Govt may ax EPZs

UNCLAS HARARE 002365

SIPDIS

STATE FOR AF/S
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
USDOC FOR 2037 DIEMOND
TREASURY FOR OREN WYCHE-SHAW
PASS USTR FLORIZELLE LISER
STATE PASS USAID FOR MARJORIE COPSON


E. O. 12958: N/A
TAGS: EINV ETRD ECON EFIN PGOV ZI
SUBJECT: Govt may ax EPZs



1. Summary: Yesterday's Herald suggests the GOZ may
eliminate export processing zones (EPZs),taking to the
next level its obliteration of a once-thriving and
diversified economy. End summary.


2. The lead article in the State-run Herald's business
section announces: "EPZs fail to deliver - RBZ [Reserve
Bank of Zimbabwe]." In recent weeks, the GOZ has implied
that firms in EPZs are sheltering foreign exchange from
Reserve Bank controls. Although we have not heard
anything definitive from GOZ sources, the Government
appears to be laying the groundwork for de-certification
of EPZs.


3. Comment: EPZ companies continue to do well, since they
are not subject to the GOZ's mandatory exchange
requirements and take full advantage of an industrious
workforce at very low wages. It is one area of this
plummeting economy that is even drawing new investment.
Although GOZ statistics are sketchy, we believe most
Zimbabwean exports to the U.S. now originate in EPZs. If
EPZ companies must comply with present export
regulations, most will no longer operate competitively.

Sullivan