100 000% inflation not enough for ‘mad’ Bob
Not satisfied with setting his country on fire, Zimbabwean president Robert Mugabe is intent on adding jet fuel in an effort to intensify the blaze. His latest affront to the citizens of the ‘normal’ world is what he terms an ‘indigenisation’ law... Strai
Mugabe’s previous ownership intervention saw the country’s productive white-owned farms seized and redistributed to state cadres. Having accomplished his goal of destroying the country’s agricultural sector he is now ready to repeat his earlier successes (sic) on the economic front. The move, he says, will secure economic independence for the majority of Zimbabweans. We expect it will also ensure an economic migration from Zimbabwe to anywhere else in the world and make the current 100 000% inflation appear reasonable in coming years.
Nothing new; but still a bizarre proposal
The bill has not come as a total surprise to business. It was first proposed in 2007 and debated by the Zimbabwean parliament on 2 November that year. On 7 March 2008 Mugabe assented to the bill and ensured it was gazetted. So most large corporations have had time to adjust their exposure to the country.
When the bill was first proposed, Zimbabwe’s indigenisation and empowerment minister, Munyaradzi Mangwana went on record: “The bill is not about economics but politics. It is about the total liberation of Zimbabwe, it is not to please X, Y or Z.” And he is quite correct in his observations… It is all about politics – and Zimbabwe’s dogged determination in implementing political vendettas ahead of sensible economic reforms will keep the country on the bottom rung of the world economy for decades to come.
At the time Mangwana was particularly derisive of some of the larger banks operating in the country. “These banks don’t have a single black shareholder; they want to create white islands in a liberated Zimbabwe. If you look at the percentage of foreign capital they are bringing into Zimbabwe, it is very little,” he said. Ironically the new bill will ensure that multinational companies bring even less capital to Zimbabwe. Big business does not like having terms dictated to it. Those that have large stakes in the Zimbabwean economy will probably make some effort to acquiesce. The rest will simply avoid investing there – finding more ‘investor friendly’ destinations for their expansion capital.
Giant multinationals under fire
IOL reports that “more than 200 British and South African firms [are] invested heavily in Zimbabwe. These include “Lever Brothers, Barclays Bank, Standard Chartered Bank, Standard Bank, Stanbic Bank, Impala Platinum, Angloplat, Mettalon Gold, Rio Tinto, Edcon, Merchant Bank of Central Africa and several enterprises owned by Anglo American.”
SABC television news recently reported that many South African companies are nonplussed by the latest developments. Spur Corporation, which operates eight restaurants in Zimbabwe reports these franchises are already Zimbabwe owned… And recently privatised Edcon says it only holds a 41% share in its 70 clothing outlets in that country. But most multinationals and larger corporations are adopting a ‘wait-and-see’ approach. After all, there is little else they can do. Massmart is on record hoping the Zimbabwe intervention will be similar to South Africa’s BEE principles. And Standard Bank will not comment until it has had more time to study the bill.
We think Massmart will be disappointed; and wonder how any multinational company is unprepared to comment on a bill that was drafted in the last quarter of 2007. If these companies were serious about their Zimbabwean operations they would have prepared statements to coincide with the bill’s acceptance.
Unlimited powers
The bill gives the Zimbabwe government unlimited powers to intervene in business affairs. “The minister shall... have access to all public records relating to business shareholdings and controlling interests, notwithstanding anything to the contrary contained in any other law,” reads part of the measure. And the law also provides for an economic empowerment board to “give loans to locals intending to acquire shares, start businesses or expand existing ventures.”
All the law achieves is to underline Zimbabwe’s obsession with the perceived wrongs of colonialism. In a country with such a small economic base the government would secure better results for its people by implementing and supporting laws to encourage new black business ventures without impacting the business of existing multinational corporations. Similarly, instead of seizing white-owned farms in 2000 the regime should have focussed on ways to embrace the white farming community while independently growing and nurturing new black farmers. A slow integration would have ensured the agriculture industry maintained its once glorious reputation.
Zimbabwe is proof that the politics of hate will end in tears. In stark contrast, South Africa proves that the politics of reconciliation create lasting growth and harmony. Those among us who get impatient at the pace of transformation could do well to look at the situation in Zimbabwe and ask if they really want to go there!
A raft of electioneering handouts
Mugabe is the undisputed king of votes for cash equivalents. In the run up to the country’s 29 March 2008 free and fair (sic) elections Mugabe has pushed through legislation, hiked salaries and handed out gifts to bolster his popularity and secure another election victory. Apart from the ‘indigenisation’ law Mugabe recently hiked the salaries of government officials and has handed farm implements to many of the poorest rural communities. The IOL quotes a senior Zanu-PF supporter secretly opposed to Mugabe: “Since there are no farms left to seize for redistribution, the foreign firms offered him [Mugabe] the best prospects for patronage.”
Still there are those who believe these ‘sweeteners’ are hardly necessary given the divided state of the opposition. The Movement for Democratic Change (MDC) has struggled in the years preceding the election in the backdrop of serious government-led political intimidation. More recently the MDC has been split down the middle in an internal battle for control of the movement. Movement leader, Morgan Tsvangirai cannot count on his party’s full support. And former Zimbabwe minister of finance, Simba Makoni, will probably split the vote even further. Rumours are that Makoni enjoys huge support among the ruling Zanu-PF, though little evidence of this has emerged so far. What worries us is the news that he enjoys military support too. Military support in an unstable African country around election time is never a good thing.
Editor’s thoughts:
Mugabe is intent on personally administering the death blow to Zimbabwe’s ailing economy. For years Zimbabwe was the bread basket of Africa; today it is the basket case! In 1980 when Ian Smith handed power to Mugabe the country’s currency was on par with the US dollar; today you can exchange (on the black market) one unit of the US currency for more than Z$25m. Will Zimbabwe ever recover? Send your comments to [email protected], or add them below.
