Global Policy Forum

NGOs Withering Under Foreign Currency Shortages

Plus News
April 24, 2008

Scores of nongovernmental (NGO) and humanitarian organisations are threatened with collapse after Zimbabwe's central bank failed to release money required for their operational costs. Cephas Zinhumwe, chief executive officer of the National Association of Nongovernmental Organisations (NANGO), the national NGO umbrella body, told IRIN/PlusNews the financial situation for his members was "desperate".

The Reserve Bank of Zimbabwe (RBZ) in September 2007 demanded that all foreign currency deposits of foreign funded NGOs and humanitarian organisations were kept by the central bank on their behalf. The organisations then had to maintain 'mirror' accounts, which reflected the amount of foreign currency in their local banks, which was then reconciled by the central bank.

Zinhumwe said when the programme was introduced, organisations would apply to the central bank to access foreign currency. Foreign embassies and United Nations agencies were excluded from the RBZ's foreign currency management of accounts. "Initially, it took about three days to get foreign currency cleared by the RBZ. As far as I know, it now takes more than three months before being cleared to use your money by the RBZ. Some of our member organisations have not been able to access their money since the beginning of the year and they say they are facing closure because they have not been able to pay workers, rentals and to run programmes for which they are funded," Zinhumwe told IRIN/PlusNews.

Zinhumwe said the RBZ strategy to manage the foreign currency had exacerbated the foreign currency shortage and impacted negatively on an already collapsing economy. "Indications are that since that decision was taken, foreign currency inflows have reduced dramatically. Some organisations are looking at the option of opening off shore accounts but there are very stringent requirements that have to be met in order to get such accounts. But the situation is very grave. Another month or two of this then NGOs will close en masse," he said.

Thabani Moyo, the information officer for Crisis Coalition, a grouping of pro-democracy organisations, said the move was a deliberate attempt by the government and the RBZ to financially throttle NGOs. "The government has for years accused the NGO sector of supporting the opposition MDC. The same government tried two years ago to shut down NGOs through the proposed NGO Bill which was never signed into law," Moyo said.

Election costs

Moyo said in the run up to the 29 March presidential and parliamentary elections the ruling ZANU-PF government had used scarce foreign currency reserves to bribe voters ahead of the poll. "The RBZ was responsible for the purchase of farming equipment and buses which were used by the ruling ZANU-PF to entice and bribe voters. The RBZ cannot use the people's money to prop up the ruling party."

Vukile Mkushi, a programme officer for a civic society organisation that he declined to name, told IRIN/PlusNews he had not been paid since the beginning of the 2008. "By the end of April, I would have exhausted all my savings because we are now in the fourth month without receiving a salary. My wife who is paid in local currency has been keeping the family going and I am getting frustrated with the RBZ for failing to give us our money," he said.

The scarce availability of foreign currency is also affecting people living with HIV and AIDS. Lindiwe Mhunduru, the spokesperson for the country's largest medical aid service provider, Cimas, told The Herald, the state owned daily newspaper, that her organisation had stopped supplying antiretroviral (ARV) drugs for HIV positive clients. "The inability to get hard currency to import ARVs has in part caused the disruption. Some of the drugs that are manufactured locally were in short supply and we could not buy the quantities which we required."

Mhunduru said foreign currency was needed to both import the drugs and to equip local manufacturers to ensure adequate supplies, while other ARV drug manufacturers had stopped production because of a government price control regime that forced companies to sell commodities at unrealistic prices. This, according to Mhunduru, had forced medical aid service providers to approach the government. "We understand that medical aid societies and service providers have set up a task force which is preparing a paper detailing foreign currency requirements for pharmaceutical and other service providers to be submitted to the government."

Reverend Maxwell Kapachawo, Zimbabwe's first religious leader to publicly disclose his HIV status, told IRIN/PlusNews "My salary has not come in as one of the people who work in the NGO sector because of problems at the Reserve Bank. "Now I am told that my medical aid company cannot access foreign currency to provide the life saving (ARV) drugs. The Reserve Bank should do all in its power to provide foreign currency so that ARVs are available at affordable prices."

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