Air Zimbabwe allowed to hike fares

Air Zimbabwe, which had its fares slashed by more than half was allowed to increase its fares four months later with a round trip from Johannesburg to Harare increasing from Z$84 million to Z$195 million.

Harare to Lusaka shot to Z$130 million from Z$54 million, and a return flight to London went up to Z$1.3 billion – up from Z$600 million.

The airline was forced to charge in local currency which made little sense because of the wide gap between the official and real exchange rates.

Full cable:

Viewing cable 07HARARE1073, Zim Notes November 30, 2007

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SIPDIS

AF/S FOR S.HILL

ADDIS ABABA FOR USAU

ADDIS ABABA FOR ACSS

NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN

TREASURY FOR J.RALYEA AND T.RAND

STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN

COMMERCE FOR BECKY ERKUL

SIPDIS

E.O.12958: N/A

TAGS: PGOV PREL ASEC PHUM ECON ZI

SUBJECT: Zim Notes November 30, 2007

¶1. The Embassy Harare Political/Economic Section began producing

Zim Notes in July, 2007 to present a perspective on current events

in Zimbabwe. Suggestions are always welcome. If you would like to

receive Zim Notes by email, as well, please contact Frances Chisholm

at chisholmfm@state.gov. Distribution is restricted to U.S.

government employees.

¶2. Parallel exchange rate: ZW$2,000,000:US$1

Official exchange rate: ZW$30,000:US$1

Sugar on the parallel market jumped to Z$1.2 million/2kg vs.

controlled price of Z$247,000/2kg

Cooking oil on the parallel market Z$5 million/750 ml vs. new

controlled price of Z$440,000/750 ml

Fuel – Z$2.4 million/liter vs. Z$60,000/liter at controlled price

(and scarcer than ever)

—————————–

On the Political/Social Front

—————————–

Proposed Changes to Electoral Laws Positive, But – The Electoral

Laws Amendment Bill published on Nov. 16 and pending debate in

Parliament proposes to amend the Zimbabwe Electoral Commission Act

and the Electoral Act to provide an improved electoral framework.

Major changes to the electoral law would include: continual

registration of voters (up until the day before candidates are

formally nominated), less restrictive procedural requirements for

voter registration, electronic copies of voter rolls to political

parties, exclusion of security forces from running polling stations,

equal access to state media for editorial time and advertising, and

foreign election observers (although the justice minister may ban

some groups). It is important to note that an improved electoral

law will be significant only if the political atmosphere, which

continues to feature violence and intimidation, is improved; and if

there is time for the opposition to take advantage of the electoral

law and other changes before elections take place.

Police Bash 22 Activists During Mbeki Visit – Some 400 National

Constitutional Assembly (NCA) activists turned out in Harare on Nov.

22 to protest against continuing state-sanctioned political violence

against opposition and civil society activists. The group intended

to intercept the motorcade of South African President Mbeki who was

in town to press for a quick conclusion to the drawn-out mediation

talks between the ruling party and the opposition. Ironically, one

of the key issues still under discussion is the cessation of the

political violence. Maddock Chivasa, NCA spokesperson, told us that

police dispersed the crowd using batons and injuring nine activists

just before Mbeki was to pass by the demonstration. Soon after,

suspected state agents in plain clothes forced 22 NCA members into

minibuses and took them to ZANU-PF provincial offices in Harare

where they were beaten. The activists were turned over to police

later that evening and then eventually released some hours later

after paying a fine. Chivasa reported that all 22 required medical

attention for their injuries; 10 required hospitalization.

Zimbabwe Low On U.N. Human Development Index – The 2007 U.N. Human

Development Index, released this week, put Zimbabwe, DRC and Zambia

at a lower level of development than they enjoyed in 1975.   Most

countries have seen their human development index rise over the last

30 years, but in 16 countries it was lower than in 1990. The index

ranks 175 U.N. member countries plus two territories by life

expectancy, education levels and real per capita income.

Senegal’s Wade Visits Harare – Senegalese President Abdoulaye Wade

visited Harare on Wednesday and proposed a committee of at least

five heads of state, including South Africa’s Thabo Mbeki, to

mediate an improvement of relations between Zimbabwe and the United

Kingdom. Wade was reported as stating that while he did not condone

HARARE 00001073 002 OF 004

President Robert Mugabe’s policies, they should be understood in

their historical context. While praising SADC’s mediation efforts

under Mbeki, Wade said they were inadequate and that Africa should

do more to help Zimbabwe. For his part, Mbeki said he was unaware

of the visit.

Prelude to the EU-AU Summit – Tomaz Salomao, SADC executive

secretary, said SADC would pull its 14 members out of the EU-AU

SIPDIS

summit, scheduled for December 8-9 in Lisbon, unless European

leaders agreed not to single out Zimbabwe for criticism. Zimbabwe

will most likely be discussed not as a separate agenda item but as

part of a discussion on governance and human rights. Mugabe intends

to attend; UK Prime Minister Gordon Brown has stated he will not.

Zanu PF All Set For Million Men And Women March – Zanu PF has

launched a major media campaign, using radio and TV adverts, to

encourage people to join the million men and women march set for

Friday November 30, 2007, and show support for President Robert

Mugabe’s candidacy for 2008. Additional train and bus service is

being provided for marchers coming from out of town, with over 150

buses having reportedly been pledged by private transport owners.

The march is expected to start at 11 am in the center of Harare and

end in Highfield, a low density suburb located approx 12 km out of

town. Although the war veteran’s association under the leadership

of Jabulani Sibanda was initially at the forefront of campaign

marches in support of Mugabe, ZANU-PF has appropriated the

organization after various party bigwigs expressed dissatisfaction

with the leadership of Sibanda, who had been expelled from the

party.

WOZA Marks “16 Days Of Activism Against Gender Violence” With

Peaceful Demonstration – On Tuesday 27 November, approximately 1000

members of WOZA marched through central Bulawayo to support the

global campaign 16 Days of Activism Against Violence Against Women.”

The group walked for four blocks singing and chanting slogans

before it was stopped by police who told the group the official

government campaign did not begin until the following day. The

marchers dispersed without incident.   WOZA leader Jenni Williams

told us that the march was the fourth demonstration in a row WOZA

had managed to stage without arrest. She also said high ranking

police officers were becoming increasingly conciliatory toward WOZA

demonstrators.

UK Lifts Ban on Deportation of Zimbabweans, Appeal Expected – The UK

Embassy confirmed media reports that the UK Asylum and Immigration

Tribunal (AIT) upheld the Court of Appeal’s 2006 ruling that

Zimbabweans face no automatic risk of persecution following

deportation. Since 2002, UK Immigration has fought a legal bar on

deporting Zimbabweans who are denied asylum, allowing thousands to

remain indefinitely in the UK without legal basis. The AIT’s Nov.

23 decision to lift that ban, however, is unlikely to result in the

immediate resumption of deportations, according to the UK Embassy

Head of Visas David Ashford; UK Immigration officials expect the

decision to be appealed again, almost certainly requiring another

moratorium on deportations. The UK officials don’t wish to repeat

the embarrassing scenario of August 2006 when a similar ruling

resulted in only one successful deportation before the moratorium

was imposed. Canada has a similar moratorium on Zimbabwean

deportations resulting from a court case also under appeal; the USG

deports Zimbabweans for all manner of reasons, including failed

asylum applications.

Bulawayo’s Water Crisis Deepens – Bulawayo City Council is

decommissioning the Invankuni Dam today, leaving Zimbabwe’s second

city with only one supply dam, according to the Chronicle. The

state-owned newspaper reported that water rationing in the city

would spread to the central business district; residential areas

HARARE 00001073 003 OF 004

would receive supplies once a week, and industrial areas twice a

week.   See Harare 1051 for details of Bulawayo’s water woes.

Zimbabwe’s Deteriorating Public Health System – Harare 1047

describes how Zimbabwe’s public health care system, once among the

best in Sub-Saharan Africa, is being eroded by mismanagement and

under funding which have led to deteriorating infrastructure, low

public expenditure, and high attrition of human resources. As a

result, the system today is characterized by inadequate staffing,

reduced accessibility by the general population, shortages of

essential drugs and medical supplies, and outdated and poorly

functioning equipment. Many health indicators have worsened, and

while the HIV prevalence rate has declined, Zimbabwe is still home

to one of the worst HIV/AIDS epidemics in the world. The GOZ is

able, but unwilling, to address the current economic and health

crises. While current donor support in the health sector is

primarily focused on HIV and reproductive health, many programs are

designed with intentional spill-over effects to strengthen systems

within the public health sector. Such programs are enabling the

continuation of some basic health care services for an increasingly

impoverished population.

USAID Celebrates World AIDS Day With Award Ceremony – USAID hosted

the 7th Annual Auxillia Chimusora Awards on November 29. The award

celebrates the bravery and leadership of the first woman to publicly

announce her HIV status in Zimbabwe (in 1987), at a time when stigma

was extremely high. The awards, prestigious in the HIV community,

are given to individuals and organizations in the fields of media,

arts, corporate responsibility, orphans and vulnerable children, and

advocacy to recognize leadership in the field of HIV and AIDS and

impact achieved on reducing stigma. While Auxillia Chimusora is

deceased, she was represented at the event by her daughter and other

family members. Ambassador McGee presided over the event, attended

by approximately 400 guests, and was joined in formal remarks by

Minister of Health David Parirenyatwa and USAID Director Karen

Freeman.

—————————

Economic and Business News

—————————

Independent Press Reports New Currency Launch on December 1.- The

Independent reported on November 29 that the RBZ would rollout

“Sunrise II” – introduction of a new currency – on December 1 and

that the changeover would require a minimum of three days instead of

the 48 hours initially suggested. Gono announced last weekend cash

deposit limits of Z$50 million for individuals, Z$200 million for

businesses, and Z$1 billion for wholesalers and other large cash

handlers, effective December 1, unless one can account for the

source of the cash. In spite of the pressure to bank one’s cash,

its availability at banks did not improve this week. However, more

cash began to circulate in the informal market, wiping out the

premium at which it had been trading and sharply driving down its

value vis a vis hard currencies.

Z$58 Trillion Cash In Circulation; Is There Hoarding? – Reserve Bank

officials said that about Z$30 trillion of Zimbabwe’s total Z$58

trillion cash in circulation was being held outside the banking

system. Using that figure, RBZ Governor Gono lashed out at “cash

barons” for hoarding notes and fuelling the parallel market in

currency and goods. But commentators were quick to note that Z$30

trillion divided among a population of roughly 10 million (on the

high side) averaged out to only Z$3 million per person, hardly a

hoard when it doesn’t even suffice to buy a small bottle of cooking

oil on the street in these hyperinflationary times.

Finance Minister Announces Z$7.8 Quadrillion Budget – With

starry-eyed projections of 4 percent growth in 2008 and inflation

falling to 1,978% by December 2008, Finance Minister Samuel

Mumbengegwi announced a Z$7.8 quadrillion “People’s Budget”(that’s

HARARE 00001073 004 OF 004

Z$7,800,000,000,000,000, or US$3.9 billion at the parallel exchange

rate and about US$260 billion at the official rate) on November 29.

Details and analysis to follow septel.

More Staples Appear In Supermarkets, But At Exorbitant Prices –

Supermarkets appear to be getting more frequent deliveries of bread,

soft drinks, local beer, some chicken and sausages, but the goods

disappear quickly amid consumer uncertainty about supplies. In

addition, the lid appears to be off prices in apparent reaction to

Industry Minister Mpofu’s announcement on November 22 that there

would be no repeat of the disastrous price crackdown of the last

months.

Air Zambia Suspends Direct Flights To Harare – On the heels of

British Airway’s withdrawal from Zimbabwe last month, Air Zambia

announced suspension of its Lusaka Harare direct flight effective

December 1. Contacts in the industry told us the airline was

operating at a loss on the route, especially due to the high fuel

prices and fluctuations in the Zimbabwe dollar exchange rate.

In the meantime, Air Zimbabwe increased its fares across the board:

roundtrip Harare Johannesburg went from Z$84 million to Z$195

million, Harare Lusaka shot to Z$130 million from Z$54 million, and

a return flight to London now sets a traveler back Z$1.3 billion –

up from Z$600 million a week ago.

Mobile Carriers Raise Tariffs, Too – Econet, Telecel and Net One

announced new rates this week for phone calls and text messages.

Econet’s tariffs went up by about 650%; a local text message now

costs Z$11,000 (less than one US cent on the parallel market).

Analysts commented that the tariffs were still very low in real

terms, well below regional comparisons, and, for Econet, below its

own target of about 15 US cents/message. A text messages from

GOZ-owned Net One increased to Z$8,000.

World Bank Concludes Mission, Not Sanguine About GOZ Economic

Stabilization Plan – World Bank Mission Chief Naoko Kojo and the

Acting Country Manager Mungai Lenneiye expressed skepticism to the

diplomatic community on November 29 about the prospects for the

successful implementation of the GOZ’s plan, approved by the

cabinet, to introduce a one-year Stabilization and Short-Term

Recovery Program in January.   At the conclusion of the two-week

mission, they lamented the lack of cooperation and consensus on the

way forward among the GOZ’s competing economic policy institutions:

the RBZ, the Finance Ministry, and the Ministry of Economic

Development. Details to follow septel.

IMF Mission Due in December – IMF staff will visit Zimbabwe December

13-19. The primary purpose of the mission, according to World Bank

Mission Chief Kojo, is data compilation. Embassy Harare is

coordinating a business briefing for the mission by representatives

of the American Business Association of Zimbabwe on day-one of the

visit and Amb will host a debrief for fellow ambassadors on December

¶18.

McGEE

(30 VIEWS)