Chronicle Editor
Masimba Mavaza
The dark cruel demonic cloud called Zdera hovers above Zimbabwe.
Thousands of innocent people die as a result of Zdera. Hospitals cannot cope and medication becomes scarce.
The irony of it all is that those who claim to fight for human rights are the ones killing Zimbabweans in the name of human rights.
Zimbabwe’s Land Reform Programme of 2000 led to the imposition of sanctions on Zimbabwe by the US and its allies under the so-called Zimbabwe Democracy and Economic Recovery Act (Zidera) of 2001.
Since then, Zimbabwe has been under US and European sanctions over the past two decades.
The relentless attack on Zimbabwe has destroyed our health system and our economy.
Supplementing the US’ legislative sanctions of Zdera are Executive Sanctions (Executive Order 13288) of March 2003 renewable on a yearly basis.
The European Union (EU) also introduced its own sanctions in February, 2002.
The sanctions also include travel bans and asset freeze for Zimbabwean officials and companies. The EU insists that it will maintain the sanctions under constant review in light of political and security developments in Zimbabwe.
Far from the claim that sanctions are ring-fenced and targeted on a few individuals, the reality on the ground is that the tight grip of the declared and undeclared sanctions is being felt throughout the whole economy.
While the US and Western countries claim that the sanctions were imposed over human rights violations, it is common knowledge that the land reform irked the West and they had to “hit Zimbabwe in the knees” with the hope of forcing it down.
It was a well calculated move of regime change through sanctions.
A puppet political discourse was formed in the name of MDC which has transformed to CCC.
It is not surprising that CCC will never denounce sanctions while the whole of Africa stands with Zimbabwe calling an end to the illegal sanctions.
The sanctions are reviewed every year. These sanctions do not reflect on the human rights situation in Zimbabwe.
The truth of the matter is that Zdera is a direct response to Zimbabwe’s historic and revolutionary land reform programme which corrected the racially imbalanced land ownership in the country.
Zdera becomes a punitive measure which victimises the black majority for claiming their land back.
These punitive measures have effectively hampered the Government’s efforts to implement its development agenda.
The sanctions generally have resulted in devastating effects on the whole economy of Zimbabwe.
It should be noted that a country survives through engaging with other countries.
We now have a global economy affecting domestic economy. The world has become a global village and our actions and inactions have a direct impact upon our society.
To boost our economy, we need a line of credit. Zimbabwe’s Balance of Payments (BoP) position has deteriorated significantly since the introduction of sanctions.
This means Zimbabwe’s access to most international credit markets was blocked after the enactment of Zidera and as a country we cannot buy anything on credit.
The country has been forced to virtually operate on hand to mouth basis. This was a plan for the West to starve Zimbabweans to rebellion.
This diabolic development has worsened the country’s creditworthiness as the country’s international financial risk profile escalated.
Zimbabwe, despite doing its best under the circumstances, was declared an unsafe country to invest in. This was the direct effect of the sanctions.
This subsequently led to the drying up of traditional sources of external finance from the International Financial Institutions (IFIs), with the country receiving no support from the African Development Bank since 1998, the International Monetary Fund (IMF) since 1999 and the World Bank since 2001.
In essence, the IFIs stopped their support to Zimbabwe by instituting a number of suspensions on Balance of Payments support, technical assistance, voting and related rights by the IMF and declaration of illegibility to access fund resources.
To make things worse, Bretton Woods Institutions suspended Balance of Payments support and technical assistance to Zimbabwe.
Regrettably, the lending programme from the World Bank is inactive due to accumulated arrears and sanctions.
With effect from October 2000, the World Bank placed all its International Bank of Reconstruction and Development loans and International Development Association credits to, or guaranteed by, Zimbabwe in non-accrual status, resulting in the country being unable to access any loan.
The combined effect of the arrears situation and sanctions has resulted in Zimbabwean companies finding it extremely difficult to access offshore lending, thus, crippling their operations.
Where the private sector manages to secure offshore financing, it is usually at punitive and exorbitant interest rates.
Because of Zidera many companies closed and this meant unemployment.
The sustained decline in long-term capital inflows has had ripple effects on the country’s employment levels, and its ability to provide basic goods and services to its people, ultimately leading to a decline in the standards of living.
This resulted in the country suffering from de-industrialisation and, subsequently, stagnation.
Zimbabweans had to look for greener pastures and consequently, there has been large-scale emigration, especially of skilled labour.
This has further strained the human resource capacity to hasten the pace of economic turnaround and development through brain drain.
Because of Zidera, Zimbabwean companies and individuals have found it extremely difficult to effect payments through the international payment platforms as these transactions are intercepted and blocked in the hostile countries, especially the US.
Many companies were afraid to deal directly with Zimbabwe. Several companies and banks were fined millions for dealing with Zimbabwe.
The diaspora community was also not spared and this had adverse effects on remittances into the country.
Humanitarian institutions like the health services and hospitals cannot buy medication from abroad. This has affected our health system.
Agriculture is the backbone of Zimbabwe’s economy; providing employment and income to over 60 percent of the population, supplying 60 percent of raw materials required by the manufacturing sector and contributing 40 percent of the total export earnings.
The unilateral sanctions brought a myriad of challenges to the agriculture sector. Specifically, they have made it extremely difficult to access agriculture lines of credit and attract investment.
This resulted in lack of development, rehabilitation, modernisation and deterioration of production and marketing infrastructure, ultimately reducing productivity and access to markets.
Sanctions affected the livelihood of households owing to lower agricultural yields and this derailed Zimbabwe’s quest to attain the United Nations Sustainable Development Goals (SDGs) against poverty and hunger.
With limited capacity for irrigation and investment in climate smart agriculture, Zimbabwe remains vulnerable to climate change.
The market access for horticulture, sugar, beef and cotton, among other crops was negatively affected.
Horticulture was the fastest growing sector and generated significant amounts of foreign exchange, and at one point becoming the second largest foreign exchange earner after tobacco.
However, due to sanctions the country lost most of its niche and lucrative markets for horticulture products. Previously, farmers used to export horticulture produce to the Netherlands and the UK.
However, these markets were closed due to sanctions, resulting in a significant decline in the horticulture industry.
By 2005, horticulture exports had gone down to about US$72 million, with the value further tumbling to US$40 million by 2009.
The short supply of vaccines and other drugs indicate how sanctions affected animal health in Zimbabwe.
This resulted in failure by the relevant department to control diseases like foot and mouth and this in turn affects the country’s beef export.
Given that 70 percent of funding for animal health programmes were through collaborative work, the withdrawal of funds hard hit the sector.
Since 2001, there has been huge shortages in vaccines, dipping chemicals and antibiotics, unlike from 1980 to 1990 where there were no recorded shortages.
The cotton industry is failing to access the EU markets directly, resulting in the loss of between 5 to 10 percent of the value of produce.
The cotton industry is failing to pay for inputs, spare parts and machinery to companies outside the country. Payments are blocked, foreign companies demand first class bank guarantors and funds take long to process.
Due to sanctions, a number of agricultural programmes and projects were terminated.
The Danish International Development Agency’s (Danida) support to Zimbabwe’s agriculture sector in 1998 was about USD15,4 million.
The International Fund for Agricultural Development (IFAD) was supporting five projects in Zimbabwe to the tune of US$215,700 million; namely the National Agricultural Extension and Research Project (US$39,4 million), Agricultural Credit and Export Promotion Project (US$116,9 million), Small Dry Areas Resource Management Project (US$19,8 million), South Eastern Dry Areas Project (US$20,3 million) and the Smallholder Irrigation Support Programme (US$19,3 million). All these projects were stopped after the imposition of sanctions.
As aptly put by the Food and Agriculture Organisation, “sustainable development goals offer a vision of a fair more prosperous, peaceful and sustainable world in which no one is left behind”.
Regrettably, the unjustified and illegal sanctions imposed on Zimbabwe by the US and its allies run counter to this noble vision, impacting negatively on the country’s agriculture sector.
Impact on Industry/Manufacturing sector
The sector has been heavily affected by sanctions through its effects of high cost of borrowing, tight liquidity conditions, outdated technology, continued use of antiquated plant and machinery, declining agriculture output, low aggregate demand and power outages.
Sanctions affected the manufacturing sector through lack of long term financing which precluded the sector from accessing the much-needed capital injections for retooling. This eroded the viability and competitiveness of the sector.
The industry’s capacity utilisation fell from 76 percent in the 1980s to an all-time-low of 10 percent in 2008.
The sector rebounded from 2009 to 2011 to about 60 percent before deteriorating again in 2015 with another rebound in 2016 to about 48 percent which was attributed to import restrictions under the Statutory Instrument 64 of 2016.
Due to sanctions, Zimbabwe lost some of its overseas international markets for its manufactured goods. This was due to cancellation of contracts to the EU and US markets.
The mining sector was negatively affected by the sanctions, resulting in limited funding to recapitalise as most financiers stopped providing lines of credit to the industry;
Sanctions also saw some companies failing to receive proceeds from mineral sales, especially those associated with the Minerals Marketing Corporation of Zimbabwe (MMCZ) and reduced ability to access new markets.
Of particular concern are the negative effects on the minerals marketing and the diamond companies.
Two minerals marketing companies were designated by the US and the EU as some entities against which sanctions were imposed in 2008 and 2012 respectively, with the American and EU citizens and entities, and other entities outside these two jurisdictions prohibited from doing business with or providing financial and technical assistance to these organisations.
Assets belonging to these marketing companies within the US and the EU were immediately frozen and could not be withdrawn or liquidated.
From a financial perspective, the sanctions have affected all the foreign currency transactions with the companies unable to directly transact in foreign currency.
Producers are now receiving their funds directly from customers outside Zimbabwe creating a problem for the Government as some producers tend to evade paying taxes and royalties.
Concerning the mining companies, the sanctions made it difficult for them to effectively market and trade their minerals at competitive prices, forcing them to sell the precious minerals at discounted prices of more than 25 percent below the normal prices.
The companies traded their minerals through unconventional means because major international banks, insurance companies and couriers did not want to be associated with minerals from Zimbabwe. — [email protected]
Online Reporter