ZIM NOTES 01-08-2010

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STATE PASS TO USAID FOR L.DOBBINS AND J. HARMON
COMMERCE FOR ROBERT TELCHIN

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TAGS: PGOV PREL ASEC PHUM ECON ZI
SUBJECT: ZIM NOTES 01-08-2010

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1. SUMMARY
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Vacations Delay Negotiations...
Diamond Sale Announced Then Cancelled...
MDC-T Investigating Corrupt Ministers...
Zim Ambassador Invades Malaysian-Owned Farm...
Teachers and Mine Workers Threaten Strikes...
Michael Jackson's Ghost Sighted in Zimbabwe...
Counterfeit US$50,000 Found in Toilet...
Gono Sells Own Bank to German Investors...
Electricity Utility Seals a Deal with Botswana Power Company...
Mobile Phone Giant in Talks with State-Owned Mobile Operator...
Economic Woes Take their Toll on Redcliff Town...

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On the Political and Social Front
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2. Most Zimbabweans remained on vacation this week. President
Mugabe is rumored to be in Asia and Prime Minister Tsvangirai has
been in Dubai and the Seychelles. The principals are expected to
return mid-January at which point they and their negotiators will
attempt to resolve the remaining outstanding issues: the
appointments of Gono, Tomana, Bennett, and the governors. Parliament
will also re-open mid-January.


3. On Thursday The Herald announced that Mbada Diamonds, one of the
companies currently digging in the controversial Marange diamond
fields, was planning to sell 300,000 carats (approximately 60 kgs)
of diamonds in an auction on January 7 to international buyers. This
came as a surprise since the Kimberley Process action plan on
Zimbabwe that was signed in November stipulated that no diamonds
could be exported without approval of a monitor, who has not yet
been designated. In a quick about-face, announcements late Thursday
cancelled the sale, with the Deputy Minister of Mines Murisiwi
Zwizwai explaining that the government was not aware of the sale and
had not approved it.


4. The MDC-T announced that it has set up a 13 member team to
investigate reports of alleged corruption by three of its (unnamed)
cabinet ministers, several law makers, and councilors and vowed to
dismiss those found guilty. Recently the party took drastic measures
to weed out corruption from its ranks and dismissed the mayor and
suspended a councilor from Chitungwiza. The party announced that it
will adopt a code of conduct that will require its ministers,
legislators, and councilors to declare their interests and assets as
a measure to fight corruption.


5. On Tuesday, Zimbabwe's Ambassador to Tanzania, Edzai Chimonyo,
was ordered by the High Court to vacate a banana plantation he
occupied over the festive season in Manicaland, but the retired army
general refuses to leave the farm. The property, Fangundu Farm,
southeast of Mutare, is owned by a Dutch and Malaysian company and
is protected by a Bilateral Investment Promotion and Protection
Agreement (BIPPA). Chimonyo has reportedly ordered armed soldiers
onto the property and has begun harvesting bananas in spite of
Tuesday's High Court order. A Lands Ministry official in Mutare
described the High Court ruling as "just a piece of paper."
Qdescribed the High Court ruling as "just a piece of paper."


6. Demanding increased salaries, teachers' and mine workers' unions
are threatening to go on strike. Teachers from both of the major
teachers' unions have reiterated their demand, which they've been
making for the last year, for a wage that complies with the poverty
datum line, most recently estimated at US$600. The next semester is
scheduled to begin on Tuesday January 12. Like other civil servants,
most teachers make US$150 per month. Similarly, the Associated Mine
Workers' Union of Zimbabwe is threatening to strike after failing to
reach an agreement with the Chamber of Mines. The Chamber said they

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were only prepared to pay a minimum wage of US$80, a reduction from
the previous minimum wage of US$100, while the mineworkers were
demanding a minimum wage of US$200.


7. Just when we thought we'd heard it all, we learned this week
that The King of Pop has chosen a Catholic girls school in Harare as
his preferred haunting grounds. According to press reports, during a
nativity play at St Mary's Mission School, children dressed as Mary,
Joseph, and the Wise Men were on stage when suddenly the lights went
out, then a "ghost-like being" appeared on stage waving a
white-gloved hand. The terrified students emptied the hall along
with the supervising nuns. Almost all students later agreed that it
was Michael Jackson. "It definitely was MJ" noted Theresa, a student
at the school. "It was his face and his clothes. He smiled and waved
at us." We're not convinced, but this is Zimbabwe, where anything is
possible.


8. In other "even we can't make this up" news, a Harare man was
arrested after he was found hiding fake bills totaling US$50,000 in
a toilet at a stationery shop, according to The Herald. This is one
of several recent arrests of producers and dealers in counterfeit
currency.

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On the Economic and Business Front
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9. In a rare spasm of efficiency, Reserve Bank of Zimbabwe (RBZ)
Governor Gideon Gono approved in record time the sale of 54 percent
of a local financial institution, Premier Bank, to German investors.
It happens that Gono and an ally were Premier Bank's main
shareholders. The deal worth US$6 million saw the RBZ unilaterally
fast-tracking a waiver on Zimbabwe's stringent banking and
indigenization policies to allow foreigners a controlling stake in
order to facilitate recapitalization. Gono and his crony, RBZ
supervision chief Norman Mataruka, reportedly owned 50 percent of
Premier Bank, with a further 4 percent belonging to Mataruka's
brother-in-law.


10. The Zimbabwe Electricity Supply Authority (ZESA) has entered
into a contract worth US$8 million with the Botswana Power Company
that will see it revive the Bulawayo Thermal Power Station.
According to ZESA, the deal will enable the company to produce 90
megawatts of electricity with 40 megawatts being exported to
Botswana while the remainder will be consumed locally, thereby
reducing load shedding.


11. According to a report in the Financial Gazette, MTN has set its
sights on acquiring a significant stake in Zimbabwe's state-owned
mobile phone provider, NetOne. Although NetOne executives have
refused to comment on developments, officials from MTN have been
camped at NetOne's offices for nearly a month now. Many analysts
believe that a deal is imminent.


12. The town of Redcliff in the Midlands has reportedly collapsed
following the closure of the town's main industry, Zimbabwe Iron and
Steel Company. Most companies operating in the town have stopped
QSteel Company. Most companies operating in the town have stopped
paying local taxes to the Redcliff council, citing viability
problems, while residents are also not paying because of difficult
economic conditions. As a result of these problems, the Town Council
is failing to settle its bills with electricity and telephone
services providers ZESA and TelOne.

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Quotes of the Week
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13. "The entire process of mining, transportation to marketing is
being done in compliance with the requirements of the Kimberley
Process." -- Robert Mhlanga, Chairman of Mbada Diamonds, The Herald,

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January 7, 2010.


14. "The due process for selling diamonds produced in Zimbabwe
involves the Minerals Marketing Corporation of Zimbabwe, ZRP
Minerals Unit, the Ministry of Mines and Mining Development, and
Zimbabwe Mining Development Corporation where diamonds from Marange
are concerned... In the case of Mbada Diamonds, this process is yet
to happen."
-- Ministry of Mines Permanent Secretary Thankful Maskukutwa,
The Zimbabwe Independent, January 8, 2010.

RAY