Zimbabwe Absurdity

I have always associated bread queues with failed economies but curiously I have never actually stood in one. That changed this morning but the bread had run out before I got anywhere near the front. No riots though – yet.

It’s been a crazy week. Exchange rates on the black market have crashed by about 50%, price controls have been implemented by the “Price Police” and other hoods who have marched into retail and wholesale outlets, demanded that prices be reduced by an arbitary amount and distributed goods to their mates and others waiting outside. Rumours have flooded all aspects of the economy – “Prices have to be reduced by half”, “Prices have to go back to the level of June 18th”. Even restaurants have reduced prices. The price police have dictated prices of fresh produce arriving from the farms. And where have all these “guidelines” and “laws” emanated? None other than The Herald, that daily mouthpiece (but it more closely represents a sewer outlet) of the government. How much of this has been gazetted (written into law)? With the exception of the commodities that are already price controlled (bread, milk, maize meal etc.) – none. And has anyone challenged it? No. Fear rules.

My business has not yet had a visitation but I expect we will get one. Sooooo, we have joined the ranks of the spineless and reduced our prices somewhat, just to show we are “patriotic”. How long is this all going to last? Estimates vary from a couple of weeks to the end of the year but I really doubt the latter figure. Already supermarket shelves are empty of produce that is not going to be replenished at less than the cost price.  Already the government is getting belligerent and threatening companies that don’t toe the line and sell whatever they have at the dictated price level with takeover (takeover what exactly?). Bread is scarce, cooking oil non-existent, fuel can only be purchased with hard currency (so it is rumoured), butcheries are closed and empty and those that can afford to have stopped trading. Those who can afford to have been stocking up on the cut-price essentials, fearing the shortages that must surely happen. I have stocked up on dog food for Jenni (I wonder if I can eat it?) and other essentials when I see them. It cannot last of course, they have only tied a tourniquet around the leg – the cause of the bleeding has not been addressed and if the tourniquet is not loosened soon the leg will fall off.

In the wake of the precipitous collapse of the dollar over the past two weeks the government has slapped a price freeze on basic commodities. This has not been gazetted so I don’t know how “official” it all is but we are apparently supposed to revert to prices as they were on the 18^th of June. The government has even formed a squad of “price police” whose duty it will be to enforce the oft ignored price controls. Already the effects can be noticed in the empty shelves in the supermarkets (not replacing stock and not restocking) and other outlets. My usual stop at the bakers this afternoon was not worthwhile; I could see without getting out of the pickup that there was nothing in the shop. Now government has said that they will ease the problem with food and fuel subsidies, and indeed one of the weekend papers reported that the money crash was due in no small way to government agents buying up black market cash with freshly printed Zim dollars! This is apparently going towards buying the fuel to be sold at $15000 a litre instead of the going rate of $150000 a litre. Both of the major weekly papers, The Independent and the Financial Gazette predict that these “control” measures will merely drive the black market further underground and fuel even more spectacular inflation.The most impressive part of the pink paper as the Financial Gazette is known was the 38 page full colour supplement ostensibly put out by the Reserve Bank. Rather grandly entitled “The launch of phase 1 of agricultural equipment acquired under the RBZ farm mechanization programme – celebrating the birth of a mechanization vision and the consolidation of our land reform programme” it is a monument to the breathtaking stupidity of those in charge. While there is a certain amount of repetition of photographs, the range and quantity of equipment displayed is impressive. I must stress that it is not cheap and nasty stuff; it is all top of the line Massey-Fergusson, John Deere and Landini 4×4 tractors and Claas combine harvesters, Gaspardo planters and other assorted equipment. All this whilst Zimbabwe is reeling under 80%+ unemployment, estimated 10000% inflation, highly disruptive power cuts due to lack of money to maintain equipment and a government debt of over 2 trillion dollars (admittedly Zim dollars but that is still a lot of money). That aside, I am really mystified how splurging on highly technical equipment is going to solve our economic crisis. I do wonder just who managed to get their fingers into this particular pie because as sure as the Pope’s a Catholic, it is only going to fail without the technical expertise to get and keep it all running not to mention the finance (I guess the printing presses are running red-hot right now). It is interesting to note that in the same papers the collapse (or rather the non-start) of the much vaunted winter wheat programme is detailed. Of the 80000ha of winter wheat envisaged by the government, just 8000ha have been planted. So where has all the money for the rest of it gone? And why, pray, do we need all those combine harvesters for only 8000ha of wheat?

The Zimbabwe Government has the unenviable reputation of having the world’s largest cabinet. In the centre of the pullout there is a lovely example of just how they have achieved this. Pictured at the top of page 7 is “The Honourable Minister of Agricultural Engineering and Mechanization” – I am not joking, we have such a ministry. In charge of it is one Dr (of what one cannot imagine) Joseph Made, who with a little help trashed the entire Zimbabwean agriculture industry when he was the Minister of Agriculture. That he is not in jail is testament to the corruption that pervades the government of this country.

I have only paged quickly through the rest of the document – I have a limit to my patience. I do find it interesting that they have inserted it into a business orientated newspaper that is only likely to be bought by those with a bit of cash to spare and therefore a reasonable education and so are unlikely to be taken in by the blatant propaganda. Or so I would have thought.

For unknown reasons the black market money rates have actually dropped back from the hysterical levels of last week. This had obviously not filtered through to the farmer from whom I purchased 400 bags of used peat moss. Last Thursday I phoned up his clerk, found out the price to be $200 000 a bag and ordered 200 bags. I then changed my mind and thought I might as well get a lot while I could and added money for an additional 200 bags and did the electronic transfer. Yesterday the clerk phoned me back and said that yes, I could collect the first 200 bags but the price of the additional 200 had gone up.  What? No, I should speak to the manager (he sounded distinctly uncomfortable). I phoned the manager to be informed that prices had gone up so the second lot was now 75% more expensive. I must admit I was confused as I had paid all in one lot. No, but prices were going up so that was the deal. Bizarre – I give customers a discount for bulk orders, I don’t charge them more. Unfortunately I was between a rock and a hard place as the usual suppliers of pine bark were unable to meet orders (maybe something to do with the owner going drinking at lunchtime, but don’t quote me) and I think this guy knew it. Fighting a desperate urge to tell this character what I thought of him I instead said that I’d get back to him today – which would allow me time to cool down and give it some rational thought. So today after mumbling a pathetic “I cannot afford it” excuse, I cancelled the additional 200 bags and decided to put the money into the transport or another asset.

Apparently the price police are out in town, preventing outlets from raising prices and in some cases forcing retailers to reduce prices. I always know when something is afoot as my regular baker stops baking the standard loaves of bread (which are theoretically price controlled) and switches to the uncontrolled round ones!

There is a limit on the amount of cash one can legally withdraw from the bank, Z$1.5m from a personal account or Z$3m from a corporate account. So far as I know there is no limit on the number of accounts one may hold. But there are easier ways to get around the restriction. One is to withdraw the cash from the human teller and then go to the ATM and withdraw it there too. You don’t even need to run to the ATM either. Hannah’s bank manager offered to withdraw 1.5m from his son’s bank account which she then repaid with a transfer – the son did not need the cash that day and the transfer was within the bank so it was quick.

I have just had an email from Gary Hensman, a friend who farms in Chinhoyi. He has had notice that he has to be off the farm by the end of November and the legal thief even came along to peruse his new “acquisition”. Gary has every intention of putting up a fight but he is unlikely to win as by law one cannot appeal the decision. The farm has been in the family for two generations and is productive so is attractive. How long it will remain in that state remains to be seen. The government official who came along to authorize the theft told Gary that whites were not wanted on the land. This is despite the national wheat crop falling to 8000 ha this year from a high of 40000 ha. The lunacy continues without the help of the full moon.

The two major political parties in Zimbabwe are in talks in Johannesburg. They have not progressed past the talks about talks stage and as someone commented to me on the weekend “What political party is going to negotiate the conditions for its departure from power”. So even if it gets beyond the current stage it is unlikely to achieve much. The conditions that ZANU-PF (the ruling party) are imposing on the MDC to get to the talking stage are quite informative. It must:

1. Accept the legitimacy and significance of the liberation struggle (means: accept that we live in the past unlike the majority of the population who were born after the war ended in 1980)

2. Declare its acceptance of the president and government’s legitimacy and act accordingly in both language and actions (means: Bob is God and we did not fiddle the last two election results)

3. Drastically re-orientate its attitudes towards national events (means: kiss our arse)

4. Stop forthwith its promotion of violence (means: this is OUR speciality and we won’t have you competing)

5. Publicly and unequivocally commit itself to the irreversibility of land reform (means: we are not giving back what we have  stolen so get used to it)

6. Respect the country’s sovereignty and independence, respect all national laws (means:  we still make the laws around here and no matter how draconian, illogical and unconstitutional, you will kow-tow to us)

7. Publicly and unequivocally call of the lifting of sanctions (means: we really do want to go shopping in London and Paris and send our kids to elite foreign schools with money we have liberated from government coffers)

8. Stop calling for outside interference in Zimbabwe’s domestic affairs (means: killing, maiming, torturing and otherwise brutalizing our population is OUR business and is therefore allowed)

It’s all rather pathetic and very immature and of course so unreasonable that the MDC is not going to agree to most of it so the talks will go nowhere. Fait accompli.

Yesterday a well dressed and pleasant gentleman delivered a letter to my nursery announcing the formation of yet another union, the Zimbabwe National Farmers’ Union. I was invited to come along to the launch next month.  I could not really ascertain why we need yet another farmers’ union (I don’t belong to any at this stage, the Commercial Farmers’ Union is expensive and I get nothing out of it) so I suppose I will go along  but I remain leery of any attempt to gain credibility for the current state of agriculture in the country which I suspect this is (oh yes, government ministers will be there).

On Thursday night I went to an amateur presentation of Fiddler on the Roof. It was an ambitious project and rather too long for my liking but it was entertaining and worth and evening out. What made it very expensive for me was the 20 litres of diesel that disappeared out of my truck whilst I was in the show. The truck was being carefully watched by 2 security guards and another freelance “guard” who called himself “Jiminy Cricket” (actual name Theo).  I suppose I should have been suspicious of someone who claimed he was always called “Jiminy Cricket” and was just way too cheerful for the current Zimbabwean climate but in the absurd way of thinking in this country I blame myself for driving around in a vehicle with the fuel gauge on full.

Last Friday someone asked me what value I was using for the US dollar. I said 115 000 to 1. Yesterday it was around 300 000. A recent post recorded how I’d been caught out by “taking a day off” from the business and how expensive it had been. Well, I rectified that and spent a lot of the money in the bank on medium for growing seedlings.  Now I have to find the money to transport it to Harare. The transporter does not have any vehicles available until the week after next by which time the money in the bank will be nearly worthless (if he’ll accept zim dollars) so I may well have to dig into my own forex reserves which was definitely not the plan – but where does one draw the line?

Then yesterday came the wages issue. Not surprisingly the labourers refused their pay and I had to settle for 650 000 zim dollars a month. This is on top of no new orders for next month so in a meeting with the “workers committee” it was agreed that the increase came with an agreement to retrench the more recently hired staff if we have to restructure as seems increasingly likely. It was no coincidence that the workers’ committee is made up of the employees who have been around the longest. What did surprise me was the acquiescence of the rest of the labour when the deal was presented to them. Nobody, however, seemed to appreciate the gravity of the whole situation; they just seemed pleased that they were getting more money now, next month would come later. I did not broach the subject of income tax.

Zimbabwe must be the only country around where the lowest income tax bracket is set at around one third of a US cent A MONTH! At that limit you will be paying 25% of your salary to the government.  I should therefore be taxing my entire staff (it is a curious facet of the system in Zimbabwe that it is the onus of the employer to tax the staff under a system called Pay As You Earn or PAYE). Apart from being cruel the company just cannot afford it as we would have to pay proportionately more to keep people at work. So for the moment at least I am ignoring it. I am not concerned about any financial reparation further down the line as by then it will be worthless but they might just decide to forgo that and use a jail term for defrauding the tax department. The government must be aware that the poor are being taxed and it cannot be gaining them votes so I can only guess that they are desperate to get ANY money in, whatever the cost, and will deal with the vote issue when the need arises.

I was buried in software yesterday and when I emerged my bank balance had depreciated 30%. I blinked and paid the price. Today I set about rectifying the situation though in reality it was just fire fighting. There was an obstacle to overcome first; the phones. Our land line at work has been stolen again (well about 3 weeks ago) and the “service” provider is not replacing the lines. Cell phones do work but one needs a lot of patience. Never mind, I had the wages to keep me busy in the interim. Legally we only need pay our staff a minimum of Z$207000 a month. That’s about US82c. Obviously that is a ludicrous sum so they get double that which at the time of writing this actually is slightly useful. I’d love to pay them more but we have had no significant orders in the last 2 weeks so that would be a little foolish. We are after all trying to survive. OK, so having calculated the wages and determined that I needed to get Z$13010000 from the bank there was another obstacle in the way. With a corporate account I can only draw Z$3000000 a day so I then had to make up a list of names, ID numbers (not all have ID’s so I invented a few) and the amount they are to be paid so that I can draw the requisite amount. Or so I thought.

On arriving at the bank I had to wait to see one of the manageresses. I have dealt with Maria for a number of years now and she is a pleasant and helpful person. She did some simple maths and said that yes, as the average was less than Z$700000 (less than US$3) per person, we could apply for permission to draw the amount (all of about US$50).

-Oh? I thought the bank could do that?
-No, it has to go to the Reserve Bank, and it takes 24hrs. We might be lucky.
-Right. So what happens when the amount exceeds the “limit”?
-Oh, your staff have to get accounts.

She admitted that this was daft (well, actually she said impractical). Especially considering that some of my labourers are illiterate and probably only have a sketchy idea of what a bank account is and would not be able to provide proof of residence (lights or water bill) as part of the requirement to open an account anyway. I was fuming at the injustice of it but there was little I could do. Or maybe not. I could always just draw the Z$3000000 limit every day but I do that anyway for all the other purchases that I need to do. I could always apply every week for the wages limit but that will only keep the wolf away for another month at most. Then what?

And all this is handed down from the morbidly obese fat cats at the top who continue to do the Marie Antoinette cake walk while getting ever fatter. Mind you, the masses could always do something about it but they are still waiting for somebody else to throw the first stone.

The train is definitely coming.

The tracks are awry.

The wreck is going to happen.

There will be casualties, certainly.

Will I be able to walk away afterwards?

I don’t know.

I heard a rumour on Saturday that one of the cell phone companies, Econet, had suspended all services out of the country because it could not source the foreign currency to pay for them. This was supported by the assertion that the lady in question had texted here daughter in the UK and got no reply and could not dial either. I was skeptical and immediately texted my brother in the UK who replied wondering what I was up to. Later in the day I called my uncle too and got through easily. So much for that one but it does bear a bit of analysis:

1. Econet HAS stated that it is struggling to get the foreign currency to pay for international communications and has applied to the government to be allowed to charge in US dollars. The government refused it (it also sets the rates at which all calls are made which makes Zimbabwe one of the cheapest places on the planet for cell phone calls).
2. Cell phone calls  are notoriously difficult within the country.
3. The lady in question was having difficulty getting through to her daughter (I did venture that maybe the daughter did not want to talk to her).

So it had all the ingredients of plausibility, but that’s about all.

Up until now the area in which I live has been relatively unaffected by all the power cuts plaguing the rest of Harare. That changed this weekend with 9 hours a day without power and it has also been off since five this morning – 11 hours and counting. It is a double irritant because my house is dependent on power for the water pressure so now power frequently means no water though if the tank is full enough I do get a trickle. So when there is power I have to remember to fill up the bath with cold water (the hot is gravity fed from the tank in the roof) or wait for the hot water to cool down. It is already getting tiring.

I was chatting to Austin at the gym at lunchtime as he took advantage of a brief supply of water at the gym to get a shower. I mentioned that I’d heard that Zimbabwe has lost its right to refine gold and export to the international market because they’d fallen below the threshold of 25t per year. In fact, talking to someone I know in the gold business, Zimbabwe has only exported (legally) 700kg so far this year. This means that Zimbabwe has to pay South Africa a commission to market its gold. Well, maybe that explains some of the luxury vehicles around town. Austin replied that it was more to do with the Marange diamonds that are being plundered in Manicaland. I have mentioned them in an earlier blog but Austin filled me in on few details.

Some 35 years or so ago, de Beers, the diamond mining conglomerate, staked the Marange claims but decided not to mine them as it was not in their marketing plan for Africa. In those days de Beers had total control of the world’s diamond market. When the claims lapsed recently, a Zimbabwean businessman noticed and got them reclaimed using a British company. They then announced their plans and all and sundry descended on the area to help themselves. They were removed after some time and the government now mines the diamonds. I say “government” but precious little, if any, of the estimated US$1bn has found its way back into the Zimbabwean economy. The claims are incredibly rich in mostly industrial diamonds but according to the friend of Austin’s who is an executive with the aforementioned British based company, there are a lot of gem quality stones close to the surface that are easily retrieved using no more than a bucket. Now wouldn’t it be nice if they just decided to give a little bit to the electricity supply authority to do some maintenance so that we could have a few less blackouts? No, maybe not, the greed is total. De Beers has not of course totally disappeared from the scene. Concerned that the diamonds pouring out of the ground might depress the market somewhat, they are buying them up (probably at a reduced rate in return for no questions asked) and they do need to maintain the myth that diamonds are rare. And to further the tragedy, this largesse will only encourage those extremely fat cats at the top to stay there as long as possible; after all, why would they want to return to any semblance of law and order with all that unspendable wealth to be had?

Oh, about the legends; sorry, I couldn’t think of any.