US embassy cable - 03HARARE2016

UNCLAS HARARE 002016 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR AF/S 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
USDOC FOR 2037 DIEMOND 
TREASURY FOR OREN WYCHE-SHAW 
PASS USTR FLORIZELLE LISER 
STATE PASS USAID FOR MARJORIE COPSON 
 
E. O. 12958: N/A 
TAGS: ECON, EINV, PGOV, ZI 
SUBJECT: "Export or Die" for Mutare Businesses 
 
Ref: Harare 1955 
 
1. (U) Summary: Zimbabweans in and around Mutare, the 
country's third largest city, continue to fare better 
than most countrymen.  On a recent sojourn, we observed 
the same U.S. dollar/local crevice found in Masvingo 
(ref).  Clearly, however, Mutare's export sector enables 
more to reach the privileged USD economy.  A new MDC 
mayor's challenge is tapping that export revenue to shore 
up dilapidated public services.  End Summary. 
 
Only Hope Is to Export 
---------------------- 
2. (SBU) The local Zimbabwe National Chamber of Commerce 
(ZNCC) rep underscored the economy's duality. 
Receptionists earn Z$ 250,000 (US$44)/month at exporter 
Border Timbers but Z$ 55,000 (US$10) at non-exporting 
companies.  Many local women have become cross-border 
traders since Mutare is only a short drive from 
Mozambique.  They buy whatever is cheaper or less scarce 
in one country, then sell in the other.  Small but well- 
established timber companies told us they aspire to 
become exporters, "the only way to earn real money," but 
struggle to get off-shore USD financing.  With Zimbabwean 
coal producer Wankie Colliery in shambles, firms say they 
must import coal and other inputs from South Africa - no 
easy task without a USD source. 
 
3. (U) At the same time, a visit to a rural community 
near Mutare reaffirmed how taxing life has become for 
those strictly on the local economy.  We toured a 550- 
pupil private school that charges only Z$1,500 (US$.26) 
tuition for the academic year (due to support from a 
religious body).  Still, the headmaster explained that 
half the children's families were unable to afford even 
that tuition and received assistance from a variety of 
charities.  The school's highest paid employee earns 
Z$200,000 (US$35)/month.  Owing to inflation and lack of 
other savings vehicles (interest rates are 350 percent 
negative), a plot of land that fetched Z$3,000 five years 
ago has now been bid up to Z$1,700 million, affordable 
only to those with access to hard currency. 
 
New Mayor's Challenges 
---------------------- 
4. (SBU) Incoming MDC Executive Mayor MT Kagurabadza gave 
us a quick tour of the poorest shantytowns in Mutare.  He 
opined that the previous ZANU-PF municipal government had 
essentially tossed in the towel on public services.  The 
Mayor showed us the parking lot for official vehicles, 90 
percent of which are inoperable.  The city has no working 
fire engine and a single ambulance.  Since it lacks funds 
to buy tar, municipal workers merely fill in potholes 
with gravel, returning every two weeks.  With only one 
functioning garbage truck, piles of disease-spreading 
trash accumulate for three weeks at a time.  A public 
swimming pool, the former summertime destination for 
thousands of poor kids, has been closed for the past 
three years due to a missing part worth only several 
thousand zimdollars. 
 
Comment 
------- 
5. (SBU) Obviously, Mayor Kagurabadza desperately craves 
outside assistance.  He acknowledged the contradiction of 
an MDC that does not want the outside world to repair the 
national economy with President Robert Mugabe's ZANU-PF 
in power - but now invites aid to the country's large MDC- 
administered cities.  We suggested he try to tax Mutare's 
export revenue, if legally possible on a local level, or 
appeal to the social responsibility of export firms to 
help restore the city's public services. 
 
Sullivan