Financial Gazette (Harare)
NEWS
22 August 2007
Posted to the web 23 August 2007
By Rangarirai Mberi and Clemence Manyukwe
Harare
SOUTH Africa has rejected the possibility of direct financial aid to Zimbabwe, a plan proposed by other Southern African regional leaders, deepening uncertainty over the likely structure of an economic rescue package being worked out by the Southern African Development Community (SADC).
SADC last week tasked its 14 finance ministers to work out a comprehensive rescue plan for Zimbabwe after a summit that, as expected, held back any public rebuke of President Robert Mugabe whose ZANU PF party is seen frustrating regional efforts to heal a full blown economic crisis blighting one of the continent's once promising economies.
But South African Finance Minister, Trevor Manuel, said on Tuesday his country would not throw taxpayers' money into saving Zimbabwe's economy. Zimbabweans would have to do that on their own, he said.
Diplomatic sources said Manuel's comments were reflective of the dominant view within the ruling African National Congress and Thabo Mbeki's Cabinet towards Harare. Manuel is one of South Africa's longest serving finance ministers. "We cannot decide what kind of economy the Zimbabweans must have. They must get the prices to work, they must drive the changes. We cannot commit financial resources," Manuel said in a televised debate in his country's parliament.
Manuel's comments reveal differences within SADC over the form of an aid package for Zimbabwe. Tomaz Salomao, the SADC executive secretary, had in his Zimbabwe report to last week's summit, held in Lusaka, Zambia proposed that the region prop up what he sees as the country's "sanction-hit" economy by providing supplies, including energy and farm inputs.
His recommendations reportedly received backing from a section of the region. But a communiqué released at the end of the meeting said leaders only "took note" of the Salomao report, recommending that it be used as a basis by finance ministers to draw up a more comprehensive "economic plan to support Zimbabwe".
Given South Africa's political and economic clout in the region, Manuel's comments would suggest whatever assistance Zimbabwe was likely get from its peers would not include loans, as hoped for by the government. Tito Mboweni, the South African Reserve Bank governor had previously ruled out prospects of linking Zimbabwe's currency to Pretoria's solid rand.
Mboweni said Zimbabwe is a long way from being ready to join southern Africa's rand monetary union comprising South Africa, Namibia, Lesotho and Swaziland. Regional finance ministers, according to diplomats, would be asked to estimate the financial aid that would be necessary to stabilise Zimbabwe's flagging currency. Zimbabwe's known immediate needs include some US$253 million to feed up to three million people at risk of starvation.
But private economic consultants that have advised SADC, The Financial Gazette has learnt from South African sources, estimate Zimbabwe needs as much US$3 billion over the remaining months of the year for energy supplies and to stabilise the currency. A coalition of western countries had previously put forward a similar amount for a plan that would stretch for five years.
Zimbabwe has been scouring the continent for aid to shore up its economy. Negotiations over a possible US$2 billion loan from Libya have faltered, according to a senior Treasury official, "although lines are still open." Pleas for aid to other "friendly" countries, such as China, have been unsuccessful. Economists doubt that Zimbabwe is ready to implement any recommendations from SADC.
"Any help would depend on whether the government would implement what it is told . . . an economic rescue package would be incompatible with the kind of political objectives of the government. The government has previously ignored advice it has been given," said Tony Hawkins, professor of business at the University of Zimbabwe.
Hawkins pointed to Zimbabwe's rejection of reforms suggested by the International Monetary Fund (IMF). IMF managing director Rodrigo Rato told a press conference in Mozambique this week that Zimbabwe had ignored its advice. The IMF, which has suspended all new aid to Zimbabwe, had proposed a raft of reform programmes it says are key to stabilising the economy, including transparency and the need to end controls on prices and the exchange rate.
"We are not encouraged by the response of the (Zimbabwe) authorities. Our advice to Zimbabwe is not the one they are applying," Rato said. Lovemore Madhuku, chairman of the National Constitutional Assembly, said Zimbabwe would not accept any aid with strings attached. He added that any SADC approach on Zimbabwe would not yield any results if it did not first make it clear to ZANU PF that its actions were unacceptable.
"I do not think SADC is serious. It has not condemned Zimbabwe so that politicians here know that what they are doing is not acceptable," said Madhuku. "The first step should be to condemn government's actions." President Mugabe has said Zimbabwe would go its own way, although there is growing admission from within his own government that policies such as price controls do not help.
State media has begun to question the policy, while Industry and International Trade Minister Obert Mpofu took further steps backwards this week by allowing price increases on a range of goods and services. Although there were reports last week that SADC had tied stringent reform conditions to any rescue package, statements by senior politicians in the region suggest President Mugabe prevailed at the summit.
SADC is now trying to rope in regional elders to pressure President Mugabe, according to Zambian finance minister, Ng'andu Magande. Kenneth Kaunda, the former Zambian president, told South Africa's eTV this week he would accept such a role. This new attempt by SADC will be seen as further evidence that President Mugabe faced no challenge to his policies at last week's meeting. Mbeki has also dismissed suggestions the summit had set conditions and deadlines for Zimbabwe.
"Nobody is looking for conditionalities. Nobody said there should be conditionalities to finding solutions. Solutions must be found -- that's all," Mbeki said. "Nobody has spoken about a specific date, but it is the process that will determine that. On the economic one, everybody is saying there is urgency on this matter and that the finance ministers will engage this matter immediately."
Manuel this week defended South Africa's policy of "quiet diplomacy" towards Zimbabwe, saying that foreign intervention to bring about regime change risked unleashing turmoil like in Iraq. Media reports said Manuel had told lawmakers that South Africa -- the top regional powerbroker -- was not in a position to dictate political and economic policy to President Mugabe.
"We must encourage Zimbabweans to solve their own problems. That is the most we can do because the decisions have to be carried by Zimbabweans into perpetuity," Manuel said in a heated exchange in parliament. "For those who don't understand, I ask that President Bush recruit them and send them to Iraq," Manuel, described as visibly angry by the South African press, said amid heckling from opposition lawmakers. "Then they will understand what regime change is about."
President Mbeki has long advocated quiet diplomacy towards Zimbabwe.
Since March he has acted as mediator between Zimbabwe's ruling party and the opposition, but so far there has been no visible progress. In the interim, there has been an upsurge in the number of desperate Zimbabweans crossing into neighbouring countries to escape the meltdown. Zimbabwe is in its worst economic crisis since independence from Britain in 1980, with runaway inflation and acute shortages of basic commodities.
The economic crisis is largely blamed on the seizure of white-owned commercial farms that began in 2000, disrupting the agriculture-based economy. Many in the West and elsewhere have held President Mugabe responsible, and critics complain of state control of the media, widespread intimidation and a clampdown on the pro-democracy movement.
The IMF has warned inflation might hit 100 000 percent by the end of the year.