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Robert Mugabe forces Zimbabwe aid agencies into cash crisis
Peta Thornycroft, The Telegraph
October 19, 2008

View article on the Telegraph website

In a bid to stop speculators profiteering on the wide gulf between the official and black market exchange rates, the Zimbabwean reserve bank has cancelled the inter-bank money transfer system used by businesses and aid agencies to move cash around.

With daily cash withdrawals limited to Z$50,000 a day - worth just £1.20 given Zimbabwe's current soaring inflation rate - it has become impossible for relief workers to make the large payments necessary to buy and distribute food or pay staff wages.

The banking restriction came despite a warning last week by the United Nations that nearly one third of Zimbabwean under-fives were now malnourished, and that nearly half the population would depend on emergency food aid by next year.

"We cannot get money from the banks to pay people to distribute the food, it is as simple as that," said the operations manager of one of the top three distributing agencies, which has been working in Zimbabwe for the last 16 years.

"We can't pay our staff hotel bills, or buy food for our field workers, or even advertise for people we need to hire to distribute food," he said.

"We have enough food in the warehouse to ensure no one starves, and we have enough money in the bank to finance our operations, but the Reserve Bank (of Zimbabwe) will not give us access to it."

The aid agencies spoke out as power sharing talks between Mr Mugabe's ruling Zanu PF party and the opposition Movement for Democratic Change, led by Morgan Tsvangirai, appeared to be on the verge of collapse.

Mr Tsvangirai is refusing to give way to Mr Mugabe's insistence that Zanu-PF should remain in control of the home affairs ministry, which controls the security forces widely blamed for intimidating and killing MDC supporters following elections earlier this year.

"The (powersharing) agreement is rubbish," one Western diplomat told The Sunday Telegraph. "It is a pathetic agreement and it was only a question of time before it collapsed, as Zanu PF has no intention of abiding by any of its conditions."

Both sides have now asked the Southern African Development Community to intervene in the talks mediated by former South African president Thabo Mbeki, and will meet in Swaziland tomorrow.

Mr Mugabe banned all non-governmental organisations (NGOs) from working in rural areas after he lost the first round of the presidential elections to Mr Tsvangirai.

He claimed NGOs had been handing out food to supporters of Mr Tsvangirai, and only allowed them to resume their work in August.

The Zimbabwean central bank cancelled inter bank transactions - known as the Real Time Gross Settlement system - on the orders of its governor, Gideon Gono, who is viewed as the president's personal banker and widely regarded as the most powerful man in the country after Mr Mugabe.

Critics accuse him of diverting public money to support Mr Mugabe's ruling Zanu PF party and of fuelling the current inflation crisis by printing banknotes.

When he cancelled inter bank transfers, he made no exception for humanitarian agencies. Now, like the rest of the population, they are struggling to operate in a country where cash devalues so fast that every supplier demands instant cash payment.

"We have workers stuck in hotels which have no food because they have no cash to buy food," said a worker with one agency. "Every bit of foreign money we bring in to the country has to go through the Reserve Bank.

"You would think the government or the welfare ministry would ease our way, be happy we were feeding the people, but instead they make it impossible for us to work."

The chaos caused by the government's latest inept efforts to rein in hyperinflation can be seen outside any bank or building society, where queues to withdraw money last from dawn to dusk, and where grown men often weep if they are turned away as darkness falls.

A senior civil servant, who queues nearly every day to withdraw his government salary in amounts equivalent to £2.20 each time, said: "We come here at six in the morning. We eat nothing before we leave, we eat nothing during the day, we have no water to drink - and then sometimes we go home without money because the bank has run out of cash."

Last week the United Nations in Zimbabwe took the issue up with the Reserve Bank, but to no effect so far.

"We don't want to believe that this is deliberate," said the chief executive of one of the largest donor organisations in Zimbabwe.

Eric Matinenga, an MDC MP for a rural constituency 150 miles south of Harare, said: "My constituency is in a desperate state and people are in a very bad way. I was not aware of this. We have to go to parliament about this."

David Coltart, an MDC MP from the country's second city, Bulawayo, said he has had a harrowing week in his urban constituency. "The food shortage is catastrophic," he said.

"There are HIV Aids patients on anti-retrovirals who have not had adequate food supplies for two months and some of them are at death's door. There are probably 25,000 others in my constituency alone also at death's door.

"One tall woman who weighed 75kg in January is now down to 43kg. I see this every day. About two million people need food now, and it will be five million by January. The situation is absolutely critical."

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