Daily News Editor Gift Phiri sits down for a wide-ranging
interview with President Emmerson Mnangagwa’s spokesperson George Charamba
about the stuttering economy and what government is doing to address the
worsening crisis.
Find below excerpts of the interview.
Q: President Mnangagwa is set to leave for Belarus,
Azerbaijan, Kazakhstan and Russia this week, before making a second appearance
at the prestigious annual gathering of world leaders, economists and captains
of industry at the World Economic Forum (Wef), in the resort town of Davos in
Switzerland. What is the objective of these trips?
A: They are outstanding invitations which we couldn’t
fulfil last year because of the sheer congestion of his programme.
Q: The opposition is saying he is taking his begging bowl
to eastern Europe, that he is going on a “dictatorship refresher course”
because most of these are countries under autocratic leadership.
A: We look for
investors, we don’t ferry begging bowls.
Q: One of these countries is an energy giant, is he looking
for fuel?
A: We always have a
drought period of foreign currency between (the) second half of the year up
until when we start having tobacco sales. I’m surprised you guys have not come
to grips with the cyclical shortages of foreign currency.
Q: In years gone by it wasn’t this bad.
A: Because the economy has been static in the sense that
demand for foreign currency was not as big as it is now. There is more activity
in the economy which means the demand for foreign currency is larger.
Q: What is stimulating this demand?
A: Because there is more activity in industry. You were the
first person I gave that story remember, and you were sceptical at the time.
You said it was “spin.” You didn’t realise I was actually equipping you for
things to come.
There is increased activity in the economy much of it which
requires raw materials whereas in the past it was as if we had good foreign
currency position. It was simply because there was inactivity in the economy.
The simple way of understanding this is to look at the quantity
of consumption of fuel. It will tell you (the full) story; (we are consuming)
4,3million litres daily. Suddenly a false surplus position or near let me say a
limited shortage which we had in the past was a false one to the extent that it
was founded on inactivity, economic inactivity.
Q: What do you mean?
A: It was due to a depressed economy. There was no
(economic) activity.
Q: Isn’t a pricing issue because foreign truckers
refuelling here at knock-down prices because of distortions in the currency?
A: Zimbabweans are notorious for single-cause reasoning.
From currency, we go to pricing. Gift, if your raise the price, you restrain
demand, you follow? It doesn’t mean you have met the demand, you have only
restrained it.
There is a basic difference and sometimes I fail to
understand why our economists mislead people. In terms of regional pricing, we
are slightly cheaper but it has its own positive side in the sense that, then
you keep inflation under check.
When you raise the cost of fuel per litre, what it means is
to tell Gift that if you have fuel covering 200km per week, don’t embark on the
trip because I am making it more expensive for you to do so. It causes demand
restraint; that is a way of coping with a scarcity situation. It doesn’t solve the
scarcity issue. It simply allows you to cope better because you are also
restraining activity.
Q: Last time we spoke about the fuel crisis, which is
worsening, you blamed it on transport economics. Now, why is this fuel crisis
not going away?
A: There is fuel in the country, (it is just that) we can’t
afford it. Fuel suppliers in the country, such as Trafigura and Glencore have
fuel stocks running into millions but those millions have to be paid for in
terms of foreign currency.
Q: Is government broke?
A: Why is it broke? I am saying it is our priorities.
Allocations of fuel are expending on the basis of increased economic activity.
This is a simple point. I don’t like this propensity for negativity which I
find rather difficult to explain.
Q: There is no negativity here; we are trying to understand
the crisis.
A: Then why rush to say the government is broke? Well
government is not the sole trader of fuel in the market, you follow? Why are
you attributing it to government? By the way RBZ is not a shareholder. You need
to do an enlightened coverage of this story.
Your discourse has never gone beyond the retail side of
fuel.
Q: Retail side?
A: Yes. The retail side is what is visible; it is not the
full supply chain. There are bulk suppliers, the international oil companies
like Trafigura, Glencore and Engen. If you got to their storage facilities
right now, they are actually holding huge quantities of fuel, but that fuel has
to be paid for.
Q: By who?
A: It has to be paid
for by the retail companies, such as Sakunda and Zuva who do not have foreign
currency.
Q: They don’t have foreign currency?
A: No, they don’t.
Q: Why?
A: Because they are
not exporters, they are in fact importers. Because they are importers, they are
not earning foreign currency.
They then troop to the RBZ for the 30 percent of foreign
currency the RBZ gets from exporters for allocating to importers.
So everyone, whether you are in industry or you are in
(the) fuel sector or in the service sector or pharmaceutical sector or
wherever, we are all going to converge on the 30 percent that goes to the RBZ
because generally the assumption their businesses have a larger societal goal
even though they are not earning foreign currency.
Otherwise the bulk of the foreign currency is in the
private sector, the 70 percent of it, that’s where it is. And the biggest
challenge we have been having is how to get that foreign currency made
available to the rest of the economy.
Q: What currency do the fuel retailers have?
A: They have bond
notes and RTGS (balances). They are not exporters Gift. It’s like you, when you
want newsprint you may not have foreign currency but probably lots of money in
local currency.
Q: So, isn’t that a currency problem?
A: Yes, it has
always been a currency problem. It’s not a shortage of fuel, in the strictest
sense because there is no fuel in the country. There is actually a glut from
the point of view of oil companies that supply bulk supplies.
Q: Why are we not retailing fuel in foreign currency?
A: Because it’s not everyone who can afford it. There are
some outlets selling fuel in foreign currency. Why are people queueing at
outlets that do not insist in foreign currency if they had it? This is where we
always say sometimes we go for easy solutions.
We actually have dedicated outlets that sell fuel in
foreign currency; those have been recording diminishing sales because people
don’t have the currency. But big companies that are exporting, if you notice,
you don’t find their vehicles in queues because they can afford the foreign
currency.
Q: There are untested allegations that Zuva is owned by the
president, it’s selling fuel in foreign currency. Is this true?
A: It’s untrue and if you talk to (Gloria) Magombo, (the)
secretary for Energy, there was a decision taken by government in the context
of fuel truckers that were refuelling here; foreign truckers from South Africa,
from DRC especially, Zambia and Malawi. They were coming (here) on empty to
come and fuel in the country because our fuel was cheaper because it was being
sold in bond notes.
Q: Government has started selling to the foreign truckers
in foreign currency, isn’t it?
A: Just be patient Gift, so that I can explain. Then we
decided that this is what is dwindling the small supplies we have as a nation,
why don’t we establish dedicated outlets which will sell fuel in foreign
currency to both the outsiders as well as the Zimbabweans with free funds.
Now, those dedicated outlets come from across a whole menu
of retailers, it’s not any one specific. You know who owns Zuva. It’s not a
secret, go to the Deeds Office and find out who the owner of Zuva is.
Q: I have been to the Deeds Office, the file is not there.
We know it is owned by Wobble Investments.
A: Interesting, but you can get it from the chair. So,
anything you don’t find a file for, it belongs to the president? If I don’t get
the ANZ file then I should assume that the Daily News belongs to the president?
(laughs uproariously).
Q: We know Zuva is owned by Wobble Investments but we are
trying to see the shareholders. The file has been removed from the Deeds
Office. That’s strange? You are being sarcastic, isn’t it?
A: No, I’m just trying to show you the absurdity of the
reasoning. In the first place, I hope you get my point that the outlets selling
fuel are not restricted to Zuva alone, it’s across the whole chain of
retailers.
Q: Ok that’s fine.
A: So, it’s a
falsehood. I hope you also remember that a few months ago we actually closed
some outlets belonging to Zuva.
Q: Why?
A: For going against
the trading rules. One myth being peddled in the media is to equate dry pumps
to a dry a country, they are different.
Q: You are saying they are well stocked, I got that.
A: We have millions and millions of litres in the country.
Those are your equivalent of a warehouse if you want in everyday parlance. To
access those millions in the warehouse, you have to buy them.
Q: How much are these major companies holding?
A: Major companies are holding an average of 2,211 million
of diesel, and 1,33 million of petrol.
Q: That’s a lot.
A: Yes of course. That’s why I was telling you that we are
not dry as a country.
Q: So where is this fuel, in the bonded warehouse?
A: Well, in tanks. This is fluid my friend.
Q: So, you’re saying this is in Msasa?
A: Aaaah, do I have to tell you where it is. (LAUGHS). It’s
now a security issue which you want me to discuss.
Q: Ok but that’s a lot of product.
A: Yes, this is the trouble.
Q: How are the stocks for ethanol?
A: Ethanol 2,8m litres.
Q: And I see regularly the blending ratios are always
shifting, why is that?
A: Yes, because of the shortage of ethanol, which is why we
are trying to improve on the supply side.
Q: Why is the Tongaat Hullet Zimbabwe unit, Triangle
(Private) Limited, not coming to the party in light of the shortages. Why don’t
you want Triangle to supply ethanol to government?
A: It has been licensed now, why are you so behind Gift?
Q: It has been licensed?
A: Yes of course it has been.
Q: When did this happen?
A: Ahhh, check with Magombo, it has been licensed.
Q: Really?
A: Yes, yes. And just to show you something very
interesting, daily consumption rate for diesel is 4,3m litres per day. And for
petrol is 3,3m litres per day. Yesterday (Wednesday) Trafigura sold 6m litres
of diesel.
Q: So why are the shortages persisting?
A: Aaah, because you
guys are trading the product
Q: You mean on the black market?
A: Yes of course. Over and above increased usage, there is
quite an abuse. Of course whenever you have erratic supplies, panic buying sets
in.
Q: Everyone is filling up their tank.
A: There is also a component of a secondary market for fuel
products.
Q: And the prices on the black market are ridiculous.
A: If we are on 4,3m litres and we release 6m litres and
you still see persistent queues, cant you see that there is something very
anomalous there?
Q: But the default mode is to fill up your fuel tank.
A: Well, this is a human instinct, isn’t it?
Q: Of course.
A: If you are in an environment where you have experienced
scarcities, you want to guarantee yourself against stock-outs.
Q: Of course.
A: It’s understandable for human behaviour, but ultimately
it boils down to a consistency of supply. Those are the facts and figures on
the ground.
Q: So are you saying this fuel crisis is here to stay until
mid-February when the tobacco auction floors open?
A: Let me put it this way: When the foreign currency
inflows into the country improve.
Q: When is that?
A: Generally, we have out cycle Gift. Let’s be very basic.
The key earners of foreign currency in this country are mining, agriculture
which is your tobacco, and tourism.
Q: But tourism and mining are doing extremely well. Gold
for instance scaled 33m kg last year?
A: Don’t be generous with your terminology. They are doing
extremely well in relation to historical records, but not in relation to the
need of this economy.
Q: Are you saying the need dwarfs the performance?
A: Yes. That has seen relative improvement in the
performance of these individual sectors. That doesn’t mean that improvement
meets the requirement of foreign currency for this economy. So, we are only
talking of relative improvement in relation to historical data.
Q: Ok fine, I hear you. So, what’s the solution?
A: The solution is to stimulate an export-led economy.
Q: But that won’t happen in the short-term?
A: Of, course it will not, which is why for me anyone who
thinks dollarisation will solve our problems is joking.
Q: What’s wrong with dollarising? This fallacy that the US
dollar is trading at 1:1 with bond notes is simply unsustainable, isn’t it?
A: That is not the
issue. What is at issue is the availability of the dollar.
Q: But people recall the dollarisation era with nostalgia?
A: But nostalgia doesn’t run the economy.
Q: But in 2009 it worked.
A: No, can I give you an example. In 2009 — then that’s
another myth that you guys need to debunk — what made us afford salaries in US
dollars was because every civil servant was on $100; do you understand? Yes,
yes.
Now, if you look at the wage levels as of now, where do you
get that foreign currency? And if you can get it enough to make a wage bill
which is 70 percent of GDP, I mean why would you be unable to have enough
foreign currency to run your industry?
I just don’t understand the thinking of some of our
economists. It’s rather convoluted; it doesn’t make sense to me. In 2009, we
were all pegged at $100 basic wage, that’s why we were able to give someone a
modicum of what we call money illusion.
That illusion must not be allowed into a new era where we
find the lid on the wages has been removed.
That argument is a false argument and the sooner we move
away from it, the better it is for us. And by the way the trouble is that it
stands in the way of proffering real solutions because we are giving ourselves
false solutions.
The solution lies in stepping up your tobacco; industry,
stepping up your mining industry, tourism and, more critically, in transforming
your economy towards greater beneficiation, then your earnings improve.
Q: Yah, but as it is, there is no beneficiation policy.
A: Now, you and me are talking. If you looked at the three
instalments that we have done under Economic Dialogue (President Mnangagwa’s
column in a local State-owned weekly), that was the subject matter.
We need a beneficiation summit for all the sectors in the
economy so that instead of exporting chrome and platinum as matte, how can we
enhance our own earnings by making sure that we actually work with finished and
semi-finished goods. That is the gist of the matter.
Q: But it looks like this issue is on the back burner.
A: No, it’s not on the backburner, that’s where we are
going. In today’s story, for instance, we are talking about black granite. We
have been sending stones boulders in the raw form.
Q: Some people think the president must rope in opposition
leader Nelson Chamisa to fix the economy.
A: Chamisa and Mnangagwa will not improve your savings
levels if you are living from hand to mount.
They will not improve your agriculture if you are busy
admiring vast tracts of land which are lying idle.
They will not improve your mines if you are pushing out
produce instead of value adding minerals.
This is a matter which requires hard-headed economics not
this political myth that we are creating around ourselves. Chamisa’a parents
are struggling wherever they are. Go to the Mnangagwa family it’s also
struggling wherever they are, you know. Why do we take a family that is as just
badly circumstanced as you and me and then transform them into a magic wand
that will solve the national problem?
Q: Are you aware that people are recalling ousted Mugabe’s
rule with nostalgia?
A: The human tendency is to hunger over days gone by.
Q: The problems are piling up. It looks like the whole
civil service wants to go on strike.
A: No, no, no, that’s what you guys were wishing for.
(LAUGHS). What you guys were wishing for hasn’t happened.
Q: No, no, no we have no such wish for labour unrest. We
have no dog in this fight.
A: You guys were running out of headlines. (LAUGHS.) I feel
pity for your sub editors. They were literally running out of words. It will
not happen.
Q: But the Apex Council has issued a 14-day strike notice?
A: No, no, no, you are confusing Apex with Artuz (the
Amalgamated Rural Teachers Union of Zimbabwe), don’t confuse the two.
Q: I know the Apex Council, it represents everyone in the
civil service.
A: No, no, no, that’s not where you got the voices. The
voices you are referring to were those of sub unions, Sir. Just go back to your
text and see whether Ms Alexander said that. You won’t find her name.
Q: You mean Cecilia Alexander?
A: Yes, she is the president of Apex Council.
Q: But she has a secretariat, isn’t it?
A: You know what, a secretariat is exactly that, it does
exactly that, secretarial work.
Q: So you’re saying until Alexander pronounces herself on
this....
A: Yes, yes yes, she is the leader of the Apex Council.
Q: But she is being accused by her colleagues of being
captured by your regime?
A: No, no, no. She
is their leader. There is a certain desire for things to go in a certain way,
which will not happen Gift.
Get it from me. It
does not help to come up with a story which creates excitement but then gets
confounded by tomorrow’s events.
The beauty about
Charamba is he subverts your storyline but gives you the facts. What you are
going to see is a convergence.
Q: A convergence?
A: Yes, which in fact happened on Monday.
Q: Are you going to yield to the US dollar salaries?
A: I have already explained this. There is going to be
convergence and convergence can’t be around false solutions.
Q: Why are you resolutely predicting this convergence?
A: I am an insider Gift. Are you aware that I am the acting
chief secretary?
Q: No, I didn’t know?
A: All reports are coming to my desk. Just now the deputy
minister of Health was on the phone with me to give an update on progress.
Q: I hear the doctors’ strike is dissipating?
A: It’s not just dissipating; we are finding each other
around long-lasting solutions, realistic solutions not falsehoods because you
can negotiate outside the parameter of the budget. It’s like collective
bargaining outside what the ANZ can afford. It does happen that way.
Q: I hear you, but the protesters were saying if they don’t
get US dollar salaries, that’s a deal breaker, there will be no convergence?
A: No, no, no, you guys are completely lost. Look, if we
couldn’t succumb to health practitioners, you expect us to do so in respect of
any other branch of the civil service? It doesn’t make sense.
The health workers
wanted US dollars and we told them that we can’t afford that. If you want US
dollars you have to work for foreign currency earners. It was hard talk.
Q: But in government it seems you don’t usually give each
other straight talk, you use diplomacy and that’s problematic, isn’t it?
A: Well, it applies to some not Charamba, to say it like it
is.
Q: Telling it like it is like the Daily News?
A: Hahahaha, borrowing from you.
Q: The teachers marched from Mutare to Harare demanding
these US dollar salaries. They seem determined.
A: We don’t need to create emotional triggers by walking
all the way from Mutare to Harare. I mean, many people do that.
Q: But their grievances are different, these area rural
teachers. They want an education equalisation fund. That’s a legitimate
concern.
A: Did you read the statement from (Public Service
Commission head) Vincent Hungwe yesterday?
Q: Yes, I did.
A: One of the key
challenges the Apex Council was tasked with is to find how they could
distribute the $4,8 billion between rural-based and urban workers.
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