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R 201643Z MAR 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 2612
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 1881
RUEHAR/AMEMBASSY ACCRA 1824
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RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1075
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000225 
 
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 
CIA WASHDC 
 
SIPDIS 
 
E.O.12958: N/A 
TAGS: PGOV PREL ASEC PHUM ECON ZI
 
SUBJECT: ZIM NOTES MARCH 20, 2008 
 
 
¶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.  *Parallel rate for cash soared to: ZW$42million:US$1; bank 
transfer rate: Z$60 million; official rate: ZW$$30,000:US$1 
 
Sugar jumped to Z$45 million/2kg vs. controlled price of 
Z$8million/2kg 
 
Cooking oil steady at Z$40million/750ml vs. controlled price of 
Z$9.3million/750ml 
 
Petrol and diesel shot to Z$50million/liter vs. controlled price of 
Z$60,000/liter 
 
----------------------------- 
On the Political/Social Front 
----------------------------- 
 
¶3.  ZEC Briefs Stakeholders on Elections...  The Zimbabwe Electoral 
Commission (ZEC) briefed SADC observers, diplomats, and political 
parties on March 18 in Harare, assuring them it was prepared for the 
elections.  Key questions remained however.  The ZEC reported that 
more than 300,000 names were added to the voter roll during the 2 
week registration period in February, an enormous number.  Total 
registration is almost 6 million, 300,000 more than in 2005--this 
despite a continuing exodus from the country. The ZEC also could not 
provide an adequate response to concerns about the dearth of polling 
stations in urban areas, and was apparently unaware of a statute 
published the day before on March 17 requiring police presence in 
polling stations.  Additionally, the ZEC was unable to explain how 
the integrity of the voting process would be ensured when the final 
tally of votes in the presidential race would take place at the 
national command center in the absence of observers.  All in all, we 
have serious doubts as to whether the ZEC is ready for prime time. 
 
¶4.  Western Journalists Still Not Accredited...  With elections less 
than two weeks away, no western journalists have yet been accredited 
to cover them.  Press reports indicate that over 300 have applied, 
but Byzantine procedures, vetting by three ministries and an active 
desire on the part of the GOZ to keep western media out has resulted 
in an absence of accreditation for western journalists, although 
credentials for journalists from "friendly" countries have been 
issued..  Presidential spokesman George Charamba last week accused 
foreign journalists in Zimbabwe of being spies.  On March 17, he 
called in stringers and representatives of foreign media 
organizations resident in Harare and delivered a thinly veiled 
threat, telling them their election coverage would be closely 
scrutinized and their reporters followed over the election period. 
(See Harare 214 for details.) 
 
¶5.  Yet Parliament Still Working With Embassy Staff...  Despite the 
GOZ anti-US rhetoric and the closure last year of the State 
University of New York (SUNY) parliamentary support project, the 
Parliament's librarian recently reached out to the Embassy 
Information Resource Center (IRC) for help in selecting new staff. 
The Clerk of Parliament formally invited our IRC director to assist 
in interviewing candidates for two librarian positions at 
Parliament.  The only outsider on the interview panel, our 
 
HARARE 00000225  002 OF 003 
 
 
director's participation continued a tradition of cooperation with 
the Parliamentary library that has not ended even as unfriendly 
rhetoric increases. 
 
¶6.  Junior Doctors on Strike...  Junior doctors in government 
hospitals went out on strike again demanding better pay and improved 
working conditions.  This marks the third labor action by junior 
doctors over the past year.  At present, a junior doctor earns 
between ZW$700 and $900 million (roughly US$16 - $21) per month - or 
about a dollar a day.  To put it in context, the average cost of a 
one-way commuter bus ride in Harare jumped to ZW$15 million (about 
US$0.35) this week.  Many nurses also have stopped reporting for 
work on a regular basis citing high transport costs.  The decline of 
working conditions at State hospitals has mirrored that of the rest 
of the economy.  There is a perpetual lack of basic supplies, 
diagnostic machines remain in disrepair due to a shortage of foreign 
currency to import necessary parts, surgery rooms do not have 
reliable electricity, and blood supplies are insufficient.  As such, 
doctors are refusing to work in conditions where they have to ration 
care and determine who survives. 
 
 
-------------------------- 
Economic and Business News 
-------------------------- 
 
¶7.  *The Zimbabwe Dollar Roller Coaster Continues and Domestic Debt 
Skyrockets... The local currency continued its swoon on the parallel 
market this week, underpinned by the continued high demand for 
foreign currency against the backdrop of low inflows.  Surpluses on 
the money market also contributed to driving the parallel market 
cash rate from Z$30 to Z$40 million:US$1 and the transfer rate from 
Z$40 to Z$60 million:US$1.  Anxiety associated with elections is 
likely to continue pushing parallel rates to record levels in the 
short to medium term.  Zimbabwe's domestic debt also scaled new 
heights, rising from Z$21 trillion at the beginning of the year to 
Z$1.4 quadrillion (roughly US$33 million - street rate) by February 
29, 2008.  The surge in government expenditure is associated with 
both the prevailing hyperinflationary environment and the impending 
elections.  At the same time, revenues have not risen in lock step, 
resulting in a widening deficit that the GOZ has had to finance 
through increased borrowing from the domestic market.  The effect of 
such borrowings has been reflected in the high growth in money 
supply and, inevitably, inflation. 
 
¶8.  Gold Output Falls Further...  Gold output fell 58.9% to 315.7kg 
in February from 768.1kg in the same month last year, according to 
latest figures from the Chamber of Mines.  Gold output in January 
dropped to 370.2kg from 819kg in the same month last year, further 
decimating a formerly significant source of foreign exchange for the 
GOZ. 
¶9.  Another Food Company Manager Arrest... As elections draw near, 
government has pulled in yet another food company manager on 
allegations of overcharging. The GM of Bakers Inn was arrested this 
week on charges of selling a standard loaf of bread for Z$9 million 
instead of the controlled price of Z$6 million. 
 
¶10.  Johns Hopkins Economist On Zimbabwe's Hyperinflation...  In a 
short book sponsored by Botswana-listed asset management firm Imara 
Holdings Ltd and published this month in Zimbabwe, US economist 
Steve Hanke outlines how to stop hyperinflation in Zimbabwe.  In 
Zimbabwe: Hyperinflation to Growth, he recommends replacing the 
central bank with a currency board, dollarization or a less well 
known system of "free banking" that was used in Zimbabwe until 
¶1940. 
 
¶11.  "Director of the Year"...  Nigel Chanakira was named "Director 
 
HARARE 00000225  003 OF 003 
 
 
of the Year" by the Institute of Directors this week.  Founder of 
Kingdom Financial Holdings Ltd, he masterminded the recent merger of 
Kingdom, Meikles Africa Ltd, and Tanganda Tea Company, and now 
serves as CEO of Kingdom Meikles Africa Ltd.  The conglomerate is 
planning to raise US$600 million in an IPO in London in May.  Half 
the money will be invested in Zimbabwe, executives tell us, 
including on the refurbishment of the flagship Meikles Hotel; also 
in sight is expansion of its TM Supermarket chain outside of 
Zimbabwe.  ZimSun CEO Shingi Munyeza was runner up for the 
prestigious award for the second year in a row.  He might have a 
shot at the top spot next year: He told us that after the March 
elections, ZimSun will announce its acquisition of several leading 
hotels in South Africa.  He cited four international banks in 
association with financing of the acquisitions, as well as with the 
recently announced construction of five new ZimSun hotels in 
Zimbabwe. 
 
¶12.  Exports, Key To Business Survival...  Paper mill breakdowns, 
problems in sourcing sufficient coal, and interruptions in power had 
a negative effect on production at paper manufacturer Hunyani last 
year.  Nevertheless, the company's managing director anticipates 
exports rising from US$10 million in 2007 to around US$12 million in 
the year to October 2008 thanks to increased orders for banana boxes 
into Zambia and Mozambique.  He lamented the slow pace of price 
increase approvals and the punishing export tax in the form of 
government retention of a share of forex earnings.  Hunyani believes 
it could raise exports to 80% of output if allowed to retain 100% of 
its export proceeds rather than 65%. 
 
MCGEE