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The immediate outlook
Eddie Cross
August 28, 2005

It is not possible to look too far ahead in Zimbabwe - conditions are just too unstable and literally anything could happen any day. I get up every day thinking - is this the day when it all happens? But whatever happens, the immediate outlook is pretty grim and I think it needs analysis and description.

If we start by examining the economic outlook, sector by sector, this reveals a truly alarming situation. In respect to agriculture, it is now too late to prevent the disaster that is going to happen this summer as food production and the production of all export crops plunge to new lows. There is little seed available, no fuel for land preparation, no chemicals and very little fertilizer. It is now just 85 days away from the critical date for planting and there is just not enough time left to overcome the present shortages. We are about to see another year wasted and another year during which Zimbabwe will be another African country requiring emergency food aid.

In mining the situation is only marginally better with all investment frozen by hostile government policy decisions and a poor domestic economic outlook - at a time when for the first time in 50 years, basic commodity prices are rising in real terms. In industry and commerce the situation is critical - one businessman said to me today - "we have no coal, no diesel, no chemicals and no sign of any relief". For many, if not most industrial firms, they are close to closure.

In the tourism sector, the position is no better - occupancy rates are below break even, many hotels and resorts are closed and the major hotel groups are all making losses and being forced to cut back on everything. Recent changes to the tax regime do not help and a new tax on transactions on the stock market of 10 per cent on both sales and purchases simply makes it impossible for the bourse to function. The stock exchange has been virtually closed down since the Ministers statement on the 18th and once they start operating stock market valuations will plunge. One broker told me they are holding Z$3 trillion in "sell" orders.

Since he took office the Reserve Bank Governor, Gideon Gono, has closed down 10 asset management companies, 7 commercial banks and several other financial institutions. These closures have cost investors and customers many billions of dollars. Now these losses are being compounded by the huge impending losses of a stock market crash.

Citizens have seen their investments devastated by these developments and savings have been wiped out by inflation and low interest rates. Pensioners are living in penury unless they receive help from overseas or local sources. I doubt if confidence can be re-established in the financial services industry until there are major political changes in leadership and policy.

Then there is the inflation outlook. Inflation rates have risen every month this year and in July they rose at an annual rate of 10 000 per cent (I am told that this is what 47 per cent in one month translates into when compounded). August will be worse and I can see no sign of any slow down in price rises in September. How do we cope with these massive price rises in a collapsing economy? There is only one possible outcome - incomes are going to fall even faster and poverty in every sense is going to become much worse.

Then there is the humanitarian situation. We have at least 5 million people in need of food aid. This number will grow exponentially in the next three months and we need to import huge amounts of food - 120 000 tonnes of maize,
30 000 tonnes of wheat, thousands of tonnes of vegetable oils and fats and a significant proportion of our protein foods including milk and baby foods every month.

There is simply no way we can afford the bill and the State has still not asked for help. If these bottlenecks were overcome immediately, how do we get that volume of product into the country on a depleted rail network and a degenerating road transport system? If we do not get help and if this food does not arrive then the UN description of Zimbabwe as the worlds "worst humanitarian crisis" will take on graphic proportions. Unlike Niger and Mali, the television crews will not be here to bear witness to this failure - only the graves in poor villages across the country will be there to bear witness and by then it will be too late.

In the political sphere the news is no better. Mugabe has rejected the South African emergency loan proposals because of the conditions attached to them. I have never seen such an intensive media effort to obscure what is really going on as in respect to this loan debacle. I think even those whose job it is to confuse us are themselves confused by all that is going on. Mugabe has rejected the UN's overtures to stand aside and let them help; he has rejected the UN assessment of our needs and the humanitarian priorities. He has also rejected mediation by the AU and any independent assessment of the humanitarian crisis by the AU itself. He has rejected the mediation of an old friend and ally - Chissano.

Within Zimbabwe the political crisis evolves on a daily basis. Powerful Zanu and military figures talk to opposition politicians, seeking assurance and asking what can be done to break the logjam. Zanu PF itself has fractured into two main factions with others simply abandoning the Party as a lost cause and retiring to the sidelines for fear of being hurt. The rape of the country's assets continues and in fact accelerates as those in power at a local level see no future and seek to make hay while the sun shines. Mugabe is in his bunker, like Hitler at the end of the Second World War, imagining the progress of his massed divisions and giving orders that cannot be obeyed even when death was the consequence of refusal.

He knows in his heart that he cannot survive - his circle of friends is now down to a handful of people and countries, even in Africa he is now seen as a liability, not an asset. He knows he has failed, failed his people, failed his country and his continent and that disgrace and banishment are the most likely outcome of this situation. In some ways I feel sorry for the man - so much to offer, so much to gain, all lost because of a blind pursuit of power at any cost, even the destruction of your own country and the complete impoverishment of its peoples.

In a sense I am glad we are here at last - because it means that the end of this nightmare is close. But my goodness, what a mess to clean up after!

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