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Cablegate: "Export or Die" for Mutare Businesses

This record is a partial extract of the original cable. The full text of the original cable is not available.

061309Z Oct 03

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

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