12 December 2012

Zimbabwe: Zanu-PF Pleads Bankruptcy

ZANU-PF has no money in its coffers and has been relying on a US$5 million bank overdraft that was converted into a loan, a Central Committee financial report to the party's 13th annual people's conference revealed.

The report states that ZANU-PF has been experiencing tight liquidity challenges in the last four years, and called for long-term solutions to "its precarious financial position, especially considering the forthcoming harmonised elections, which the party should win at whatever financial cost".

The picture being painted by ZANU-PF in its financials is in sharp contrast to the lavishness recently displayed by the party.

Of late, the party spent US$20 million on a Presidential inputs scheme, drawing questions from its inclusive government partners who demanded explanations on the source of funding for the project which President Robert Mugabe is using as a campaign tool.

The party has also awarded its workers an annual bonus paid out in November while transport and housing allowances were increased in February this year.

Also, the venue of the conference in Gweru, dubbed the Gweru Convention and Exhibition Centre was hastily built at a cost of US$6,5 million, money which the party says came from "donors", amid allegations that ZANU-PF is secretly siphoning proceeds from Chiadzwa diamond sales where securocrats have been placed in influential positions and the army is heavily invested.

The party has also bought over 400 brand new all terrain vehicles, some of which are still parked at the ZANU-PF headquarters, in preparation for the 2013 harmonised polls.

But the Central Committee financial report to the Gweru conference says since the introduction of the multi-currency system in 2009, the party has been relying on the overdraft which amounted to US$5 million by February 2012 against an income of US$4,6 million.

"The overdraft was converted into a loan of US$4,5 million and an overdraft facility of US$500 000," reads part of the report.

The report states that the repayment obligation of the loan is US$125 000 "which is unsustainable". The facility attracts an 11 percent interest per year.

In admitting that it has limited revenue inflows, ZANU-PF said that the major expenses during the year emanated from constitutional meetings, salaries and loan servicing.

Staff salaries chewed close to US$2,5 million, loan repayments US$1,650 000 and constitutional meetings US$725 241. But the report also states that US$2,6 million had been budgeted for the Gweru conference.

The party lists card sales, subscriptions, donations, government grant and fundraising as its main sources of income.

The party's financial position come after revelations by this newspaper two months ago that some ZANU-PF-run companies were tottering on the brink of collapse after failing to pay their statutory obligations such as taxes.

Workers at some of the struggling companies warned that they may end up filing for liquidation after going for several months without being paid in what would essentially put the last nail in their coffin.

ZANU-PF has since independence in 1980 invested in real estate, listed and non-listed stocks in order to sustain its operations from rental income and dividends.

Contrary to expectations, the majority of the investments have failed to declare dividends and are, instead, crying out for recapitalisation at a time the party cannot sustain itself from subscriptions raised from its membership as well as funding received through the Political Parties Finance Act, which prohibits local parties from being recipients of foreign funding.

The party narrowly survived eviction by the Catering Industry Pension Fund from its Gweru offices in June this year over unpaid utility bills and rentals amounting to about US$6 000, underlining the depth of its financial woes.

The party also operates a string of companies, among them Zidco Holdings, Treger Holdings, Cater-craft, Jongwe Printers, Zidlee and Fibrolite, which are reportedly trading below the red ink and desperately in need of fresh capital to reinvigorate them.

The bulk of these companies have been beset by mismanagement, resulting in some of their workers failing to get their salaries on time.

Since dollarisation in February 2009, the party's companies have continued to sing the blues with efforts to turn them around failing to bring tangible results.

Some of these companies are said to be heavily indebted to various service providers such as ZESA Holdings and the Zimbabwe Revenue Authority.

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