US embassy cable - 03HARARE2410

UNCLAS HARARE 002410 
 
SIPDIS 
 
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: EINV, ETRD, ECON, EFIN, PGOV, ZI 
SUBJECT: Emigrants Fuel Housing Construction 
 
 
1. Summary:  Zimbabwean living abroad and Export 
Processing Zones (EPZs) are keeping the country's 
building sector afloat.  Only they can afford mounting 
costs. End summary. 
 
2. An unpublished study reveals that Zimbabweans abroad 
are funding two-thirds of residential building, according 
to Construction Industry of Zimbabwe CEO Martin 
Chingaira.  In Harare, their share of residential 
construction is even higher.  Chingaira claims only 
Zimbabweans earning foreign exchange can afford 
hyperinflationary increases in building materials.  The 
price of 50-kgs of cement has risen from Z$575 to 21,000 
since February.  Due to the near-collapse of the National 
Railway of Zimbabwe, trucks now transport most heavy 
materials, causing prices to outpace inflation.  Most 
builders now require upfront payment for all materials 
within 24 hours of estimate. 
 
3. Chingaira believes the only other aggressive building 
has taken place in EPZs, as export-minded firms hope to 
take advantage of Zimbabwe's low cost structure.  (Note: 
The GOZ recently threatened to rescind EPZ privileges.) 
 
Comment 
------- 
4. The study underscores a point we have hammered on 
frequently:  Zimbabwe is becoming a two-class society of 
those with and without access to forex.  Even working- 
class Zimbabweans abroad are building future abodes in 
Harare's best neighborhoods.  Others are building more 
modest houses for themselves and their relatives.  Of 
course, the forex-starved GOZ is aware of and hoping to 
tax these inflows - easier said than done. 
 
Sullivan