Tuesday, September 04, 2007

Indigenisation in Zimbabwe is picking up speed (FT)

Companies in Zimbabwe start to go local
By Tony Hawkins in Harare
Published: September 3 2007

US food manufacturer H J Heinz has sold its 49 per cent stake in Zimbabwe’s Olivine Industries in a move described by the state-owned media as a “government takeover”. In a statement on Monday, the Cotton Company of Zimbabwe (Cottco), which has been listed on the Zimbabwe Stock Exchange since its privatisation 10 years ago, said it had bought the Heinz stake for $6.8m.

The sale comes as the Zimbabwe parliament this week debates a bill designed to force foreign-owned companies and those owned by “non-indigenous” Zimbabweans (whites and Asians) to sell 51 per cent of their shares to black Zimbabweans.

However, business sources say the sale, which has been under negotiation for at least a year, is not attributable to President Robert Mugabe’s “indigenisation” campaign.

The Zimbabwe government holds a 23 per cent indirect stake in Cottco through the National Social Security Authority, as well as a small direct stake, but does not have majority control of Southern Africa’s largest ginner and marketer of cotton.

So while Olivine has been “indigenised” and now has majority ownership by black Zimbabwean shareholders, it has not been taken over by the state.

Indeed, the initiative came from Heinz which over a year ago decided to sell its Zimbabwe operation because, as a manufacturer soaps, vegetable oils and candles, Olivine’s business is “noncore” for the food group. It is understood that with the sale to Cottco, the Heinz brandname will be discontinued in Zimbabwe.

Heinz was one of the first foreign companies to invest in Zimbabwe after independence in 1980 when it bought a 49 per cent of Olivine from the family owners and established a joint-venture with the government.

Its chief executive at the time, Irish businessman and former rugby international Tony O’Reilly, befriended Mr Mugabe and tried – mostly in vain – to convince other western companies to invest.

The Heinz sale is the third corporate restructuring in as many weeks that has been linked, rightly or wrongly, to the government’s indigenisation programme.

Last week, London-listed Old Mutual said it would allocate 20 per cent of the shares of its Zimbabwe operation to local, black, staff. Old Mutual Zimbabwe is listed on the Zimbabwe Stock Exchange, which means that 30 per cent of its shares are held by local – mostly black – investors. Old Mutual is unpopular in Zimbabwe because the retirement funds of policyholders are largely worthless as a result of cumulative inflation since 2002 in excess of nine million per cent.

Earlier last month, the Meikles Africa group, which operates hotels, supermarkets, tea plantations, and a textile company in Zimbabwe and also has a growing investment footprint in South Africa, announced that it would restructure its business, appointing a black chief executive for the first time. Details of the restructuring have still to be announced, but the effect will be to indigenise ownership in Zimbabwe.

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At 5:21 PM , Blogger MrK said...

It seems to me that the machinations of the MDC/LonRho are again blowing up in their own faces.

I suspect that a lot of the claims about Zimbabwe's imminent demise, in fact the very act of putting a time table on the state's collapse, is inspired by the indigenisation progamme.

For the neoliberal MDC and especially it's LonRho backers, it is all about money.


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