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UNCLAS SECTION 01 OF 03 HARARE 000281 
 
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 
 
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E.O.12958: N/A 
TAGS: PGOV PREL ASEC PHUM ECON ZI
SUBJECT: Zim Notes 04-04-2008 
 
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SUMMARY 
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¶1. Zim Notes is a compendium of political & economic news items from 
Zimbabwe. 
ZIM NOTES IS NOT FOR DISTRIBUTION OUTSIDE THE U.S. GOVERNMENT. 
This newsletter is produced by the Political/Economic Section of 
Embassy Harare.  It is intended to present a perspective on current 
events in Zimbabwe.  Suggestions are welcome.  Please let us know of 
anyone else who would like to receive it.  Zim Notes is circulated 
in email form each week and can be accessed on Webgram and SIPRnet. 
END SUMMARY. 
 
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Price Movements-Exchange Rate and Selected Products 
--------------------------------------------- ------ 
 
¶2.  Parallel rate for cash steady at ZW$43million:US$1; bank 
transfer rate: Z$67 million; official rate: ZW$$30,000:US$1 
 
Sugar soared to Z$85 million/2kg vs. controlled price of 
Z$8million/2kg. 
 
*Cooking oil rose to Z$100million/750ml vs. controlled price of 
Z$9.3million/750ml. 
 
Petrol and diesel shot to Z$80million/liter vs. controlled price of 
Z$60,000/liter. 
 
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On the Political/Social Front 
----------------------------- 
 
¶3.  Presidential Results Yet To Be Announced...  The Zimbabwe 
Electoral Commission (ZEC) has yet to release the results of the 
presidential election; ZEC is expected to announce them sometime 
between today and Monday.  Rumors have swirled this week, ranging 
from a ZANU-PF announcement that Mugabe had won the election to a 
negotiated settlement between ZANU-PF and the MDC under which 
President Robert Mugabe would step down.  As of now, it appears the 
ZEC will announce a runoff, with neither of the candidates having 
earned the 50 percent plus one required to avoid one.  While the 
Electoral Act requires a runoff within 21 days, it appears that 
Mugabe will claim the government is logistically unready, and set 
the date somewhere between 30 days and 6 months from the date the 
results are announced.  See Harare 00278. 
 
¶4.  Historic Results, Opposition Wins Majority In House Of 
Assembly...  For the first time in the countryQs 28 year history, 
ZANU-PF will not control the House of Assembly.  Of the 210 seats, 
the MDC Tsvangirai formation won 99, ZANU-PF 97, the MDC Mutambara 
formation 10, and an independent one. Three remaining seats will be 
decided in by-elections.  The MDC Tsvangirai formation penetrated 
rural areas and scored gains in traditional ruling party 
strongholds.  Several ZANU-PF bigwigs lost their seats, including 
Justice Minister Patrick Chinamasa and WomenQs Affairs Minister 
Oppah Muchinguri.  See Harare 00273. 
 
¶5.  Embassy Harare Election Observations: A Positive Experience... 
Embassy HarareQs 11 election observation teams reported that voting 
took place in a calm and orderly manner. The teams were generally 
well-received and noted a sense of excitement coming from the 
electorate.  Police had a noticeable presence in all polling 
stations and interacted cordially and professionally with observer 
teams.  See Harare 00270. 
 
¶6.  SADC Tribunal Rules In Favor Of Zimbabwean Farmers...  The 
Southern African Development Community (SADC) Tribunal ruled last 
 
HARARE 00000281  002 OF 003 
 
 
week in Windhoek that more than 70 white Zimbabwean farmers who had 
been evicted from their land could remain on their property pending 
a hearing on their joint application on May 28.  The farmers are 
challenging the legality of ZimbabweQs fast-track land reform. 
Their suit has been joined with that of Michael Campbell whose case 
is now pending before the court. 
 
¶7.  Migration From Zimbabwe...  The Johannesburg-based Center for 
Development and Enterprise released last week a paper entitled 
Migration From Zimbabwe, Numbers, Needs, and Policy Options, which 
concluded that cross-border movement of people was on the rise and 
unlikely to slacken in the foreseeable future, and the crisis in 
Zimbabwe was increasing pressure on already strained and overloaded 
policies and systems for migration management in South Africa. See 
the paper at: http://www.cde.org.za/article.php?a_id=280. 
 
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Economic and Business News 
-------------------------- 
 
¶8.  Another Leap In Inflation...  The Financial Gazette reported 
this week that the Central Statistical Office calculated the 
official rate of year-on-year inflation in February at 164,900 
percent, up from 100,580 percent in January.  A well regarded 
private sector report put the March y-o-y figure at over 370,000 
percent and the month-on-month rate at close to 180 percent. 
 
¶9.  Anecdotally, we found that the price of a no-frills hotel buffet 
dinner in the provincial capital of Mutare had doubled from Z$300 
million to Z$600 million in the one week between our pre-election 
observation visit and Election Day. 
 
¶10.  New Higher-Denominated Notes Released...  The Reserve Bank of 
Zimbabwe (RBZ) issued Z$25 million and Z$50 million notes today. 
The new highest-denominated note is worth about USD 1.16.  The RBZ 
also raised the daily cash withdrawal limit for individuals and 
companies to Z$ one billion. 
 
¶11.  Olivine Industries Benefits From GOZ Largesse...  A former 
executive of Olivine Industries until the HJ Heinz majority 
shareholding was sold to the GOZ last year told us that new 
management had negotiated 100 percent retention of its forex 
earnings.  (The Reserve Bank otherwise takes 35 percent and pays it 
back in local currency at the ludicrous official exchange rate.)  In 
addition, Olivine is now getting more frequent price relief from the 
National Incomes and Pricing Commission (NICP).  While there is a 
bit more oil in the market, it is mostly going into margarine and 
baking fats to ensure the baking industryQs survival.  For 
background on other U.S. companiesQ departure from Zimbabwe, see 
Harare 00280. 
 
¶12.  Wheat Stocks Dry Up...  The Financial Gazette reported last 
week that the National Bakers Association estimated that Zimbabwe 
needed to import US$120 million worth of wheat (about 300,000 MT out 
of an annual national requirement of about 500,000 MT) beginning in 
April to carry the country through to the arrival on the market of 
the winter wheat crop in November.  Last yearQs wheat harvest of 
144,000 MT was the smallest since independence. 
 
¶13.  Reading The Tea Leaves In Zimbabwe: Troubled Times... 
Production is down at ZimbabweQs two largest tea estates in the face 
of a severe labor shortage and lack of foreign exchange for inputs. 
In addition, the move to mechanization has reduced tea leaf quality 
and the amount of exportable product.  Both estates have taken over 
the provision of many public services in their communities, but 
management recognizes that the situation is commercially 
unsustainable beyond the short term.  See Harare 00277. 
 
¶14.  More Company Results, Mostly Grim...  Publicly traded Hippo 
 
HARARE 00000281  003 OF 003 
 
 
Valley Estates Ltd reported the lowest sugar production since the 
drought of 1992: 349,356 t, 22 percent off the 2006 figure. 
Analysts blamed the poor results on price controls, the unviable 
exchange rate, and poor agronomic practices of re-settled 
out-growers, although increased technical assistance and good 
weather conditions this season are grounds for some optimism. 
 
¶15.  InnscorQs bakery outlets recorded 56 percent reduction in 
volume in the second half of 2007 due to flour shortages. 
 
¶16.  But pig and ostrich production was up.  Triple C, a division of 
publicly traded Colcom Holdings, ZimbabweQs major pork processor, 
increased its pig output last year by 4.5 percent as it began to 
benefit from an out-grower project.  Colcom also reported that 4,298 
ostriches were slaughtered last year against 1,381 the year before. 
The projected output this season of 5,700 birds is destined entirely 
for the export market. 
 
¶17.  Tobacco Auction Floors To Open Soon (If ThereQs Enough Wrapping 
Paper)...  Industry players reported that a shortage of imported 
wrapping material was delaying the opening of HarareQs tobacco 
auction floors until April 22. 
 
MCGEE