US embassy cable - 03HARARE805

UNCLAS HARARE 000805 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR AF/S 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
USDOC FOR 2037 DIEMOND 
PASS USTR FLORIZELLE LISER 
TREASURY FOR ED BARBER AND C WILKINSON 
STATE PASS USAID FOR MARJORIE COPSON 
 
E. O. 12958: N/A 
TAGS: ETRD, ECON, EINV, ZI 
SUBJECT: GOZ Still Distrusts Exporters 
 
 
1. (SBU) Summary: The GOZ believes most export firms 
shelter earnings, depriving the country of hard currency 
to import energy, fuel and other necessities.  In 
response, the GOZ has erected counterproductive export 
obstacles. End Summary. 
 
2. (U) An April 25 article in the GOZ-run Herald began: 
"The current energy crisis which threatens to cripple 
industrial production can be overcome if exporters 
repatriate all foreign currency to the Reserve Bank."  We 
have no doubt many exporters conceal earnings off-shore 
to evade the GOZ's harsh exchange requirements.  This is 
part of a broad migration toward the informal economy, 
assisted by politically-connected indigenous banks.  (An 
exporter once told us:  "I used to worry about exchange 
requirements.  Then I discovered indigenous banks.")  By 
blaming exporters for low treasury receipts, however, the 
GOZ ignores the free-falling economy's far more 
substantial impact. 
 
3. (SBU) Worse still, the Reserve Bank's severe approach 
discourages law-abiding exporters.  Zimbabwe Spinners and 
Weavers' Executive Secretary told us the Reserve Bank 
treated him so harshly that his firm has reduced monthly 
fabric shipments to Europe from 50 to 2 containers.  The 
Reserve Bank insists exporters remit revenue within 90 
days of shipment.  But our interlocutor said standard 
practice is that European textile importers take 5-6 
weeks after delivery to settle accounts.  When he 
petitioned for an elongated 180-day period, the Reserve 
Bank rebuked him for hiding earnings.  As a consequence, 
the company now focuses on the less lucrative South 
African market with shorter shipping durations. 
 
4. (SBU) Comment: This is but one example of the GOZ's 
deep-seated suspicion of private sector integrity.  As 
usual, the GOZ does not distinguish between profiting and 
profiteering.  An anti-capitalist reflex also causes it 
to ignore private sector pleas that many controlled 
prices are below production cost.  In the case of 
exports, the GOZ self-destructively enforces draconian 
disincentives at a time when most developing countries 
offer subsidies and other incentives.  In short, 
government ministers who still address each other as 
"comrades" have drawn few lessons from the failure of 
command economies around the world. 
 
Sullivan