Air Zimbabwe sent workers on forced leave

Air Zimbabwe, which said it was operating at a loss of US$4 million a month was forced to send its workers on forced leave at half their benefits until they were recalled.

The airline had been surviving on off-budget support from the Reserve Bank of Zimbabwe but this had dried up following the formation of the inclusive government which stopped the quasi-fiscal operations of the central bank.

Workers saw the move as the signal of impending layoffs that could target as many as two thirds of the company's 1 400 employees.

Full cable:

Viewing cable 09HARARE471, ZIM NOTES 05-29-09

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RUEAIIA/CIA WASHDC

RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000471

SIPDIS

AF/S FOR B. WALCH

ADDIS ABABA FOR USAU

ADDIS ABABA FOR ACSS

NSC FOR SENIOR AFRICA DIRECTOR MICHELLE GAVIN

TREASURY FOR D. PETERS

STATE PASS TO USAID FOR LDOBBINS AND JHARMON

COMMERCE FOR BECKY ERKUL

E.O.12958: N/A

TAGS: PGOV PREL ASEC PHUM EAGR ECON EFIN ZI

SUBJECT: ZIM NOTES 05-29-09

—————————-

SUMMARY – Topics of the week

—————————-

– Post Welcomes CODEL to Zimbabwe

– Gono Retains Backing of Mugabe and Service Chiefs

– ZANU-PF Sets Up Succession Committee

– Msika to Retire?

– AG's Office Still Pursuing Women, and Lawyers, and Journalists (oh

my!)

– Free Press Still a Distant Goal

– Pentecostal Pastor Abducted, Then Released

– Land Reform Threatens Conservancy

– Chiadzwa Footage Hits the International News

– Local Pharmaceuticals Firm to Acquire South African Company

– Diamond Mine Re-Capitalizing

– Winter Wheat Crop Hampered by Funding Shortage

– Property Companies Record Increase in Rentals

– Troubled Air Zimbabwe Sends Workers on Forced Leave

– Development Bank of SouthernAfrica in Loan Negotiation with

Zimbabwe

– Quote of the Week

—————————–

On the Political/Social Front

—————————–

¶1. Post Welcomes CODEL to Zimbabwe: A Congressional delegation led

by Representative Donald Payne (D-NJ) is arriving in Harare this

weekend for several days of meetings with senior government

officials, the donor community, and civil society and business

leaders. Representative Payne is currently the chairman of the

House Subcommittee on Africa and Global Health and a past chairman

of the Congressional Black Caucus.

¶2. Gono Retains Backing of Mugabe and Service Chiefs: In the

continued struggle over the future of RBZ Governor Gono, Mugabe

spoke out in support of his long-time personal banker this week

saying that he wasn't going anywhere. See Harare 447. Vocal

support also came from the Service Chiefs, who have benefited from

many of Gono's illegal activities, including the farm mechanization

scheme that saw high-ranking officers receive free farm inputs and

equipment. On May 26, Vice Air Marshal Henry Muchena warned, "If

you keep harassing Gono, we will take matters into our own hands."

¶3. ZANU-PF Sets Up Succession Committee: ZANU-PF spokesman Ephraim

Masawi confirmed on May 28 that his party held an extraordinary

politburo meeting which created a committee to deal with the

controversial issue of who within the party will eventually succeed

Mugabe. The committee is led by party chairman John Nkomo and

includes rival faction leaders Joyce Mujuru and Emmerson Mnangagwa.

Though local political analysts say a successor is unlikely to be

named anytime soon, the issue may again rise at this year's December

ZANU-PF party congress.

¶4. Msika to Retire?: According to The Zimbabwe Independent,

longtime ZANU-PF fixture, Vice-President Joseph Msika is on the

verge of retiring due to deteriorating health and the succession

problems within ZANU-PF. However, Mugabe is allegedly reluctant to

allow him to retire, preferring to keep him in office for life as

happened with Joshua Nkomo and Simon Muzenda.

¶5. AG's Office Still Pursuing Women, and Lawyers, and Journalists

Q5. AG's Office Still Pursuing Women, and Lawyers, and Journalists

(oh my!): The Magistrate's Court was busy on Thursday morning with

three political cases. 8 alleged WOZA women and two ZLHR lawyers

were acquitted on charges of disturbing the peace in February.

Separately, magistrate Catherine Chimhanda heard arguments in human

rights lawyer Alec Muchadehama's remand hearing for allegedly

HARARE 00000471 002 OF 003

obstructing justice when he secured the release of three of the

abductees on bail back in April. He may face trial on June 17.

Chimhanda also ruled that the two journalists from The Zimbabwe

Independent will stand trial on June 16 for allegedly publishing

falsehoods. Recently, Chimhanda has been the designated magistrate

in numerous political cases and has consistently sided with the

State, leading many to believe her objectivity has been

compromised.

¶6. Free Press Still a Distant Goal: Despite a recent pronouncement

by Prime Minister Tsvangirai that foreign and local journalists did

not need to possess a registered press card to report in Zimbabwe,

on May 23 the ZANU-PF led Ministry of Media, Information and

Publicity told all reporters they would be required to apply for

press cards from the commission. The cards cost up to 2,000 rand

(US$250) and issuance is not assured.

¶7. Pentecostal Pastor Abducted, Then Released: A prominent

Pentecostal pastor was abducted on May 26 by men in a white vehicle.

He was released the next day and remains in hiding. He has been an

outspoken supporter of the MDC.

¶8. Land Reform Threatens Conservancy: ZANU-PF heavyweights in

Masvingo are seeking to establish forced partnerships with land

owners in the Save Valley Conservancy. The Conservancy is home to

20 percent of Zimbabwe's rhinos. Rhinos have thrived in Zimbabwe's

private conservation areas, largely due to the massive private

investments made by landowners. See Harare 444.

¶9. Chiadzwa Footage Hits the International News: A team of Canadian

journalists recently visited the diamond fields of Chiadzwa. They

interviewed the Minister of Mining, Obert Mpofu, and one of the men

who says he helped with the mass grave that the government continues

to deny. See the story online: http://www.

cbc.ca/world/story/2009/05/26/zimbabwe-diamon ds.html

————————–

Economic and Business News

————————–

¶10. Local Pharmaceuticals Firm to Acquire South African Company:

Pharmaceuticals manufacturer CAPS Holdings Ltd is about to acquire

an unnamed South African pharmaceutical company in a share swap deal

that will see CAPS issuing new shares for the project. The shares

will be registered on the Johannesburg Stock Exchange's Pan African

Board.

¶11. Diamond Mine Re-Capitalizing: River Ranch Diamond Mine

announced that it will invest US$15 million in mine development and

exploration which will double output from the current 30,000 tons of

rock a month to 70,000 tons. The funds will be sourced from

shareholders. 20 percent of River Ranch is owned by retired general

Solomon Mujuru, who gained his stake at the expense of a local

company, Bubye Minerals. Bubye contested the ownership change but

was thwarted by the Zimbabwean courts.

¶12. Winter Wheat Crop Hampered by Funding Shortage: Wheat planting

Q12. Winter Wheat Crop Hampered by Funding Shortage: Wheat planting

is progressing slowly due to a shortage of funds for inputs. Lack

of liquidity in the banking sector is exacerbating the problem. In

addition, more farmers are shifting out of wheat and into barley as

beverages manufacturer Delta Corporation is providing inputs to

farmers to grow barley under contract for beer production.

¶13. Property Companies Record Increase in Rentals: Major property

developer Pearl Properties saw a rise in rental yields from 1.21

percent in 2007 to 3.11 percent in 2008 due to an increase in

rentals from US$0.28/m2 in 2007 to US$2.62 in 2008, a development

HARARE 00000471 003 OF 003

also reflected in the interim results of property developer

Mashonaland Holdings Ltd. Rentals are believed to be a tenth of

those prevailing in the region. Furthermore, they were 67 percent

in arrears in the first quarter of 2009, but fell to 40 percent by

the end of April.

¶14. Development Bank of Southern Africa in Loan Negotiation with

Zimbabwe: The government mouthpiece The Herald reported this week

that DBSA is conducting due diligence on two short-term loan

packages to Zimbabwe to provide US$100 million to upgrade

infrastructure in the energy, telecommunications and water supply

sectors. The report does not make clear whether the loan would be

ahead of arrears clearance.

¶15. Troubled Air Zimbabwe Sends Workers on Forced Leave:

Struggling with debt since off-budget support from the Reserve Bank

dried up earlier this year, Air Zimbabwe is reportedly sending out

notices to its workers to take time off at 50 percent of benefits

until recall. Workers see the move as the signal of impending

layoffs that could target as many as two thirds of the company's

1,400 employees.

¶16. Quote of the Week:

"They have no reason whatsoever to fear anything like that as long

as they fear and obey the laws of Zimbabwe."

– Attorney General Johannes Tomana on May 27 speaking in reference

to criticism that his office was prosecuting MDC-T MPs in an effort

to return control of Parliament to ZANU-PF.

MCGEE

(22 VIEWS)