3% of all USD cash withdrawals from a bank are taxed. While one can still pay car licence fees and other government levies in the local currency the sense is that it cannot last.

The local Reserve Bank has an idea to shore up the local currency; digital tokens backed by gold. It won’t work – the population’s trust in the government has long since evaporated. There is nothing new about digital currency in Zimbabwe but my staff for one will only be interested in the greenback.


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A letter to America

5 02 2023

Hi 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.

The complete Zimbabwean domestic survival system: visible are two solar water heaters, two solar panel systems and rainwater collection into tanks and a swimming pool.

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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The slide and fall of the Zimbabwe dollar

8 09 2022
Clean cash but I paid for it!

Last month I finally had to throw in the towel. I called together the workers’ committee who represent the labour force and told them that I couldn’t find enough local dollars to pay them and from now on it would have to be US dollars. They tried hard not to show their delight and failed, dismally.

The government likes to claim it has stabilized the Zimbabwe dollar that had officially slumped to about 530 to one US dollar last month. They have even gone so far as to issue punitive fines on those organizations trading at unofficial rates which can be around 800:1 or higher. Indeed, local dollars can now be bought for as little as 700:1, if they can be found at all. That very little needs to be paid for in Zimbabwe dollars is no doubt preventing the local dollars gaining more. My business has steadily been taking in more and more US cash over the last 6 months to the extent that my time spent going through the bank statements at the end of the month is now only a couple of hours.

The government also displays considerable ambiguity to the currency it is supposedly supporting. Imports are taxed at a rate of 700 local dollars to the US dollar, no doubt to encourage importers to use the US currency. Export remittances paid back to Zimbabwe are “taxed” by the government which takes 40% of the hard cash and then pays the exporter back in local money at the official rate which means the exporter is losing 25% of the hard-earned forex. Internal foreign currency transactions are deducted 20% under the same system, and yes, the money I withdrew from my account shown above was taxed 3%. Curiously the small denomination notes are all issued new. I’d been hoping to get some 1s but my bank didn’t have any in stock.

Marianne and I are going to the UK on Sunday for three weeks. It’s always a bit of an exercise in anxiety in what can go wrong whilst I’m away but it’s been four years since we got to the UK and the break is needed.

Yesterday I got a call from one of the foremen saying that one of the borehole pumps wasn’t working. Fortunately there’s a business park some 10 minutes from my work that has an irrigation company and three visits later with an unnecessary purchase of a pump controller, it was determined that the motor was burned out (the pump controller should have protected it but failed to do so) and it was pulled out the ground and changed. Marianne remarked drily that “at least it didn’t happen next week”. Indeed.

A friend has the estimated wages, in US dollars of course, which he will drop off when the clerk tells him an updated breakdown. The wages package was written by me and although I’m not and exceptional programmer I do take pride in designing software that’s intuitive to use. Emergency phone numbers have been listed and fingers will be crossed. We will be taking our full currency allowance of 2,000 US dollars each with us – nobody outside Zimbabwe has use for our currency either.


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A short stay in Zimbabwe’s finest

18 05 2022

“I have a suppository for you” said the nurse aid pulling on another set of gloves over those he already had on.

I eyed him suspiciously, “What’s it for?”

“Pain” he replied.

“Oh, OK” I relented. I needed a bit of alternative pain control – back surgery is a painful affair. The fentanyl had been a disaster causing me to vomit a lot and pethidine doesn’t have much effect on me. I laboriously rolled over and let him put the suppository where suppositories go.

I rolled back over and watched aghast as he reached over me with his left hand to my table on wheels. “I hope you aren’t left-handed because if you are you’ve just spread the bacterial contents of my rectum over the table” I thought.

Then he stripped off the outer pair of gloves and moved on to the next patient.

The hospital I was in is relatively new being opened in 2017. It’s not big and it only caters for surgery patients but by Zimbabwe standards it is “state-of-the-art”. The wards contain three beds which are comfortable and can be power-controlled for comfort. The food, for a hospital, is excellent. There are still pencil marks on the wall above the awnings in the small courtyard – I guess Zimbabwe’s artisans don’t look at the final details like I do.

I got chatting to one of the qualified nurses on the night shift. She told me that the hospital made use of a lot of nurse aids to keep costs down. The turnover was high as they then took their experience overseas to go caring and earn reasonable wages. She had two small children and a surveyor husband in dead-end government job so she was unlikely to hang around much longer. There were some older nurses around but not many.

Some years ago Canada had a drive to recruit Zimbabwean nurses and physiotherapists. There was a big billboard on a major road into town advertising emigration to Canada. I can only guess at how many took up the offer (a recent France 24 article puts the figure at 1,800 for last year); the weather might be dismal by our standards but the salaries far better. I saw a post on Facebook today that a junior doctor in Zimbabwe on a government salary can expect to earn ZW$35k which is less than US$100 per month.

I was let out of the hospital after six days, trailing a vacuum dressing device and with strict instructions not to go further than the bathroom for the first two weeks. I also had to get in a nursing service to administer the intravenous antibiotics for 10 days. The two nurses involved were older women, one of them very proudly told me that she got her qualification in the Rhodesian days (Rhodesia became Zimbabwe in April 1980). Her husband had retired after spending a lifetime working for the National Railways of Zimbabwe and now gets a monthly pension of ZW$30 which equates to about 7.5c in US dollars. Needless to say we paid the nursing service in USD.

For the first couple of days when Marianne went out shopping she hired another retired nurse to come and keep an eye on me. I told her the story about the suppository. Joy rolled her eyes and said for a start there was no need to double-glove except if the gloves were of suspect quality like when she’d been nursing in the 2000s when just about everything was difficult to get hold of. She’d left nursing as a profession when she could no longer put up with the declining standards.

Boredom set in quickly. It didn’t help that I couldn’t sit up for any length of time. Mike the electrician came in to repair a spike filter on the solar inverter. Themba, my seven month old Rhodesian Ridgeback barked at him from beside me on the bed despite having met him before. When Joy walked up the passage he was even more agitated and growled when he thought she was getting too close. That’s my boy! I was so proud of him (there was no danger of an attack).

Themba, having told off the electrician and nurse for getting too close.

It’s now been a month since the surgery and I am a lot more mobile. The vacuum dressing has gone and I have made the transition from crutches back to my walking sticks. The pain is under control with nothing more than paracetemol but, like all pain control, it must be anticipated. Today Marianne drove me into work so I could see the state of the nursery. All was well though business was slow. My foreman had phoned around the competition to see what their prices were and they were way below mine so I’d taken the rather painful decision to reduce my US dollar prices even though I know that my quality is superior. I didn’t bother changing the Zimbabwe dollar prices. Currently the unofficial rate, i.e. what retail outlets are charging, is around 400:1 US dollar so a minor change was not going to make much difference. In the month that I’ve been away Marianne has been in twice to change local prices. It’s easy enough. Back in 2008 we were changing prices daily so I made sure that the software, which I wrote, was intuitive in that respect.

As I was sitting in the truck with the computer a customer arrived. I have grown seedlings for him in the past but last year he chose to take his business to one of the other cheaper nurseries. Back again this year I can only assume he had a bad experience because he didn’t even blink when I told him my prices. We briefly discussed how the economic environment was affecting his business which is mostly export orientated. He admitted that the 40% export earnings retention by the government was tough (the government takes 40% of the forex earned and gives it back in local dollars at a highly disadvantageous rate for the exporter) but at least changes to the procedure meant that they were “only” losing some 25%.

Two weeks ago the president of Zimbabwe, E D Mnangagwa, announced that all banks were to stop all lending in an effort to get inflation, estimated at 96.4% for April, under control. Confusion reigned. It even made the weekly edition of The Economist which called it a “curious way to tame inflation” and also ran another article on how a Zimbabwe businessman was running a pension scheme for Zimbabweans by breeding cattle. Clients buy cattle and the offspring are the interest. At any time they are welcome to go and visually inspect their investment. It’s a clever idea as Zimbabweans have little faith in any sort of intangible currency. This extends to not depositing US cash in banks but using safe deposit boxes which are now at a premium.

Marianne interrupted our discussion to say that she’d read the loans ban had been completely dropped but we agreed that the damage had been done. Who would want to invest in a country where the government has so little understanding of economics that they might arbitrarily slap a ban on the core business of banking?


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Paperwork

27 03 2022

Anyone anywhere who has tried to import materiel knows that paperwork is essential. Where you are depends on how tedious it all is. In Zimbabwe three import permits are required for plant material; a Plant Import Permit, a Control of Goods Act Import Permit and a National Biocontrol Authority Import Permit. So when I need to import the coir pith (coco peat is the trade name) that we use in the nursery as a propagation medium, I am filled with a sense of dread and resignation. It can be a tedious process, really tedious.

Compounding the issue is the Covid crisis. I have had an order in with my supplier in India for eight months now. Finally he said that he could source a container but it would have to come in via Durban in South Africa, not the shorter land route via Beira in Mozambique. I have had to use this route once before in 2014 so went back through my file; the C & F (carriage and freight) price to Durban had increased 200%. I don’t know how much of this was the container but I do know that thanks to Covid prices of containers have skyrocketed. There was nothing to be done about that; the imported medium is much better quality than the local medium, so I got on with the application process.

The Ministry of Agriculture building where two of the permits are to be applied for is quite close to where I live and fortunately well out of the CBD. It’s also had quite a makeover since I was last there just over a year ago for another purpose. The gardens have been spruced up and the parking lot and entry and exit made less hazardous off the busy Borrowdale Road that passes it. I suppose it’s a small expense compared with fixing up the disastrous state of the roads and public hospitals but I do feel it shows where the interest in spending money lies.

In order to start the process I had to provide a number of other documents. Several were company registration documents and easy to get copies of them from the accounting firm where they are kept. Another was proof of membership of the Agricultural Marketing Association (AMA) and despite the name I’ve yet to ascertain exactly what it does apart from take US$350 per year off me. I did notice that they had gone some way towards making applications entirely online.

They young man in the AMA office was pleasant and chatty. He took the completed forms off me and put them through the very large scanner/copier/printer in the corner of the room. “We are making every effort to go paperless” he commented. When I pointed out that it was a very large and new printer he did admit that it was a bit ironic. He was well informed and actually did know what coir pith was and what it was used for. The actual registering online took a bit of tweaking over the phone but I’ll admit to being impressed that it actually does work even it it’s not very intuitive. Zimbabwe is progressing in very select areas!

The permit application process at the Ministry of Agriculture was also surprisingly painless. The Plant Import Permit was ready within three working days and the Control of Goods Act permit two days after that. I didn’t have to queue long either! The Biocontrol Permit needs a declaration from the coir pith supplier but that can only be had once the coir is packed in the container and ready to be shipped. Apparently I can also apply for that entirely online. We’ll see. Of course fuel prices have increased markedly in the last month which was after I got the original quote so I haven’t dared to inquire what the new transport costs from Durban will be.

Some of the stands at the ART field day

The long reach of the Ukraine – Russia war has got to Zimbabwean agriculture. At the annual ART (Agricultural Research Trust) Farm open day, held close to my nursery, the Deputy Minister of Agriculture exhorted the audience to grow lots of wheat this coming season. It seems that we import nearly 50% of our wheat requirement, mainly from Russia. No doubt this influenced Zimbabwe’s abstention at the UN meeting on the Russian invasion, as did Russia’s support of Joshua Nkomo’s ZIPRA faction in Rhodesia/Zimbabwe’s civil war that culminated in Zimbabwe independence in 1980. It was probably not lost on the audience that we wouldn’t be so dependent on wheat imports in the first place if the government would just get on with making land tenure a reality so that farmers would have collateral against which to borrow. Banks have made it clear that loans will not be forthcoming any other way. I guess there will be a bread shortage later this year.


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A bug on weed

31 05 2021

A stink bug sitting on industrial (hemp grade) cannabis

Glossary of terms:
CBD – cannabidiol – the principal cannabinoid in cannabis
THC – tetrahydrocannabinol – the main psychoactive ingredient of cannabis
Cannabis – hemp, “weed”, “dope”, “grass”, “ganja”, marijuana – not all species are narcotic
GMP – Good Manufacturing Practice – certification required to export pharmaceutical quality products (in the context of this article)

Yes, that really is “weed” on which the stinkbug is sitting. I wouldn’t recommend smoking it, the weed that is, as it’s industrial grade cannabis which is grown for the fibre content and has no narcotic effect. Stinkbugs should absolutely not be ingested – they taste as bad as they smell, which is vile.

The Zimbabwe government has been pushing the various cannabis crops (hemp fibre, CBD oil and THC) as potential export crops and Stewart and I were at the Tobacco Research Board (TRB) to see what research they’d been doing. Stewart works part time for the Commercial Farmers’ Union and was trying to persuade me to write a growing guide, I knew how little I knew and was resisting but was still interested in finding out more about the crop.

The lead researcher was a young, dynamic fellow by the name of Munyaradzi or just Munya for short. He was passionate and knowledgeable about the crop. He quickly explained that they were just looking at the industrial or hemp quality cannabis at the TRB – the CBD oil and THC varieties, which have up to 0.3% THC and more than 0.3% THC respectively required onerous security which was not feasible. Industrial cannabis merely requires a fence and lockable gate so they were interested in getting small-scale growers into growing the crop.

The TRB had imported a number of different cultivars of the industrial hemp from origins as diverse as China, France and the USA. Some were clearly not suited to the relatively short Zimbabwean days though Munya did admit that it was early days and the seed had only been sown in January. Extending the day length with lights is practiced by the growers of the CBD and THC strains which keeps the crop from flowering too early. He told us that they’d approached the CID (Criminal Investigation Department) of the police to see if they could visit areas in the west of Zimbabwe where the THC version of cannabis has been grown illegally for many years to see if they had any selections that may be useful as he felt they’d certainly be climate adapted. Apparently breeding out the THC would not be difficult and yes, the police had approved the idea in principle.

Industrial hemp is quite widely used in the automotive and other industries that required cladding but the real money, Munya said, is in the CBD oil and THC. Unsurprisingly the buyers require the product to be GMP certified which requires stringent quality controls and regular inspections by a certified inspector which Zimbabwe doesn’t have. If it’s to be used for medicinal purposes the crop also has to be grown organically. A neighbour to the TRB who is growing the CBD cultivars has had to destroy his entire product so far as he cannot get it certified. Currently there are not a lot of major players in the industry but Munya predicted that it was going to get going within a few years.

One could be forgiven for thinking that the Zimbabwe government has other ideas. On Thursday this week they introduced a bill (SI 127 of 2021) forbidding anyone from trading in Zimbabwe dollars at anything other than the official rate of 84:1. The legislation has been around for some time but was not enforced. Now apparently it will be, with punitive fines for those who choose to ignore it. Most businesses have been pricing in US dollars and then multiplying by around 125 to get the Zimbabwe dollar price. This makes it attractive to pay in US and then more imports can be sourced. There is a government “auction” in place where one can bid for US dollars but the price is fixed, so it’s not really an auction at all, and there’s no guarantee of getting the hard currency. That there has to be an “auction” at all is indicative of just how short hard currency is. Forcing businesses to trade at the official rate is only going to make goods very expensive in US dollar terms so people will use Zimbabwe dollars and imported goods (most things) will become scarce. This graphic from a local asset management company says it concisely. “Decline in economic activity, stagnation, loss of confidence in local currency, and increased probability of second collapse of local currency”. Yes, we have been here before.


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Dollar creep

28 03 2021

The Optimist – not and easy state of mind in Zimbabwe these days

Slowly and surely the US dollar is creeping back. It’s perfectly legal, as is the local Zimbabwe dollar, but it’s getting increasingly rare to be quoted prices in them. Even the road tolls, which were always quoted in local dollars, have now stated that prices will be in US dollars though one is welcome to pay in Zimbabwe dollars at the official exchange rate. The road tolls are set by a government body.

Fuel stations are more blunt; only US dollars are acceptable and if paying by a foreign currency bank account you have to be prepared to wait whilst it’s ascertained that it really is real dollars you are using.

A visit to Kaguvi Street in the city area known as “the cow’s guts” (it’s filthy, raucous and vibrant) to source a car part was enlightening. I was offered the piece of radiator hose – not the correct one but with a bit of cutting it would do – and told it was $12 and did I have the exact amount? No, I didn’t but suggested I could use my local debit card for the equivalent of $2. Nobody had suggested that I could pay in local currency even though the debit card machine was in full view.

A couple of uniformed police walked into my office a few weeks ago. They were very polite as befitting the public relations department. My first reaction was that I’d be in trouble for not wearing my mask, even though there was nobody else around. It’s required under Zimbabwe law that a face mask is to be worn anywhere outside the home, including your own car even if you are alone. But they weren’t interested in that. They were after donations in cash or kind for building an office at the Borrowdale (my “local”) police station. I was dumbfounded. I was not surprised that they wanted to replace the ramshackle office that they currently use – it’s very temporary and probably wouldn’t last another rainy season. I asked if they’d approached the “powers that be” for funding. They had and had been told to go out and approach the community. I gave them my usual rant that I already paid tax to this government so why should I pay again? They shrugged and looked embarrassed and asked again if I could give them anything, anything at all would be appreciated.

I asked if they knew what it would cost. An architectural plan and a budget spreadsheet were offered. It all looked professionally done and of course the budget was in US dollars. The total was around $14,000 which I thought was quite a lot for what was being planned but they assured me that they’d got the required three quotes. I wondered to myself whose relative had won the contract but decided to keep quiet. I said I’d think about it and promised to get back to them.

I didn’t have to call back as the next morning they phoned me. I said I’d get them five pockets of cement – one of the perks of a farming company is that just about anything can be put through the books so the aforementioned cement could be listed as an expense and come off my tax bill. What would I get out of it? The police at that station would owe me a favour and that, dear readers, is how Africa functions. Indeed, in the past I’ve got off a traffic speeding fine because the enforcing officer used to get cheap meat from the farm where I lived.

Later the following week when I dropped off the cement some off-duty policemen in plain clothes unloaded the pockets from my truck. I’d witnessed them negotiating some after-hours guarding work with an Indian gentlemen. All the figures were of course in US dollars. I didn’t ask what their government salaries were or what the currency was – stupid question really as it was plainly not enough to get by.

A few local stores still quote in local dollars but they are getting few and far between. Where possible I pay in the local money as the majority of my income is in that currency. Customers do pay in US cash (the local cash notes are as rare as they are useless – the biggest note is ZW$50 which is about US50c) so I hoard it to pay at least part of the wages bill. My company also has a US dollar account that I use for importing raw material. One customer does pay me this way and last week I received about $24,000 for a big gum tree seedling contract that I completed last year. The gum trees will eventually be harvested and used to cure tobacco so the initiative is funded by a levy on tobacco sales which is paid in real US dollars. Hence the fact that it can be used to import materials.

I noticed on Monday that the figure in the nostro account, as the US dollar accounts are known, had been reduced by some 20%. At first I suspected there had been a mistake and somehow the depositor had withdrawn the excess. I decided to ask my bookkeeper who is knowledgeable in these sort of things. “Oh no”, she laughed, “the Reserve Bank have taken 20 percent and given it back to you as local currency. Check your other account”.  I couldn’t believe what I was hearing but sure enough, when I checked, there was the money deposited in my Zimbabwe dollar account at the official rate which is some 30% lower than the black market rate. Once again, the government is stealing our hard currency.

Still seething the next day, I mentioned this to my neighbour at work. She was not surprised. Her son is an export agent for fresh produce into Europe and the UK – the Reserve Bank takes 40% out of his account and pays him back in local currency. This is especially problematic as he has to book and pay airfreight in advance and they don’t want Zimbabwe dollars.

At the end of every year, along with various tax obligations, we have to provide to the local tax authority a comprehensive list of income, tax paid, allowances and bonuses of all employees who have paid tax over the course of the year. This is purely a fact gathering exercise – it has no bearing on the tax bill  – but if submitted late one can garner a heavy fine.

I haven’t up until now bothered with a specific wages software package as most of the time I employ 17 permanent staff and an Excel spreadsheet copes just fine. Income tax is calculated and paid on a monthly basis using a system known as PAYE (pay as you earn) and whilst a bit tedious there were only a few people paying tax. However, in 2020 the inflation has run well ahead of the PAYE tax tables and lots of people ended up paying tax who were earning less than USD2 a day equivalent in the local currency. This meant two weeks of sifting through spreadsheets and collating tables and filling in the required ITF16 form. This is not going to happen again so I’ve spent the last 6 weeks writing my own wages software package that will do all that with just a few mouse clicks. Writing the software that does the PAYE was enlightening. No surprise that not only is there a local currency table but there’s also a US dollar table! The tax threshold starts at $2.31 per day with a tax of 20% (less a 46c deduction). If you don’t believe me look here.

“The term “absolute poverty” is also sometimes used as a synonym for extreme poverty. Absolute poverty is the absence of enough resources to secure basic life necessities.

To assist in measuring this, the World Bank has a daily per capita international poverty line (IPL), a global absolute minimum, of $1.90 a day as of October 2015.”

Using the above definition (from Wikipedia), and it is a little dated, it might be fair to say that Zimbabweans start being taxed when they are not quite extremely poor. That’s how desperate our government is.

Of course it needn’t be like this. A report from the Daily Maverick newspaper in South Africa is particularly damning.

“The report focuses on business cartels because these are the vehicles used for state capture. One of the experts we asked to review the report pointed out that normally cartels work to undermine the state. In Zimbabwe, however, they are in league with the highest people in the land. #DemLoot, in the now-famous words of journalist Hopewell Chin’ono.” The Daily Maverick

Last week I was chatting to a customer who was looking for advice on what crops he could grow. I gave him my standard spiel on finding a market first and then approaching me. Then I asked him what he’d been doing. “I’ve been in Afghanistan for the past 15 years and I’m tired” he replied. I wished him the best of luck.


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The last cosmos

11 06 2020

The last cosmos of the season

This is a cosmos flower, the last of the season. It’s not indigenous but apparently was introduced in contaminated horse feed from Argentina during the Anglo-Boer War. It can be found in the grasslands (veld) of the high rainfall areas of Zimbabwe from about March into April. This one is in our garden and is not the species found in the wild which is Cosmos bipinnatus. This came from a customer at the nursery who had some spare and they have been self-seeding in the garden for a couple of years. I have no idea why its popped up now, very late in the season, but here it is making a defiant last stand.

The Zimbabwe dollar is also making a last stand but it is looking anything but defiant. The official exchange rate for the local dollar to the US dollar, i.e. if one went to the bank to sell US dollars, is 25:1. You cannot buy US dollars at the bank probably because the black market rate is around 82:1 so nobody is stupid enough to sell their dollars at the official rate. The banks just haven’t got US dollars to sell.

Fuel is also sold at controlled prices in Zimbabwe dollars. The current price for petrol is $22 per litre which your cellphone calculator will tell you is about US27c a litre at black market rates – probably the cheapest in the world if you have access to US dollars. The government, which does most of the fuel procurement and allocation to the filling stations has no US dollars. Well, not for fuel at least so what fuel does make it to the the pump generates VERY long queues.

The government DOES have US dollars to buy the senior military figures new Land Cruisers at around US$80,000 each. Apparently they were becoming disgruntled with their forever diminishing salaries and needed pacifying lest they felt like changing the government for a more pliant one. This comes hot on the heels of the Finance Minister’s recent trip to the USA with the begging bowl in full view and he actually admitted that Zimbabwe’s fiscal policies were not well thought out (“mistakes have been made” he said). Quelle horreur! The begging bowl returned empty. Zimbabwe’s elite are nothing if not thick skinned so no sooner was the minister back than another appeal went out for money to help with the Covid-19 pandemic. That too was unsuccessful. Nobody can, or will, explain where the money for the vehicles is coming from. Those of us who have Foreign Currency Accounts (FCAs) at the banks which as the name suggests are in real money, mainly US dollars, are feeling a little nervous. The Mugabe regime raided these accounts on two occasions and gave the owners local dollars at the official rate (yes, this is the second time down the tubes for the local dollar).

FCAs are a perfectly legal mechanism for exporters to keep their income for importing new inputs. Whilst the Covid-19 pandemic is raging the government has allowed anyone to trade in US dollars both as cash and between FCAs. The local dollar is also still valid but most people are skewing local prices to make it attractive for people to use US dollars. Last Friday I was buying some irrigation fittings at a local outlet and they admitted that they were using a rate of 92 local dollars to the US dollar. The black market rate was indicated at 72:1. It’s now 82:1 and sliding on an almost daily rate.

The cosmos will almost certainly pop up in the garden next year. I’m not betting that the Zimbabwe dollar will still be around. As for the US dollar – that genie is now well out of the bottle.

 

 

 

 


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The spiders are just fine – thanks

1 04 2020

The spiders are thriving – not a great photo though

The spiders are thriving in the nursery. It’s a long time since I’ve seen that many that fat. Well, I should qualify that last statement; the females are that fat, the males are as skinny as usual – probably all that escaping being eaten by the females that keeps them slender.

I am genuinely pleased to see all these spiders. It means there’s plenty for them to eat and that means our policy of using softer chemicals in the nursery is working. There have  been years in the past when the spiders never appeared (they are common golden orb spiders and harmless) which I put down to poor rains and a lack of prey. Curiously our rains have again been poor but the spiders haven’t noticed that, yet. Maybe there’s a lag phase but we’ll have to wait for this time next year to find that one out.

We are also going to have to wait a while to see how the covid-19 virus impacts us as a nation. Officially we are on a 21 day shutdown to reduce the transmission rate. It’s not likely to be that effective. On my way to work I didn’t notice much evidence of reduced activity and no police road blocks enforcing travel restrictions. It’s not a busy route at the best of times but there was still a long queue at the filling station and the usual amount of traffic up the short 4 km road past the rubbish tip which was quiet but still accepting waste removal vehicles. I was traveling legally as we are considered an essential enterprise and I needed to check up on our skeleton staff who are keeping the plants alive whilst there are no customers around.

The government did come up with a comprehensive legal document to enforce the lock-down remarkably quickly – I suspect it was largely copied from the South Africans who are enforcing their own lock-down. There’s nothing wrong with that and we do share the same type of law. Their other responses have been less well thought out.

The Zimbabwe public healthcare system is in a mess (see previous post A state of health ) with 7 known ventilators available to treat a population of some 11 million. So far as we know there’s been one fatality due to covid-19, a high profile local radio/TV presenter from a wealthy family. Relatively young at 30, Zororo Makamba was admitted to the local Wilkins infectious diseases hospital where facilities proved woefully inadequate. By the time the family had sourced their own ventilator from South Africa it was too late. Apparently he had contracted the virus on a recent trip to the USA and also had underlying health issues.

Testing kits are also inadequate. As of writing there have been 165 tests performed which accounts for the low apparent infection rate; just 5 positive so far. Strive Masiyiwa, local media mogul and sometime philanthropist, apparently took out newspaper adverts saying that his company would buy or lease ventilators from people who might have them on hand. Right, let me just go and dust off the one in the garden shed that I bought some years ago and stored for just this scenario.

While the direct health impact is still some time away the financial impact has already hit. Flower exporters have had to dump tonnes of flowers that cannot be exported due to airline shutdowns and are unlikely to be sold even if they could get them to Europe. Local vendors who rely on daily sales of produce have also been shut down. They must already be feeling hungry. We’ve had a large order of avocado trees cancelled, no doubt because the customer, who sells other fresh produce, cannot move the stock they have and cannot pay for the order. The financial cost to the country is going to be staggering. That the economy is already staggering under a burden of government incompetence and corruption will make it all the more difficult to endure.

The governor of a province to the north-west of Harare has taken matters into her own hands and is at least preparing in a way for the virus crisis. She sent out an email to local farmers for any medical supplies that included, among other things, boots, gloves, masks, body bags and quick lime. Why farmers would have body bags I cannot imagine or why they would feel any need to donate anything to a government that has done nothing to make their lives easier astounds me. I know this because a friend who farms in the area has become a de facto information hub and I’m on his emailing list. He’s also had a torrid time trying to stay on his farm and be productive whilst various fat cats try to evict him under the aegis of the previous government’s land reform programme.

While the covid-19 storm gathers the government has take the opportunity to ditch the ill fated Zimbabwe dollar. We can now legally trade in any currency we like (usually US dollars), again. The reason they gave was to mitigate the effect of the covid-19 on the economy. I think it was convenient to ditch the non-performing currency before it’s devaluation became, once again, a world recognised standard. They have stipulated that the exchange rate is fixed at 25 local dollars to the US but nobody is taking much notice of that when the parallel rate is 43:1.

On driving out of the nursery to come home I had to wait for a minibus to pass. It wasn’t supposed to be on the road during the lock-down,  that privilege belongs to the government owned ZUPCO buses which are apparently enforcing stricter hygiene standards.  I’m not sure what these standards are – it certainly won’t include social distancing given the seating arrangement. The seating philosophy on that minibus and others is pack them in, as many as possible. This has meant that I’ve decided to reduce work hours so that the majority of the labour who live within walking distance can avoid this virus highway and walk or cycle. It also means that they don’t get the transport allowance but hopefully we can do a bit to reduce the disease impact on my business.

Will we make it through the coming storm? I think so, we are semi-essential as witnessed by the rush on vegetable seedlings in the days prior to commencement of the lock-down. It is uncharted territory for us. The spiders of course will come and go as spiders do, influenced by the weather and factors other than covid-19. But for the moment they are doing just fine, thanks.

 


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Categories : Agriculture, corona virus, Economics, horticulture, News & Various

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