Cash Squeeze and Desperate Measures

27 09 2008

It took a lot of pleading and three hours in the bank on Thursday before I could withdraw 100000 Zim dollars )(about US$200) for wages. I had put in the applications up to 2 weeks previously but the bank was just not getting cash. I offered my senior foreman US dollars but he was surprisingly reluctant; I guess that he didn’t want the hassle of changing the money. I told him to try offeringthe US dollars instead. He eventually took them.

I see that the withdrawl limit has gone up to 20000 local dollars as from Monday. Will this mean that it will be any easier to draw money for wages? I am not really sure but I do know that the exchange rate for cash will start to run again – actually it already has just based on the information!

Walking into the cafe where I am writing this I notice a local paper had listed all the retail and wholesale outlets that have been granted licences to trade in forex. It was not a cheap exercise. 20000 US dollars for a retail licence! I believe most of the supermarkets have been granted licences. I guess a bit of competition and increased availability is a good thing but it is certainly out of the question for me; that sort of money is just way beyond my budget and at last most of my customers are paying in real money anyway. Will this mean a clamp down on those of us who cannot afford the licences but trade in real? I guess they will at least threaten a clampdown.

Even my customers who trade only on the local market are offering real money. Yesterday one of the biggest TOLD me he was going to pay in “real”. Actually, I wouldn’t have minded Zim dollars. At least it would have solved the wage issue for a while!





No deal?

23 09 2008

Like most Zimbabweans I thought the agreement signed between Mugabe and Tsvangarai included the allocation of ministries and Bob would keep control of the military and Morgan would get other key ministries such as home affairs and finance. Nope. Nothing has been allocated so it’s up to them to come to an agreement. Some chance. At the annual ZANU-PF gathering last week Bob came up for a lot of criticism for signing ANYTHING so the likelihood of giving up control of various key posts is remote. Bob is away at the UN General Assembly so nothing is going to happen for a while. In the meantime I must have my monthly squabble with my labour over wages.





Hello Sophie

16 09 2008
Hello Sophie,
Let me know what I can do – have some 100 billion dollar notes that I can scan but remember they are only worth 10 of the NEW dollars! I have plenty of the NEW 500 dollar notes that are worth 5,000,000,000,000 of the old which I can also scan if you like. The reality is that very little changes hands for Zimbabwe dollars these days (but I can find you an old invoice I printed for a customer where the value ran off the page) – most people use a hard currency like the US or the South African rand (pounds and euros are not very popular). You are only legally allowed to draw 500 dollars (about one US$) in cash from the bank and yes, it is often just one note (!!!) which is pretty much useless though there are loads of very long queues outside the banks. I’m not sure what they do with the money.
I got in 500 000 of the new dollars the week before last but with such a huge disparity between the cash for cash rate (it was 200 to one US then) and the cash for a bank transfer rate (it was 25000 to one US) nobody really wanted to change cash when they could get so much more for a transfer even if the did have to queue for it. By the time I did manage to change it the rate was 550:1 which was quite a substantial loss. What the hell, I needed to buy fertilizer and crop chemicals. The lady who was serving me asked how I was going to pay. I said; US. Then I asked if they still accepted Zimbabwe dollars. No, she said, I was just thinking of a polite way to tell you. The transfer rate is now upwards of 40000 to one US but it’s all very quite out there. Nobody trusts Bob and I think they are all just waiting to see what is going to happen next.
You might think that with cash money in such short supply it would be worth more but nobody wants it – they’d rather use real money!
Try this one: I have 500,000 Zim dollars in my corporate bank account which if I were to transfer it for cash would get me 10 US dollars. If I could get it out and change it for cash (that’s why I put in fictitious wage requisitions every week) it would be worth 1,000 US dollars!
I am reliably informed that our inflation of 10,000,000% is the highest in history. The Weimar Republic didn’t even come close.
(Resending – last attempt crashed AND I paid my ISP in fuel coupons – hey it’s an ASSET isn’t it?)
Ciao,
Andy




A small step

16 09 2008

Unlike Neil Armstrong’s words there is no giant leap in the offing. Indeed, the BBC correspondent got it right; no-one is dancing in the streets. I am referring of course to the power sharing deal signed yesterday between Robert Mugabe and Morgan Tsvangarai. Both the EU and USA have said that they will not do anything until they see concrete signs of change. And change there had better be; the WFP estimates that 5 million people (half the population) will need food aid by January next year. That is quite and achievement for a country that only 10 years ago was a net food exporter.

A lot of really odious laws have to go too. The Public Order and Security Act (POSA) that effectively allows the government to prosecute anyone for anything including criticism of the president or the police has to be one of the first. I am curious to see what is going to become of the state controlled media that will hopefully have to become self-funding and a little less fawning. The ruling party (ZANU-PF) has relied on state funding for most of its tenure – will that be withdrawn? I hope so. Will the culprits of political violence meet their true justice? I doubt it, certainly not the fat cats who really should. No, this is definitely not first prize, it is a pragmatic solution. I would really like to see Robert and his cronies in The Hague with the good company of various eastern European criminals but that is unlikely. The best I can hope for is that he suffers a massive, debilitating stroke that leaves him irrelevant and wallowing in his own excrement and bitterness. I did not watch or listen to the signing ceremony yesterday but one who did hear him droning on about colonialism and the “War of Liberation” (that ended 28 years ago) said that he looked like a distinctly spent force. There is hope yet.





Gauging the mood

12 09 2008

It was about 10 pm last night when I first heard it on BBC that a power sharing agreement had been brokered between the government and the opposition in Zimbabwe. The details are not to be released until Monday so I thought “Oh” and went to sleep. It’s headline news today and there is a fair bit of speculation but one thing is for certain; the inflation is continuing. We will just have to wait and see if Thabo Mbeki really has pulled off the coup of his presidency after years of dithering or it is yet another disappointment that we are so used to receiving.

This morning in the gym I asked Austin what he thought (he’s as big a cynic as I). He said that when heads start to roll, the first being the governor of the Reserve Bank, Gideon Gono, then things really are happening. Apparently he is the No. 1 target as far as the MDC are concerned. Having just come from my other barometer of public opinion (my bank) I can definitely say that Zimbabwe is not collectively holding it’s breath. We’ll just have to wait until Monday and the official announcement/ceremony.

The transfer rate (cash US dollars for a zim dollar transfer) on Friday last week was 6000:1. By Monday it was 16000:1 and yesterday I pushed my prices to the equivalent of 30000:1. The accountant on the farm where I stay estimated that some of the farm’s suppliers are using 80000:1. It seems that the Reserve Bank has taken note and is proposing licencing some retail and wholesale outlets to trade in hard currency. I don’t know the details but apparently they are not very attractive. The licence has to be bought in hard currency, tax paid in hard currency and the prices one is allowed to charge will be heavily regulated. They might find that there are not too many takers. Just about anywhere outside the supermarkets (which are not worth visiting anyway) are charging in US dollars as it is. Yes, it is illegal but it comes down to a simple choice; do you want the item/s? On Wednesday, desperate to get rid of some Zim dollars, I eventually changed with Chris for 550 to one US dollar. I’d got the money in the previous week at 200:1 and had been unable to change it; the Zim dollar is fast becoming useless for all transactions except paying wages (though there are still massive queues outside the banks to get it). The relief I felt despite the massive loss was almost physical – now I could do things! Yesterday I went and blew the lot on chemicals and fertilizers though it was not as much as I’d expected to get. The fertilizer had gone up 200% in real terms since I last bought some nine months ago.

I should clarify the curious currency trading arrangements. Because of the restrictions on drawing cash from the banks (500 Zim dollars a person/corporation a day = 1 US dollar) almost all foreign currency trading has gone to cash for a transfer. This has pushed the rate to the mind blowing figures mentioned above. Accordingly those with real money to sell are not interested in getting 500:1 when they could be getting about 30000:1. Cheques and transfers in Zim dollars CAN still be used to pay utility bills and a few other things so why not get some REALLY cheap money if you can! It has of course made my corporate bank account worthless though I still go through the motions of applying for wages withdrawals every week though they are taking at least a week to clear through the Reserve Bank due to the massive backlog!





Offers, burnt, not refusable

8 09 2008

I have just come from the weekly milk run. Prices are up again; milk is now a dollar a litre (bring your own container). This means that it has doubled in the last three months. Helen mentioned that the farm where she gets the milk is getting its “offer” letter next week. What this really means is that the recipient has 7 days to get off; they are not actually offered anything. Maybe it’s someone’s idea of a bad pun. Maybe that’s why the price has gone up.

The farm where I stay has not had an offer – yet. One of the managers was beaten up on Saturday though (I don’t know the full story) and his house occupied by ruling party hoods; he is a “known” opposition supporter. This is not the first time this has happened but I have a feeling that this time they will not move. It could have a knock-on effect for me as I live on the other end of the farm and am not an employee so may be asked to move out for him. I do have it on good authority that the next foreseeable crunch will be when Bob can no longer afford to pay the army. Helen tells me that the military is behind the offer last week to the neighbour to the dairy where she gets her milk. A connection perhaps?





On again off

3 09 2008

We have just survived five days of no power at the nursery. The ancient Lister enginge that powers the backup pump also decided to give up the ghost (4 cylinder head gaskets later – not a good buy) so we were dependent on a little Lombardini hooked up to 5000 litre emergency tanks and another tiny electric pump that we ran a cable to from the generator in the storeroom. By lunchtime today nerves were getting more than a bit frayed as I gave the Lister one more chance. It coughed and died again then the power came back.

It all started on Saturday with some load shedding and a fire that ripped through my garden in the afternoon. With no power there was little that I could do (we rely on a pressure tank for water pressure) except dribble a little water and swat ineffectively with a wet T shirt. Property was never in much danger but now I have to look at a blackened lawn until the first rain in a couple of months or so.  Elsewhere the fire burnt a tree that fell onto a power line on Sunday night (still no power at the nursery) and it took the electricity authority until today to rectify that and another three faults in the area.

Then this afternoon the unofficial union official (the union is not even registered) pitched up whilst I was wrist deep in old diesel oil detaching the Lister from its mountings to go in for repair/whatever. He’s an obnoxious bastard whose only interest is keeping his members from straying by ensuring that HE negotiates their transport allowance on a monthly basis. I have, in the past, proposed a straight percentage but that was far too simple and would obviate his “negotiations”. The law is vague and requires “the employer to pay any incurred transport costs” to and from work. While there is transport along the road to work no-one uses it and they don’t give out receipts. No incurred cost – no need to pay anything. Oh no. They want their transport allowance (which they put in their pocket). I could provide transport and the whole issue would go away but I am the only driver around and I am not going to go collecting and returning every day at 7 a.m. and 5 p.m. Words were exchanged, an impasse generated and now tomorrow we go to the arbitrating body. The union person was most offended that I did not consult him if he was available and demanded to be picked up. I’d had enough and walked off. We’ll see what happens tomorrow.

Cash notes are in short supply again so the black market rate cash for cash (US for Zim) is weak if one is selling US dollars at around 200 Zim to the US (it started the month off at 15:1 – remember?). By contrast the transfer rate (transferring from one account to another) is around 3500:1. It is legal to give whatever discount one likes so what I do at the nursery is price everything at the transfer or cheque rate and then give a fat discount for cash. Paying in real money is still proportionately cheaper as I mark up well above the black market rate. Annoyingly people still seem to just write cheques when what I really want is US dollars. Other companies are less scrupulous. On my way into town yesterday whilst trying to solve the problem with the Lister engine (injector OK, pump OK) I stopped to get some simple spares for the Land Cruiser engine I am rebuilding. A rubber bush and hose clamp that should have cost maybe 3 US dollars came to 7 and no they did not have change. Paying in Zim dollars was a silly price and no they did not give a discount for cash. Up until now I have resisted naming names in this blog but if you are in Zimbabwe, Universal Rubber & Hose can be given a miss.





Power to the people

27 08 2008

The power has been on for nearly an hour now and I have to resist the urge to keep opening the fridge to see how cold it’s getting! True to form I’d just finished having a cold bath when it came back on. It was off for nearly 36 hours from yesterday morning. I was coming back past work yesterday evening when I saw a pickup truck pull into the car park. We’ve had a few theft problems recently so I decided to see what was going on.

As I pulled up next to the truck people started offloading an 8m extending ladder. It looked rather familiar. Thoroughly suspicious now I quizzed the driver of the pickup but it was all quite innocuous. He had a plot further down the road and concerned about the lack of power to irrigate his crops he’d taken the initiative to borrow my ladder (the duty foreman had lent it to him) to assist the electricity supply company in accessing the broken cable. As they did not come back today to borrow it again they must have been able to source another so hopefully things have not got that bad, yet.





Land reform programme

27 08 2008

There are actually some white farmers left on the land. I was chatting to one on Thursday who happened to pass through the nursery – I will refer to him as AG. I asked him what he was doing and he replied the same that he always had; cattle and a few crops. He did admit that he was running a few butcheries in town and like a lot of farmers was selling produce for real money. Illegal of course and to avoid the various police roadblocks set up to intercept just such trade, he moved everything at night. One of my neighbours admitted to me that he’d sold his maize and soyas for real money. Why sell maize for $15 a tonne to the government when he could sell it for $300 a tonne privately? Why indeed! AG and I got onto the topic of paying staff. He paid his entirely in goods; maize meal, soap, oil etc which the valued more than money. I don’t have the luxury of growing my own crops so pay day for me is rather stressful and indeed this weekend I had a strike to sort out over exactly that issue – extra food. AG mentioned that a neighbour of his who is a very Fat Political Cat, had the previous day paid his general labourers 7 new Zimbabwe dollars (about 7c US) for the entire month – no additional goods or food!

In the same area as AG’s farm lies the remains of Zimbabwe’s largest wheat farm – 5000ha under irrigation. Nowadays nothing useful remains. Grain stores have had doorways knocked through them, the roofs stolen and now serve as livestock pens. All combine harvesters (more than 20) and tractors (50+) lie in ruins and the irrigation system is totally defunct. Such is land “reform”.





Diamond deals

20 08 2008

The senior foreman at work lives in the east of Zimbabwe at a small business centre called Nyanyadzi. Not a lot happens there. There is a small irrigation project and the usual small market. But things have changed since the diamond fields were exploited in the nearby Marange area. Having just got back from a short visit home he told me this morning that anyone can purchase a “pass” to go diamond digging for a day. All it takes is a bribe of R200 to a police guard. Benz’s are around in droves, laden with fat cats and US dollars to mop up the diamonds illicitly mined (no doubt they get the diamonds relatively cheap). Zimbabwe dollars are uncommon in the area; the currencies are the rand and US dollar.

This evening on our way back from a short cycle, Jenni and I passed the spot where Tina died. We’d gone about another 100m when in a display that was pure Tina, Jenni took off after a security guard crossing a field on a bicycle. A ridgeback in full chase mode is quite a sight but there was no malice – she was just after a bit of entertainment. The security guard noticed her as she closed on him, dismounted and shouted “Hey” (or something like that) from the security of the far side of his bicycle. Jenni swerved past and trotted off to sniff something nearby as though that’s what she’d been coming over to check out anyway.