Tsvangirai said Zimbabweans must count on themselves

Movement for Democratic Change leader Morgan Tsvangirai told Zimbabweans four years ago that though there was need for assistance from the international community to bring about economic recovery, Zimbabweans had to count for themselves.

The country has received very little direct foreign assistance from the international community apart from humanitarian assistance which is not being channelled through the government but has been on a recovery path though the growth is expected to decline this year.

Tsvangirai was addressing one of his star rallies in the run-up to the 2008 elections which his party won with a slender majority. He beat President Robert Mugabe in the first round but pulled out of the run off.

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Viewing cable 08HARARE163, Zim Notes 02-29-2008

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TREASURY FOR J.RALYEA AND T.RAND

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

COMMERCE FOR BECKY ERKUL

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E.O.12958: N/A

TAGS: PGOV PREL ASEC PHUM ECON ZI

SUBJECT: Zim Notes 02-29-2008

¶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.

——————————————— ——

Price Movements-Exchange Rate and Selected Products

——————————————— ——

¶2. *Parallel rate for cash soared to ZW$20million:US$1;

Bank transfer rate: Z$25million;

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

Sugar rose to Z$20million/2kg vs. controlled price of

Z$8million/2kg

Cooking oil rose to Z$22million/750ml vs. controlled price of

Z$9.3million/750ml

**Petrol and diesel more than doubled to Z$30million/liter vs.

controlled price of Z$60,000/liter

—————————–

On the Political/Social Front

—————————–

¶3. 25,000 Attend MDC Rally… MDC (Movement for Democratic Change)

President Morgan Tsvangirai launched his presidential campaign on

February 23 in the picturesque Eastern Highlands city of Mutare

located in Manicaland province Q the ancestral home of both

Tsvangirai and rival presidential hopeful Simba Makoni. The

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Tsvangirai faction was pleased that local police allowed the crowd

SIPDIS

to move from the bus and train stations to the rally site without

incident. Tsvangirai addressed an enthusiastic crowd of 25,000

blaming the governmentQs disastrous economic policies for destroying

ZimbabweQs once booming economy and leaving millions of its citizens

unemployed and hungry. The former labor leader acknowledged the

need for assistance from the international community to bring about

an economic recovery, but also said Zimbabweans must count on

themselves. Upon hearing about the size and success of the rally,

Mugabe reportedly said Qwhere is Makoni, I thought he was going to

take some of TsvangiraiQs support.

¶4. With this weekQs release of its manifesto and policy papers, the

MDC Tsvangirai faction is in full campaign mode. During the week,

Tsvangirai went on Qwalk-aboutsQ in the high density suburbs of

SIPDIS

Harare, talking with residents about his ideas for addressing the

Qunprecedented levels of poverty, unemployment and hunger.

Tsvangirai told us there are plans for more rallies in the cities

SIPDIS

and towns; they are also rolling out a Qnetworking campaign

strategy for the rural areas.

¶5. Makoni Launches Rallies This Weekend… Independent

presidential hopeful Simba Makoni, the former Finance Minister who

was recently expelled from ZANU-PF for challenging Mugabe for

president, will officially launch his campaign this weekend at

rallies in Bulawayo on March 1 and Harare the next day. With a

rising sun representing a new dawn in Zimbabwe as his formation

symbol, Makoni has generated great interest around the country with

his last minute entry into the race. Anecdotal reports suggest

large numbers of potential voters registered to vote immediately

after his announcement, but skepticism still remains among voters

about his motives and authenticity. What also remains to be seen is

whether disgruntled ZANU bigwigs come out in his support.

¶6. A Run-Off Presidential Election Could Be In the Cards…

Zimbabwe is abuzz with the idea of a possible run-off in the

upcoming presidential polls. With Simba Makoni throwing his hat in

the ring along with Mugabe and MDC opposition leader Morgan

HARARE 00000163 002 OF 004

Tsvangirai, there are now three viable candidates contesting for

SIPDIS

State House. The Electoral Act states that the successful

presidential candidate must receive a majority of the total number

of valid votes cast Q i.e., at least 50 percent plus one vote. If

that does not occur, a run-off election must be held within 21 days

between the top two candidates. If the second election results in a

tie, Parliament sits as an electoral college to decide between the

two candidates by secret ballot and without debate. In the 2002

presidential election, Tsvangirai secured 42 percent of the votes,

with the majority of these being in the urban areas, against

MugabeQs 56 percent which was predominantly in the rural areas.

With nearly 3 million votes cast in the 2002 contest which was

blatantly stolen from Tsvangirai by rigging, the difference between

Mugabe and Tsvangirai was only about 425,000 votes. Many political

analysts believe a run-off will only come into play if ZANU

break-away Makoni is able to lure some of MugabeQs rural support.

¶7. Teachers Out On Strike, Again… Following on the heels of the

abduction and brutal attack on nine Progressive TeachersQ Union of

Zimbabwe (PTUZ) members by ZANU-PF youths last week, Zimbabwe

TeachersQ Association (ZIMTA) on February 28 called for teachers to

go on a full-scale strike until a minimum monthly salary of ZW$3.5

billion (US$140 at the parallel bank transfer rate) and other

demands are met. ZIMTA, representing 55,000 of the roughly 110,000

teachers in the country, told us that teachers were angry with

rumors that military and police received large bonuses ahead of

elections while the government has failed to make good on teachers

retention allowances, as agreed in January. The strike comes at a

volatile time as teachers – influential opinion makers in

communities – sit at home disgruntled, and parents scramble to deal

with idle children as elections approach. Moreover, teachers

normally serve as the bulk of poll workers during elections. ZIMTA

said the Zimbabwe Elections Commission (ZEC) had yet to contact the

teachers to serve as poll workers, but if and when it does, the

labor group would QunofficiallyQ encourage its members not to

participate in light of the labor action. Morgan Tsvangirai told us

that ZEC faces a real problem if they choose to by-pass the

disgruntled teachers or if teachers make themselves unavailable.

One would then expect to see plain-clothed military and police

serving as poll workers on Election Day Q which would be a violation

of the amended Electoral Act.

¶8. USAID DAA Franklin Moore Visits Zimbabwe Programs… Starting

his Washington posting by visiting field operations, USAID Deputy

Assistant Administrator for Africa Franklin Moore spent three days

in Zimbabwe meeting with civil society leadership, discussing

strategy with the donor community, and monitoring programs. A

former resident of Zimbabwe, Moore expressed surprise at the drastic

decline in the state of the infrastructure and of the economy.

Joined by USAID’s Director of the Office for Southern African

Affairs Eric Loken, Moore discussed the political future with

opposition party leader Morgan Tsvangirai and other heads of civil

society organizations. Moore attended a Prayer Breakfast with civil

society leaders; toured a New Start HIV counseling and testing

center and the office of the Counseling Services Unit; visited Joint

Initiative project sites in Chitungwiza related to shelter,

education, and livelihoods support; and met with a leading

economist, banker, and business people representing the private

sector and agrarian sector to learn more about the state of the

economy. In separate discussions, USAID partners raised linkage

between humanitarian and development programs and potential ways to

alter some relief strategies to help sustain the livelihoods of

beneficiaries. Moore and Loken are joining Ambassador McGee and

USAID Mission Director Karen Freeman at the SADC region Heads of

Mission Conference in Cape Town this week, where Zimbabwe is a

featured topic of discussion.

¶9. QThe HeraldQ Publishes U.S. AmbassadorQs Op-ed On Voting

Rights… The GOZ-controlled QThe HeraldQ newspaper surprised us

HARARE 00000163 003 OF 004

and published, unabridged, on February 25 an opinion piece by

Ambassador McGee urging Zimbabweans to exercise their voting rights

in the forthcoming elections. But it also ran a half page piece in

the same issue titled, QU.S. interest in ZimQ elections baffling,

noting that QArtists, be they musicians, painters, sculptors or

writers, thrive on the skill of concealing messages in their

artworks,Q and stating that the opinion piece had an Qalarmist,

vague and sometimes condemnatory manner.Q In addition, it carried a

full page diatribe the next day headlined “U.S. Enemy of Zim

Democracy.” See full editorial at http://harare.usembassy.gov.

————————–

Economic and Business News

————————–

¶10. *The Zimbabwe Dollar Continues To Swoon… The local currency

continued to depreciate sharply on the parallel market with the cash

rate falling from Z$6million to Z$20 million:US$ in February while

the bank transfer rate dropped from Z$7million to Z$25 million:US$.

The Reserve Bank of Zimbabwe continues to drive the market as it

struggles to raise foreign exchange by any means.

¶11. ZECO Listing Lifts Zimbabwe Stock Exchange… ZECO Holdings,

an engineering and construction company, listed on the ZSE at four

times its initial public offer price. ZECO Holdings was set up

recently to consolidate the ownership of Delward and Crittal-Hope,

both owned by Native Investments which, in turn, is owned by the

former ZANU-PF chairman for Mashonaland West, Phillip Chiyangwa.

Native Investments had an 82.58 percent stake before the listing and

now controls 66.05 percent of the new company. The performance

followed a surprisingly successful IPO which was oversubscribed by

1.5 times, brushing aside negative sentiments arising from worsening

economic fundamentals and the companyQs link with Chiyangwa.

¶12. ZECO’s performance has lifted the whole market, which, in

addition, is being driven by surplus conditions on the money market

as well as the run in the parallel exchange rate. ZSE market

capitalization is now $67.6 quadrillion (US$2.68 billion at the

parallel bank transfer rate); industrials are up 171.2 percent this

year. Satisfied with his first IPO, Chiyangwa promised to come back

to the stock market to take another of his companies – Pinnacle

Property Holdings – public.

¶13. **Price Spikes As Fuel Supply Tightens… Many Caltex service

stations did not receive fuel deliveries this week, but fuel was

available at Direct Fuel Import (DFI) service stations at

US$1.25-US$1.30 per liter (roughly US$5/gallon). The QZimbabwe

IndependentQ reported today that fuel shortages are looming as

government has started stocking diesel and petrol for the election

campaign and the National Oil Company of Zimbabwe (NOCZIM) has been

directed to hold on to the fuel they have imported on behalf of

private companies.

¶14. Grim Results From Mining And Construction Sectors… RioZim

recorded a significant decline in minerals production and real

earnings during the second half of 2007. Production at the Renco

gold mine, the Empress Nickel Refinery, and Murowa Diamonds fell

sharply while coal from the Sengwa Colliery held steady. Adverse

factors included an unrealistically low gold support price, the

continued failure by the Reserve Bank to pay the foreign currency

component of gold deliveries (which consequently compromised

RioZimQs ability to discharge its foreign liabilities), power

outages and an inconsistent supply of oxygen, as well as an

uncompetitive exchange rate. Moreover, RioZim was not spared the

problem of skills flight which is crippling production at most

mining houses. According to the Chamber of Mines, this factor is

set to lead to a further decline in minerals production until

working conditions and remuneration improve.

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¶15. At the manufacturing arm of Murray and Roberts Zimbabwe, one of

ZimbabweQs leading construction and engineering companies, capacity

utilization fell to 10-15 percent in the second half of 2007. Price

controls and water and power cuts played havoc with production,

according to CEO Canada Malunga at an analyst briefing this week.

Looking ahead, M and R is focusing on toll manufacturing. On the

construction side, analysts concur that the short to medium term

outlook for the company is grim and only an economic recovery will

revive operations. Imara Asset Management noted that the scope for

the repair of roads, water pipes and the sewer system alone presents

vast opportunities that the company could exploit. But these

capital-intensive projects would most probably have to be funded

from external sources and these sources will remain elusive until

the political situation stabilizes.

¶16. Quote Of The Week From Murray and Roberts CEO Canada Malunga At

AnalystsQ Briefing This Week:

QEveryday we are recruiting to train new students from Harare

Polytech, Bulawayo Polytech, UZ (University of Zimbabwe) and NUST

(National University of Science and Technology) but also losing

trained people each day. In other words we have diversified into

tertiary education… there are also employees who come for less

than three months and leave for Botswana, just to have Murray and

Roberts on their CVs.

DHANANI

(50 VIEWS)