Zim Notes 03-28-2008

UNCLAS SECTION 01 OF 03 HARARE 000243 SIPDIS AF/S FOR S.HILL ADDIS ABABA FOR USAU ADDIS ABABA FOR ACSS NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN TREASURY FOR J.RALYEA AND T.RAND STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN COMMERCE FOR BECKY ERKUL SIPDIS E.O.12958: N/A TAGS: PGOV PREL ASEC PHUM ECON ZI SUBJECT: Zim Notes 03-28-2008 HARARE 00000243 001.3 OF 003 ¶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. Price Movements-Exchange Rate and Selected products Parallel rate for cash steady at ZW$42million:US$1; bank transfer rate: Z$65 million; official rate: ZW$$30,000:US$1 Sugar rose to Z$50 million/2kg vs. controlled price of Z$8million/2kg Cooking oil more than doubled to Z$95million/750ml vs. controlled price of Z$9.3million/750ml Petrol and diesel rose to Z$60million/liter vs. controlled price of Z$60,000/liter -------------- On the Political/Social Front -------------- ¶3. Zimbabweans Head To The Polls... A poll conducted by the Mass Public Opinion Institute of Zimbabwe (MPOI) from March 3 to March 10 showed the MDCQs Tsvangirai with about 30 percent support, President Robert Mugabe with about 20 percent, and Simba Makoni with about 9 percent. Thirty percent declined to state a preference; the individuals who conducted the poll believe that most of this group is sympathetic to the opposition. The MPOI poll comports with what Embassy pre-election teams who visited a number of provinces found: significant and growing support for Tsvangirai. Countering the MPOI poll is a poll conducted by Joseph Kurebwa, a University of Zimbabwe lecturer known to be sympathetic to Mugabe. He claims to have sampled over 10,000 voters between February 15 and March 15 and found that Mugabe had 56 percent support, Tsvangirai 26 percent, and Makoni 13 percent. This poll may be an attempt to justify a Mugabe victory which we believe cannot be achieved without significant rigging. See Harare 227. ¶4. Sparse Attendance At Makoni Meeting In Harare... Independent presidential candidate Simba MakoniQs March 26 meeting in Harare targeted at women attracted only about 60 people, including SADC observers and other independent candidates such as Fay Chung. Makoni responded rather unconvincingly to the audience's questions on social issues by saying he did not have any answers to their concerns but as president would work to remove the barriers put in place by ZANU-PF that prevent people from solving their own problems. Makoni also argued that he was not a newcomer and had always spoken out against poor GOZ policies when he was on the ZANU-PF Central Committee and Politburo. ¶5. Health Sector Assessment... Dr. Sambe Duale from Tulane University School of Public Health conducted a rapid assessment of ZimbabweQs public health system for USAID from March 10-15. The purpose was to provide an independent view of the current state of the health care system and formulate recommendations for increased support for short-term assistance to mitigate the effects of the current social and economic decline. Despite the difficult and deteriorating health care delivery environment, the dedication shown by health care workers to maintain service provision is remarkable. It is clear, as evidenced by the HIV programs, that little investments in the system can yield outstanding results. While health sector human resources, essential drugs, water and sanitation, immunization, maternal and newborn health, and supply chain logistics management were all recommended areas of focus, essential drugs and supply chain delivery would be ripe for rapid start-up for USAID given current in-country partners and existing HARARE 00000243 002.2 OF 003 activities. -------------- Economic and Businss News -------------- ¶6. Tighte Monetary Policy... In a move to mop up excess liuidity that has been averaging Z$4 quadrillion a ay, driven primarily by high government expenditre associated with the upcoming elections, the Rserve Bank of Zimbabwe (RBZ) this week increased te term of excess liquidity management zero-coupo bonds to 90 days from seven days; hiked statutor reserve requirements on demand deposits for comercial and merchant banks from 35-40 percent to 50percent; and increased secured and unsecured accmmodation rates from 1,200 percent to 4,000 percent and from 1,650 percent to 4,500 percent respectively. It will now be extremely expensive for banks to borrow from the RBZ in case of shortages on the market. While the tightening of monetary policy in a hyperinflationary environment is welcome, these measures, in fact, penalize banks for a crime they did not commit and increase the fragility of the sector by reducing banksQ ability to lend profitably to the private sector. The more prudent measure to counter excess liquidity would have been to reduce GOZ spending. ¶7. RBZ Set To Raise Daily Cash Withdrawal Limit... Daily cash withdrawal limits will rise from Z$500 million to Z$5 billion with effect on April 4, 2008. The increase will alleviate a cash shortage on the street that has arisen from the high transactions demand for cash under hyperinflation. Although banks are currently receiving all the cash they order from the RBZ, the low withdrawal limit and consequent shortages slowed depreciation of cash on the parallel market this week. ¶8. Civil Servant Salary Increases And An Apparently Hollow Threat Of Another Price Blitz... The average salary of a civil servant went up from Z$100 million in December 2007 to Z$500 million on February 12, and was reportedly revised up again last week to more than Z$4 billion a month (close to US$100/month). At a rally on March 21, calling price increases part of a scheme to effect regime change, President Mugabe threatened the riot act if businesses did not roll back prices to February 12 levels. The GOZ met with the business community on March 25 to discuss its Qunjustified price increases,Q but an official from the Confederation of Zimbabwe Industries (CZI) told us with relief that a price rollback was not discussed; the focus was on business abiding by the price control mechanisms already in place. ¶9. No Noticeable Increase In Supermarket Stocks... Contrary to our expectations, and perhaps a sign of just how tight grocery supplies continue to be, HarareQs supermarket shelves have failed to fill up in this pre-election week. The aisles are still bare of most price-controlled goods like fresh meat (except pork),milk, maize meal, cooking oil, sugar, eggs and flour; bread deliveries arrive only sporadically. -------------- Quotes Of The Week -------------- ¶10. President Mugabe addressing a rally in Bulawayo on March 23: QYou can vote for them (MDC),but that will be a wasted vote. You will be cheating yourself as there is no way we can allow them to rule this country. ¶11. Independent presidential candidate Simba Makoni addressing a rally in Chitungwiza on March 20, as reported in The Herald, March 24: QThere are stories that I have some Qbig wigsQ behind my campaign but I want to make it clear today, I have no so-called Qbig wigsQ from the ruling party behind my campaign. My Qbig wigsQ are HARARE 00000243 003.2 OF 003 the people who are going to vote for me... ¶12. Chorus to the ZANU-PF campaign jingle aired regularly on the GOZ-owned radio stations: If you want a farm, Vote ZANU-PF If you want a business, vote ZANU-PF For a visionary leader, vote ZANU-PF For consistent leadership, vote ZANU-PF ¶13. And Another Rich Pre-Election Week for Cartoons... See the Word version of Zim Notes for those, and have a safe and quiet weekend. MCGEE