ZANU-PF women’s league threatens to take over companies

The Zimbabwe African National Union-Patriotic Front Women’s League said it had drawn up a list of companies that were profiteering and threatened to seize control of these companies.

Information and Publicity secretary Nyasha Chikwinya said the companies were creating “artificial shortages” sabotaging central bank governor Gideon Gono’s efforts to contain inflation.

The United States embassy said ZANU-PF was trying to scapegoat private sector greed for its failure to keep inflation in check.

It said the Gono-inspired era of relative goodwill between the central bank and the private sector was coming to an unceremonious end.

Full cable:

Viewing cable 05HARARE525, GOZ THREATENS NEW PRICE CONTROLS

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This record is a partial extract of the original cable. The full text of the original cable is not available.

071332Z Apr 05

C O N F I D E N T I A L HARARE 000525

SIPDIS

AF/EX

AF/S FOR BNEULING

EB/IFD FOR FCHISHOLM

NSC FOR SENIOR AFRICA DIRECTOR C. COURVELLE, D. TEITELBAUM

TREASURY FOR OREN WYCHE-SHAW

DEPT PLEASE PASS TO ALL AFRICAN DIPLOMATIC POSTS COLLECTIVE

ALSO PASS TO USAID FOR MARJORIE COPSON

E.O. 12958: DECL: 12/31/2009

TAGS: ETRD PGOV ZI ECON EINV

SUBJECT: GOZ THREATENS NEW PRICE CONTROLS

Classified By: Ambassador Christopher Dell for reasons 1.4 b/d

¶1. (SBU) Summary: The GOZ’s daily Herald led its April 6

edition with an exhortation from Industry and Trade Minister

Samuel Mumbengegwi to the private sector to rescind recent

price hikes. The Herald, as well as GOZ-aligned Mirror,

echoed these warnings in Thursday’s editorials. A ZANU-PF

official has also announced that the party’s Women’s League

has drawn up a list of “profiteering” companies to seize

control of. Fearing an uncertain commercial environment and

the reinstatement of price controls, which caused widespread

product shortages in 2003, Zimbabweans have been aggressively

stocking up on basic commodities. End Summary.

¶2. (C) Since it abandoned most price controls in mid-2003,

the GOZ has monitored prices but has mostly allowed retailers

to set them freely at any level. Firms tell us the GOZ has

reserved the right to approve price increases for a small

number of products, such as soft drinks. In these cases,

companies renegotiate new prices with the Industry and Trade

Ministry, resulting in temporary shortages while negotiations

stall.

¶3. (SBU) The Herald also said Secretary for Information and

Publicity Nyasha Chikinya of the ruling ZANU-PF’s Women’s

League has announced that her members were preparing to take

over companies that created “artificial shortages.” The

League has drawn up a list of companies to be seized,

according to the front page article.

¶4. (SBU) Thursday’s editorials in the Herald and Mirror were

similar, both alleging that the private sector is

“profiteering” by having increased many prices 100 percent

since the March 31 parliamentary elections. The papers

asserted that firms were creating shortages in order to boost

prices, undermining the efforts of Reserve Bank (RBZ)

Governor Gideon Gono to contain inflation.

Comment

——-

¶5. (C) Recent price hikes result from a first quarter

zimdollar depreciation of over 50 percent. The parallel

exchange rate, now used by most importers to purchase foreign

exchange, fell during January-March from Z$10,000 to

15,000:US$. Few importers have been able to access forex

through the RBZ’s twice weekly auctions at the preferential

Z$6,000:US$ rate.

¶6. (C) Since inflation has already almost certainly eclipsed

the 20-35 percent band for 2005 laid out by Central Banker

Gono on January 26 and repeated in daily ZANU-PF campaign

advertisements, it is possible the GOZ will begin to

scapegoat private sector greed for its failure to keep

inflation in check. In any event, it appears the

Gono-inspired era of relative goodwill between the RBZ and

private sector is coming to an unceremonious end.

Dell

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