Sanctions hurting but government to blame for problems

Sanctions imposed on Zimbabwe by the United States and Europe are taking their toll on the average Zimbabwean. But political and economic commentators say the government, and not sanctions, is largely responsible for the mess the country is in.

The United States and the European Union imposed “smart” or “targeted” sanctions on Zimbabwe more than five years ago to force the country to implement good governance.

The sanctions were imposed soon after Zimbabwe’s land reform programme giving the government a plausible excuse that the sanctions were aimed at reversing the programme.

The sanctions are supposed to be targeted at top ZANU-PF officials and companies. These officials are barred from travelling to the United States and to Europe except on United Nations business. Their assets in those countries are also supposed to have been frozen.

Central bank governor Gideon Gono says the sanctions, both declared and undeclared, have caused untold suffering to the average Zimbabwean.

Quoting United Nations secretary-general Kofi Annan, Gono said: ” sanctions remain a blunt instrument which hurts large numbers of people who are not their primary targets”.

The sanctions have ravaged the country. Four out of every five people are poor. Even those employed are no better off. Inflation at 782 percent is eating away workers’ incomes. The average worker needs six months’ wages to afford a single month’s basics.

The country, once regarded as the jewel of Africa, has been reduced to a basket case. It cannot even feed itself. Even with the heavy rains it received this year, it may have to import 1.3 million tonnes of maize.

The economy has shrunk by nearly half over the past five years and it continues to shrink. Only 3.6 percent of industry is operating at full capacity.

Gono says international isolation has cut off foreign currency inflows into Zimbabwe with capital inflows into the private sector slumping from US$144 million in 1998 to US$8.9 million in 2001 and to zero last year.

Foreign direct investment declined from US$444.3 million in 1998 to a mere US$3.8 million in 2003. Zimbabwe cannot, therefore, service its debts. Its arrears ballooned from US$109 million in 1999 to US$2 073.7 million by the end of last year.

Credit lines have been cut off. Businesses have to pay cash upfront. When granted credit, they pay high rates of interest ranging from 8 to 15 percent above LIBOR, the London Inter Bank Offered Rate, the interest rate at which larger banks are prepared to borrow and lend.

Donors deserted the country abandoning even social projects like education and health. Tourism had become the country’s second largest foreign currency earner but visitors were warned that it was risky to travel to the country. Arrivals dropped by more than half from 600 000 in 1999 to 281 105 in 2002.

The shortage of foreign currency resulted in the country failing to pay its electricity and fuel imports. Zimbabwe imports 40 percent of its electricity from South Africa, Zambia and the Democratic Republic of Congo.

Motorists now rely on fuel brought by individuals in drums from neighbouring Botswana and are coughing up more than $220 000 a litre.

Zimbabwe National Chamber of Commerce President Luxon Zembe said sanctions had adversely affected business because Zimbabwe had been excluded from participating in programmes like the United States’ Africa Growth Opportunity Act (AGOA), which offered preferential treatment for exports from Africa.

Some 37 African countries are benefiting from AGOA.

Zimbabwe was, until quite recently, unable to access funds under the Global Aids Fund yet it has one of the highest AIDS prevalence rates in Southern Africa. An estimated 1.8 million people in Zimbabwe have Aids. This is more than the entire population of neighbouring Botswana which is one of the beneficiaries.

But Zembe, who at one time was included on the Australian sanctions list, was quick to add that the government was to blame for 80 percent of the country’s problems because it was not willing to work harmoniously with the business sector and labour.

“Sanctions are hurting, yes, but we can beat them if we work as a team,” Zembe said. “Rhodesia had worse sanctions but it survived. We can do better, but government has ditched business and labour accusing them of working with its enemies.”

He said the greatest problem in Zimbabwe at the moment was that people “just loved to be told lies”.

Zembe said Zimbabweans have been told a series of lies over the years and they had swallowed them. He gave the example of bumper harvests that had been predicted only to see the country run out of food, fuel supplies that were promised only to see the county run completely dry, and declines in inflation that were projected only to see it reach record levels.

“Look at how much we poured into food imports. We could have averted this if we had simply accepted that we had a shortage of food. When someone starts accepting one’s mistakes half the job is done,” Zembe said.

“Half the time we are behaving like a sick person who will not admit that he is sick and will therefore not take his medicine. But even the bible says: ‘It is better to have wise people reprimand you than to have stupid people sing your praises’,” he said.

Political scientist, John Makumbe, said though sanctions were hurting the poor, they were working.

“I personally think they have done a tremendous job. They are hitting the right target. I know two ministers who could not attend their daughter’s weddings because of the travel ban. They were really hurt and, despite their statements to the contrary you can see them salivating to go to London.

“Mugabe has started opening doors to talks with British Prime Minister Tony Blair. He has paid off the International Monetary Fund arrears because he does not want to be kicked out. So the sanctions are working. It may be slow but they are working,” Makumbe said.

Lovemore Matombo, President of the country’s labour federation, the Zimbabwe Congress of Trade Union (ZCTU), said the sanctions were just a travel ban. They were not likely to change much because Zimbabwe’s problems were internal.

“We have always argued that the government has to change the country’s political risk factor, the way people view Zimbabwe as an unsafe country to work or invest in and even to visit. It has to sign the Kadoma Declaration but it is prevaricating,” Matombo said.

But as the saying goes, when elephants fight, it is the grass that suffers. While the government, business and labour defend their positions, the average Zimbabwean is finding it harder and harder to survive.

Posted-16 March 2006

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