(NEWZIMBABWE) Zim: A rich country tackling inequalities and unlocking wealth
10/01/2014 00:00:00
by Bernard Bwoni
LET’S start by unpacking a recent ‘survey’ by New World Wealth (Zimbabweans among Africa’s poorest, survey) which boldly and bogusly claimed that Zimbabwe was among the poorest countries in Africa because of the country’s “controversial indigenisation policies” and “due to the erosion of ownership rights”.
The survey defines wealth per capita as “a measure of the net assets held by individualsincluding real estate, shares, business interests and intangibles, while excluding primary residences”. The survey gives a random and distorted figure of US$570 as Zimbabwe’s wealth per capita which is quite interesting to note as it conveniently “excludes primary residences” as net assets.
The figures being peddled here by New World Wealth are random numbers with no sources or references. If you just dig a little deeper into New World Wealth on www.new-wealth.com you will find a bare-bones website fronted by one individual, no data, no figures, no statistics, no sources and absolutely nothing! Zimbabweans are by far the most educated people on the African continent and beyond and challenge we must such unsubstantiated surveys which seek to deceive and discredit our beautiful country and her equally beautiful off-springs.
According to the Credit Suisse Global Wealth Databook (2013: 25) Zimbabwe’s wealth per capita is in fact US$1,456. The data and statistics on www.credit-suisse.com have sources and references and the estimation method used to derive that data is available and mostly used a regression analysis.
The Credit Suisse Data Book also gives you a clear indication of the quality of data used for each individual country as it highlights an important aspect of the random noise or error term in each data set. In the year 2000 Zimbabwe had a wealth per capita of US$467 and it increased gradually to US$606 in 2001, US$810 in 2002, US$1350 in 2003 and the figures declined significantly between 2004 and 2010.
However the figures picked up from 2011 to US$1,233, 2012 US$1310 and currently it is US$1,456. Zimbabwe has a mean wealth per adult of US$2913 and the country is ranked in the top ten on the African continent.
The question to ask is how come this survey is originating from South Africa a country that was recently ranked the most unequal country with the highest gini coefficient ranking on the African continent? Bogus surveys like the New World Wealth ‘survey’ solely seek to dismantle the nucleus of the real African economic biogenesis which is the indigenisation and empowerment and hence it warned “Should Zimbabwe continue with its controversial indigenisation programme which requires foreign companies to cede 51% shareholding in their companies to locals, its citizens’ wealth would continue to be eroded”. How is it possible to erode wealth when you empower people with ownership?
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South Africa is the most unequal country in Africa and the duplicitous New World Wealth “survey” should targeting, confronting and addressing those inequalities head-on. In South Africa the top deciles of the population accounts for 58% of the country’s income whilst the bottom deciles account for 0.5% and, largely, this is an enduring legacy of the apartheid system in that country which denies black people the chance to accumulate capital in any form be it land, finance and skills (World Bank Report, 2012). In South Africa the top 10% of the population earn 110 times more than the bottom 10% and 74.8% of all wealth is owned by the richest 10% of the population (Credit Suisse Global Wealth Databook, 2013:p146). Such inequalities are not addressed in the per capita wealth calculations.
The Gini Coefficient is a mathematical measure of inequality and the higher it is the more extreme the nation’s wealth inequality is. The gini coefficient is a ratio between 1 and 0, where 0 shows perfect equality and 1 shows perfect inequality. The closer to 1 a country’s gini coefficient is, the greater the inequality. South Africa has a gini coefficient of 69.1 or 0.69 which is the highest on the African continent and among the top in the world (UN Human Development Report, 2013). The issue of wealth per capita calculations can be misleading and does not necessarily reflect the general state of wealth to the ordinary person on the street. What this “survey” by New World Wealth used is a dubious measure to say the least. Per Capita wealth which is the mean of the people in any economic unit is calculated by taking a measure of all sources of income in the aggregate such as GDP and dividing that by the total population.
In the “developing countries” it is not unusual that more than 80% of total assets are held in the form of non-financial assets including primary residences, farms and small business assets. As countries develop and also as they make the transition to a market economy the importance of non financial assets tends to decline. In the richest countries of the world, financial assets typically account for more than half of the household wealth (UN Human Development Report, 2013). In the survey you will find that in Zimbabwe the informal sector is not accounted for in these per capita calculations. There is the Zimbabwe Diaspora which has contributed a whooping US$1.6 billion annually to the Zimbabwe economy and per capita calculations do not capture those revenue sources.
The strength of Zimbabwe’s land redistribution programme lies in giving land to the people as primary residences, people in rural areas live and farm on their primary residences and excluding primary residences in the calculations means that is also not captured. The Zimbabwe government’s indigenisation and land reform programmes are addressing inequalities whereas the high per capita wealth figure of US$11,687 for South Africa only serves to conceal the glaring inequalities and to deceive and pacify the masses from clamouring for what is rightfully theirs. Zimbabwe is rich and no amount of illusory and spurious surveys will change that.
Zimbabwe still has 90% of all its natural resources still in the ground and that is diamonds, platinum, gold and coal. The most profitable platinum mine in the world is in Zimbabwe. Agriculture is on the rebound as evidenced by the buoyant tobacco sector and that is on the backdrop of the highly necessary and successful land reform process. In Zimbabwe people with homes are unleveraged and have a 100% equity position in their homes which means there is a lot of capital to be unlocked there. Zimbabwe is rich, there is nothing controversial about the country’s indigenisation laws and is only unlocking wealth and addressing historical inequalities.
Bernard Bwoni can be contacted on bernardbwoni.blogspot.com or bernardbwn@aol.com
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), LAND REFORM, NEOLIBERALISM
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(STICKY) (NEWZIMBABWE) Tobacco exceeds targets, sales near $600m
10/06/2014 00:00:00
by The Source
ZIMBABWE’S tobacco output for the 2014 season on Monday reached 185 million kilogrammes, surpassing the season target by 5 million kg, latest figures show.
The sector continues to recover as resettled small-scale farmers find their feet, but output is still shy of the all-time high of 236 million kg achieved in 2000 before the onset of land reforms. Output plunged to a record low of 48 million in 2008.
Tobacco is a major foreign currency earner for Zimbabwe. Last year, the country sold 167 million kg of tobacco.
Tobacco Industry and Marketing Board (TIMB) statistics show that by Monday, day 74 of auctions, 185 million kg had gone under the hammer, up from 140 million kg sold during the same period last year. The selling season normally spans 90 days.
Revenues amounting to $587 million have been generated compared to $520 million in 2013. Total sales amounted to $577 million last year.
The price, at which the leaf has been sold since opening of floors in February, has declined 14 percent to average $3.17 per kg from last year’s $3.70.
The government has said a jump in production was anticipated following a 29 percent increase to 91,278 in the number of farmers involved in the production of the crop this season, with 90,000 hectares put under the crop.
Zimbabwe has three tobacco auction floors while six contractors have also been licensed to buy the crop this season.
Major exports markets for Zimbabwean tobacco include China, Belgium, Philippines, United Kingdom and Spain.
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), TOBACCO, ZIMBABWE
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(BERNARD BUWONI BLOG) In Mugabe Africa must seriously trust!
By Bernard Bwoni
As the media circus hijacked the memorial service of Mandela, certain ideological African themes are becoming more prominent and ineradicably embedded. There is a resurrection of the belief in the African ideology and the resonant acclamation President Mugabe received at the mention of his name at the FNB stadium is affirmation of the credence.
The people of Africa, the real people of Africa know who their real heroes are and no amount of illusory media sophistry and air-brushing is going to change that. President Mugabe received a standing ovation and he did not even stand at the podium to give a speech. The man must be doing something very right. No let me rephrase that, the man is doing something right.
Legends are born, not scripted. It is that unwavering, lifelong and indelible ideological immersion to a cause that personifies Robert Mugabe amply. What is interesting to note is that the inexorable thunderous ovation for Mugabe was right in the glare of those hypocritical kingmakers with privy designs and ominous intent who have incessantly and historically misinformed and disinformed the world about Mugabe. The Mugabe frenzy that is sweeping across the African continent has no preclusion. Those with inauspicious intentions on Zimbabwe have tried suppressing and smothering the ideologically-congealed Mugabe mania for it to resurface again and again as happened at the FNB stadium. Robert Mugabe’s standing ovation was for an unshakeable belief in a cause and the ovation for Obama was sheer curiosity and that novel feeling of seeing a black man fronting the very threat to that African cause.
Robert Mugabe is an extraordinary African. A man with the black African cause permanently ingrained to his whole being is what defines him. Zimbabwe has been under siege and the man has soaked all the demonization and onslaught with an unparalleled tenacity and resoluteness. He is a principled man with an indefatigable bond to delivering his people from the implacable neo-colonial structure which manifests itself in many forms to continually quell the African quest for lasting and real independence which seeks to economically liberate the continent and its people. The tumultuous ovation he received in the FNB stadium was no gimmick. That was open recognition from real African people with an unfulfilled thirst for definitive emancipation and not the delusory independence they had to settle for. Robert Mugabe represents real hope for the masses with an unfeigned and authentic proposal to truly liberate Africa and Africans. Do not believe the media hype about demons and dictators! That is just a smoke-screen to asphyxiate the African economic genesis that has the unique bonafide raison d’être to uplift and upgrade the lives of black Africans. Aid and donations have not done it yet! Most definitely will never do it and Africans eternally declassed to beggars and burgers! No real meat, no substance just barebones. No foreign aid is ever truly altruistic and the sooner Africans realise that the better. Only pessimism, calamity and undesirable negative anticipation shapes black Africa in the eyes of those with baleful and exploitation-inspired intrigue on Africa and representation of Africa is in terms of absences, delinquencies and alien. Obama delivering a hot-air speech to the permanently economically crippled black people of South Africa at the memorial service of a revolutionary who could have forced an upgrade of their lives is one of the most strikingly sardonic moments in African history. As the themes continue to emerge, Robert Mugabe’s ideals are resonating well with Africans continent-wide.
South Africa, a significantly unequal society with one of the highest gini-coefficient rankings in the world is on the threshold of a riveting social and political malfunction. Someone somewhere failed to fully address the obvious inequalities which define and are deeply entrenched in this ‘Rainbow Nation’ today. The standing ovation for Robert Mugabe, a real driver for change to address the historically and racially skewed inequalities and to economically empower the black people of Zimbabwe, is affidavit to the inevitable cataclysmic unravelling in South Africa. Little brother will guide big brother towards the summit of economic freedom.
Robert Mugabe is a visionary leader period! The unique feature about this living legend is the unflinching fidelity to ideological course and epistemological substance. When South Africans stood up and gave a resounding ovation to the man who has dedicated his entire life to the Zimbabwean cause, the South African cause was instantly thrust on the agenda. The inequalities in South Africa are not going to be addressed by flamboyant oration from the neo-colonial point man of those who wish to indefinitely degrade Africans to eternal bondage. Africa must seriously starting putting trust in the Mugabe vision. The Mugabe inspired and perceptive astuteness which seeks to dismantle and restructure the neo-colonial DNA which continues to inextricably fasten Africa and its people to enduring subjugation.
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), LAND REFORM, ROBERT MUGABE, ZANU-PF
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(WIKILEAKS) UNCLAS SECTION 01 OF 02 HARARE 000116
SENSITIVE
SIPDIS
AF/S FOR B. WALCH
E.O. 12958: N/A
TAGS: ECON EFIN EINV PGOV PREL ZI
SUBJECT: Zimbabwe Sets Racial Quota for Business Ownership
¶1. (SBU) SUMMARY: A Government of Zimbabwe (GOZ) minister from President Mugabe's ZANU-PF party has issued regulations meant to force "indigenization" of businesses. The new rules, published on February 5, say that any business worth US$500,000 or more must explain how it will "cede a controlling interest" to "indigenous Zimbabweans." The regulations are to take effect on March 1.
Existing businesses will have 45 days to submit their
indigenization plans. Failure to comply will be punishable by a
fine or up to five years' imprisonment. While the regulations
remove some of the uncertainties created by the thus-far unenforced
Indigenization and Economic Empowerment Act of 2007, they also
raise new questions. Prime Minister Tsvangirai and his Movement
for Democratic Change (MDC) oppose the regulations. This latest
indigenization scare is bound to put another dent in Zimbabwe's
battered reputation and give investors another reason to stay away.
END SUMMARY.
¶2. (U) Statutory Instrument 21 of 2010, dated January 29 but
released on February 9 by Minister of Youth Development,
Indigenisation, and Empowerment Saviour Kasukuwere, says that every
business in Zimbabwe with an "asset value" of at least US$500,000
must submit an "indigenization implementation plan" to his
Ministry. The deadline for existing businesses is 45 days after
the regulations take effect on March 1. New businesses will have
60 days to submit a plan. The goal of each plan must be to
transfer within five years a controlling interest in the business
to indigenous Zimbabweans, who are defined in the Act to be any
person "disadvantaged by unfair discrimination on the grounds of
his or her race" before April 18, 1980, or the descendant of such a
person. A business need not submit an indigenization plan if it
can show that it does "development work," adds value to raw
materials for export, brings new technology or skills to Zimbabwe,
or will "achieve any other socially and economically desirable
objective."
¶3. (U) The regulations list 14 industries "reserved against foreign
investment." These include agriculture, transportation, retail and
wholesale trade, grain milling, advertising, bakeries, tobacco
processing, and milk processing. Given that the underlying
legislation explicitly provide for minority foreign ownership of
businesses, the regulations appear to have the effect of excluding
all foreign investment in the 14 designated industries. There are
also other ambiguities in the regulations. It is not clear whether
"asset value" is net or gross. And the regulations do nothing to
clarify the definition of an indigenous Zimbabwean, which does not
obviously include all black Zimbabweans or necessarily exclude
everyone who might be considered white or of some other race.
Another disturbing source of uncertainty is how the Minister may
choose to interpret the broad exemptions in the regulations. Nor
do the regulations spell out what might become of businesses that
do not meet the five-year indigenization deadline.
¶4. (SBU) So far there have been few public reactions from the
business community. One mining company has advised shareholders
that it is "studying" the regulations and noted that they provide
for future issuance of lower indigenization quotas for specific
industries. The Chamber of Mines, the mining companies' main
lobbying group, has long been engaged in discussions with the GOZ
on indigenization rules. Private reactions range from alarm to
resignation. One prominent businessman sees the issuance of the
regulations as a political ploy by Kasukuwere to curry favor with
Mugabe. In his view, the regulations do not have broad support
within ZANU-PF and are likely to be withdrawn or modified. But he
acknowledged that news of the regulations could have a devastating
effect outside the country on potential investors. Other business
contacts have expressed doubts about the capacity of the GOZ to
implement the regulations. If there is a high degree of compliance
with the reporting requirement, Kasukuwere's ministry could
collapse under an avalanche of paper. But that could also have the
effect of making enforcement all the more arbitrary.
¶5. (U) Press reports say Tsvangirai has called the regulations
"null and void" because they were not approved by the cabinet. His
MDC party released a statement on February 11 calling the statutory
instrument "provocative" and "a deliberate attempt to undermine the
country and its people." The MDC called on the GOZ to withdraw the
regulations.
HARARE 00000116 002 OF 002
¶6. (SBU) COMMENT: With ZANU-PF's popular support draining away,
release of the indigenization regulations now could be a move to
curry favor with the electorate. But sooner or later, the
indigenization law will give way to Stein's Law: "If something
cannot go on forever, it will stop." Until then, intermittent
indigenization scares will help keep Zimbabwe a high-risk zone for
lenders and investors, choking off the financing needed to rebuild
a battered economy. Zimbabwe's macroeconomic recovery is already
starting to look like a dead-cat bounce: the economy is better now
mainly because it could not have gotten worse. Investors and
lenders were already staying away in droves before Kasukuwere made
his move. Even if the just-issued indigenization rules disappear
or are watered down before March 1, Zimbabwe's battered reputation
will carry a new and lasting dent. If the rules stay in place,
prospects for meaningful economic growth this year will dim
significantly. END COMMENT.
RAY
http://wikileaks.org/cable/2010/02/10HARARE118.html
UNCLAS HARARE 000118
SENSITIVE
SIPDIS
AF/S FOR B. WALCH
E.O. 12958: N/A
TAGS: ECON PREL EAID CN ZI
SUBJECT: CHINESE ENGAGEMENT IN ZIMBABWE
REF: 10 STATE 10152
¶1. (U) Although statistics are not readily available, anecdotal
evidence shows increasing Chinese involvement in Zimbabwe's
economy. The trend became pronounced with the Government of
Zimbabwe's (GOZ) "Look East Policy" in 2003, through which it
sought to emphasize new ties with China in place of traditional
links to Europe and North America. Chinese enterprises are
noticeably active in the retail and construction sectors. One
local press report suggests that 80 percent of Chinese-owned
enterprises are in the retail sector. But Chinese construction
projects receive far more public attention - often negative. For
example, an eight-year-old plan involving Chinese contractors to
widen the highway between Harare and Bulawayo collapsed after only
20 kilometers of construction amid allegations of poor workmanship
and corruption.
¶2. (U) There has been significant Chinese investment in industrial
enterprises. In 2007 Sinosteel Corporation bought Zimasco
Consolidated Enterprises Limited, Zimbabwe's largest ferrochrome
producer. Zimasco suspended production in 2009. In 2004 the China
Building Material Industrial Corporation entered into a joint
venture with the Industrial Development Corporation of Zimbabwe to
establish the Sino-Zimbabwe Cement plant in Midlands Province.
Chinese firms also provided agricultural equipment worth millions
of dollars under the Reserve Bank of Zimbabwe's farm mechanization
program in order to show support for the GOZ's land reform program.
In 2009, Zimbabwean officials announced a multi-billion dollar
Chinese investment in platinum mining, but there is no evidence of
actual investment on this scale.
¶3. (U) The GOZ's severe fiscal constraints have put limits on
Chinese engagement. The GOZ is in arrears on its US$400 million in
official debt to China, and this has blocked access to lines of
credit reportedly worth as much as US$950 million. According to
GOZ figures, as of March 2009 Zimbabwe owed US$37.2 million to
China in unpaid principal and interest.
¶4. (SBU) There are no concrete examples of U.S.-China collaboration
in Zimbabwe. Ambassador Ray met with the Chinese ambassador who
indicated his desire to maintain a dialogue with the U.S. and other
Western countries. The principal aims of U.S. policy in Zimbabwe
are a return to democratic governance, restoration of the rule of
law, and protection of human rights. While China has remained
silent on these subjects, it has moved from sole support of ZANU-PF
to a more balanced approach and now has relationships with both
ZANU-PF and MDC-T. The Chinese embassy recently sponsored a golf
tournament in honor of Prime Minister Tsvangirai. While China
may share an interest with the U.S. in restoring Zimbabwe's
investment climate, progress in this area ultimately depends on
governance reforms.
RAY
http://wikileaks.org/cable/2010/02/10HARARE105.html
C O N F I D E N T I A L SECTION 01 OF 02 HARARE 000105
SIPDIS
AF/S FOR BRIAN WALCH
NSC FOR SENIOR AFRICA DIRECTOR MICHELLE GAVIN
ADDIS FOR USAU
E.O. 12958: DECL: 2020/02/16
TAGS: EINV ECON PREL PGOV ZI
SUBJECT: Zimbabwe: Doing Business Zimbabwe-style
REF: HARARE 116
CLASSIFIED BY: Charles A. Ray, Ambassador, STATE, EXEC; REASON:
1.4(B), (D)
¶1. (SBU) A recent conversation with businessman Kumbirai Katsande
illuminated the difficulties of doing business in Zimbabwe.
Katsande is the past president of the Zimbabwe Business Council and
the current head of the Confederation of Zimbabwean Industries. He
is the Managing Director of Ariston Holdings Ltd., which has major
horticultural and tea interests, and the Chairman of NestlC)
Zimbabwe Ltd.
¶2. (C) Katsande described how Ariston came to give up land to High
Court Judge Ben Hlatshwayo. In 2002, Hlatshwayo, in defiance of an
order from his own Court, seized a white commercial farm in the
agriculturally productive area of Banket, about 100 kilometers
northwest of Harare. The farm was near the Mugabe rural home. In
2009, the farm caught the eye of First Lady Grace Mugabe, who
apparently wanted it for her son from her first marriage. She
ordered Hlatshwayo off the land. He countered with a lawsuit but,
unsurprisingly, no judge was willing to hear the case. The powers
that be persuaded Hlatshwayo to leave his 600-hectare farm and
promised him another. He found another farm and demanded the white
owner leave. He then received a call from Minister of Local
Government, Urban and Rural Development Ignatius Chombo, a patron
of the owner, who told him to desist and look for another. He did.
This time he got a call from Minister of Lands and Rural
Resettlement Herbert Murerwa, who had a relationship with the
owner, Hlatshwayo moved on. He finally came to land owned by
Ariston Holdings which, under pressure, agreed to cede him land.
Katsande said Ariston was a bit miffed that Hlatshwayo's original
farm was 600 hectares and he demanded 900 from Ariston. They
ultimately negotiated.
¶3. (C) Last year, in the wake of an international outcry, NestlC)
Zimbabwe, which had been buying milk from Grace Mugabe's dairy
farm, decided to stop. After he and NestlC) workers were
threatened, Katsande contacted President Robert Mugabe's office.
He was told Mugabe had asked Minister of Industry Welshman Ncube to
handle the matter, and that the government would not interfere with
NestlC). Katsande then learned that Reserve Bank of Zimbabwe
Governor Gideon Gono had frozen NestlC) accounts. He contacted
Gono, who said he was acting on Mugabe's behalf. Katsande
convinced him to call Mugabe. He did and backed off. Katsande was
subsequently contacted separately by Minister of Youth and
Indigenization Saviour Kasukuwere and Minister of State in the
President's Office Didymus Mutasa, both of whom threatened him if
he didn't resume buying milk from the first lady. He told them to
contact Ncube. Ncube convinced them that Mugabe had left the
matter with him, and told them that he (Ncube) was not going to
force NestlC) to buy milk from Grace Mugabe. NestlC) has resumed
operations and is not buying milk from Grace Mugabe.
¶4. (SBU) We talked to Katsande just after Kasukuwere had issued
new indigenization regulations (Ref). He said despite
difficulties, NestlC) had a large investment in Zimbabwe and was
going to invest an additional US$10 to US$15 million. But it was
going to make other major investments in Botswana and Mozambique
which would have been made in Zimbabwe but for the unsettled
political situation.
¶5. (C) Finally, Katsande told us about a legal dispute of Ariston
involving tea estates in Chipinge. War veterans tried to take over
some of Ariston's land and a legal case ensued. Ultimately, the
Supreme Court, in a decision signed by the Chief Justice, ruled in
Ariston's favor. But squatting war veterans refused to leave the
estates. When Ariston contacted the police, it was told that farm
invasions were a political matter and the police would therefore
not act. Katsande paid a visit to the local police commissioner in
Chipinge and was told the same thing. Katsande pointed out to the
HARARE 00000105 002 OF 002
police commissioner that the Chief Justice belonged to ZANU-PF and
that the judgment in the legal case was therefore political. He
then threatened to bring an action for contempt against her
personally for defying an order of the Chief Justice if police did
not remove the war veterans within three days. They did.
-------------
COMMENT
-------------
¶6. (C) Katsande's experiences demonstrate the difficulties of
doing business in Zimbabwe. ZANU-PF's abuse of power echoes
throughout the economy and the party's influence will certainly
inhibit economic recovery. Investors not yet active in Zimbabwe
generally understand this and accordingly choose to do business
elsewhere. Foreign companies already here - like NestlC), Chevron,
Implats, and others - will at most hedge their bets in existing
operations but not make major new commitments until Mugabe and the
likes of Kasukuwere have been forced from office. Consider, for
example, the continuing malevolent influence of Reserve Bank
Governor Gideon Gono. Even though the central bank no longer has
the means to disrupt the economy as it did during Zimbabwe's
hyperinflation, the very fact that Gono is still on the payroll
frightens anyone who might consider a financial commitment that
lasts more than a week. On Zimbabwe's current trajectory, Katsande
will have more amusing anecdotes for us next year. END COMMENT.
RAY
http://wikileaks.org/cable/2010/02/10HARARE152.html
UNCLAS SECTION 01 OF 04 HARARE 000152
SIPDIS
AF/S FOR B. WALSH
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
NSC FOR SENIOR AFRICA DIRECTOR
STATE PASS TO USAID FOR L. DOBBINS AND J. HARMON
COMMERCE FOR ROBERT TELCHIN
E.O. 12958: N/A
TAGS: PGOV PREL ASEC PHUM ZI
SUBJECT: ZIM NOTES 02-19-2010
-----------
¶1. SUMMARY
-----------
Mugabe Welcomes Codel Meeks/Watt...
Journalist thrown out of Mugabe/Codel meeting...
Diamond Drama Continues...
Zim Agrees to KP Monitor...
Court Orders Mining at Chiadzwa to Stop...
EU Extends Targeted Sanctions on Zimbabwe...
ZANU-PF Hijacks Civil Servants' Strike...
Police Arrest WOZA Members...
Mexican Journalist Arrested...
HRW Calls Gov't a "Failure"...
Rising Cost of Living Fuels Wage Demands...
Tobacco Selling Season Starts on High Note...
Companies Resort to Rights Issues...
---------------------------------
On the Political and Social Front
----------------------------------
¶2. Congressmen Gregory Meeks (D-NY), Melvin Watt (D-NC), Jack
Kingston (R-GA), and Bob Goodlatte (R-VA) visited Harare this week
and had a nearly two-hour long meeting with President Mugabe at
State House. The delegation also met with Finance Minister Tendai
Biti and visited a USAID-funded livelihoods project. Friday's
Herald featured a large photo of Congressman Meeks and Mugabe
shaking hands next to the headline "US pledges dialogue."
¶3. Freelance journalist (and correspondent of the Zimbabwe Times)
Nkosana Moyo was escorted by the CIO out of a meeting between
President Robert Mugabe and the visiting Congressional Delegation.
Moyo tried to record the proceedings of the meeting when the CIO
accosted him and took him out of State House. He told PAS that they
gave him a 20- 30 minute lecture about patriotism. "They told me I
should not be used by the Americans to demonize Zimbabwe, and took
all my details- address, phone numbers, next of kin, rural home-
and let me go," said Moyo. Moyo said he could not go back to State
house to cover meeting because "I was no longer a in a state of
mind to do anything."
¶4. Transcripts of closed-door hearings led by the parliamentary
committee on mines and energy have revealed probable corruption and
a lack of oversight in the troubled Chiadzwa diamond fields. The
committee, led by the ZANU-PF former Mining Minister Edward
HARARE 00000152 002 OF 004
Chindori-Chininga, has grilled senior leadership from the
parastatals Zimbabwe Mining Development Corporation (ZMDC) and the
Minerals Marketing Corporation of Zimbabwe (MMCZ) on their lack of
oversight of the two joint ventures operating in Chiadzwa, Mbada
Diamonds and Canadile Miners in several hearings this month. Mining
Minister Obert Mpofu is allegedly due to testify soon as well.
¶5. This week Zimbabwe agreed to allow a South African
industrialist with extensive diamond mining experience, Abbey
Chikane, to serve as the resident monitor for the Kimberley Process
Certification Scheme (KPCS) after several other potential monitors
were rejected. Chikane's appointment is the result of the KP work
plan developed in October 2009 at the KP Plenary in Namibia.
Chikane is to have "unfettered" access to Chiadzwa is will need to
approve of diamond shipments before they can be granted a KP
certificate.
¶6. The Supreme Court has ruled that ZMDC and the MMCZ must stop
mining operations at Chiadzwa pending finalization of the ownership
dispute with African Consolidated Resources (ACR). Although ZMDC's
two partners, Mbada and Canadile, may remain on site, they have
been ordered to stop operations. In the meantime, the GOZ has
reportedly cancelled ACR's license to mine the Chiadzwa fields,
giving it up to March 10 to lodge an appeal. ACR contends the
cancellation is unlawful.
¶7. On February 16, the EU extended targeted sanctions on Zimbabwe
for another year and also removed six individuals (mostly deceased)
and nine companies from the list. Of note, sanctions were lifted on
Dumiso Dabengwa, a former ZANU-PF Minister of Home Affairs, who
left ZANU-PF two years ago to reform ZAPU. The EU justified the
extension on the lack of progress in the implementation of the GPA.
Although ZANU-PF dismissed the extension of the sanctions as a
non-event, it has nevertheless said it will not make any
concessions in the GPA talks until all the sanctions are removed.
¶8. Striking civil servants have said that ZANU-PF has hijacked the
strike for political reasons. Civil servants' representatives
reported that ZANU-PF was forcing teachers to join the strike. They
reported that in Masvingo province in southern Zimbabwe, ZANU-PF
and the CIO forced Victoria High School to close at gun point and
ordered the teachers to join the strike. The civil servants are
pressing the government to increase their $150 monthly wages to a
minimum of $630. The government has said it can only increase the
paltry wages by a further $16 because it has no money.
¶9. On February 17 the police arrested two members of Women of
Zimbabwe Arise (WOZA) in the eastern city of Mutare. One of the
women, Rose Rukwewo, is an elderly woman who suffers from hyper
tension. The police arrested the women at their homes for no
apparent reason other than to harass them after they had
participated in a WOZA protest march on February 16. Although the
police admitted they have no evidence to charge the women, they
insisted on detaining them for 48 hours--the maximum period the
police can hold a suspect in detention before they must appear in
court. The women were initially denied access to their lawyer for
several hours.
¶10. In Masvingo on February 12, police arrested a Mexican
journalist who was filming potential tourist sites. The journalist,
HARARE 00000152 003 OF 004
who was in a vehicle belonging to Minister of Tourism Walter Mzembi
(ZANU-PF) and who had a letter of authorization signed by Mzembi,
was held for several hours before being released after Mzembi's
personal intervention. Mzembi later fumed, "We cannot attract
tourists if we do not look at our law and order. [The journalist]
wanted to film for Mexican tourists ahead of the World Cup in South
Africa, but the first call I received once he got there was he was
at a police station. He has understood that we are in a transition
and we have said it will not happen again."
¶11. Human Rights Watch issued a harsh statement this week, calling
the inclusive government a "failure." According to HRW's Director,
Georgette Gagnon, "The transitional power-sharing government is a
sham. From a human rights perspective, nothing has changed for the
better. Robert Mugabe and ZANU-PF are still fully in control." HRW
went on to call for the government to begin preparations for
holding internationally supervised free, fair, and credible
elections that will lead to a legitimate and democratic government
with the political will to bring about change. An article in The
Economist this week also suggested early elections wouldn't be a
bad idea:
http://www.economist.com/world/middleeast-afr ica/displayStory.cfm?s
tory_id=15549373
-----------------------------------
On the Economic and Business Front
----------------------------------
¶12. According to the Consumer Council of Zimbabwe (CCZ), the
average cost of a basket of goods for a family of six rose by about
seven percent from $488.11 in December 2009 to $520.53 in January
¶2010. The jump was attributed to an anticipated increase in civil
servants' salaries and high utility tariffs. To the extent that CCZ
figures are now the basis for determining minimum wages in the
public and private sectors, there will be more pressure for a
general rise in wages.
¶13. The opening of this year's tobacco selling season started on
February 9 amidst expecations of substantial growth in the quantity
sold. The Tobacco Industry Marketing Board (TIMB) projects sales
this year of 77 million kilograms, up from 56 million in 2009. The
TIMB cites favorable prices and an increase in the number of
farmers growing the crop as the main factors behind the increase.
The use of the out-grower schemes has attracted a lot of farmers
since they are well supported by tobacco merchants when compared to
other commercial crops.
¶14. Liquidity constraints in banks and the high cost of borrowing
have forced most companies to go for rights issues and private
placements to raise money for expansion projects. During the week
under review, for example, two publicly listed companies proposed
to raise a total of $40 million through both rights issues and
private placements.
¶15. "We know their attitude. They do not want anyone, any country
in the developing world to make any meaningful development
strides." -- President Robert Mugabe, referring to the West's
alleged efforts to block development in Africa, at the opening of
HARARE 00000152 004 OF 004
the Pan-African Tourism Investment Summit in Harare, February 17,
¶2010.
RAY
Dhanani
http://wikileaks.org/cable/2010/02/10HARARE170.html
UNCLAS SECTION 01 OF 02 HARARE 000170
SENSITIVE
SIPDIS
AF/S FOR BWALCH
DS/IP/AF, DS/TIA/ITA
DRL FOR SMORGAN, MMITTELHAUSER, AND TDANG
DOL/ILAB FOR SHALEY
E.O. 12958: N/A
TAGS: PGOV PHUM PREL ASEC ZI
SUBJECT: ZANU-PF Peacefully Protests Sanctions In Front Of U.S.
Embassy
REF: HARARE 74
---------------
SUMMARY
---------------
¶1. (U) A ZANU-PF organized group protested peacefully in downtown
Harare and in front of the U.S. Embassy on February 24. The
protesters, who were allegedly bused in from outside Harare,
shouted anti-sanctions slogans and appeared to have been paid at
ZANU-PF headquarters after the march ended. Although the group
reportedly intended to present petitions at the U.S. Embassy and at
the headquarters of the Movement for Democratic Change (MDC),
neither has received such a petition. The police escorted the
well-organized protesters but did not inform the Embassy in
advance. Police briefly detained and released one journalist.
There are no other reports of arrests or injuries. END SUMMARY.
------------------------------
March on the Embassy
------------------------------
¶2. (U) At around 10:30 local time, approximately 1,000 ZANU-PF
supporters gathered in downtown Harare for a protest march against
sanctions. According to the MDC, ZANU-PF brought the group to
Harare from nearby rural areas in buses and trucks. The protesters
wore t-shirts that said "sanctions are criminal" and carried
professional-looking posters with slogans such as "We will defeat
sanctions to realize your dreams," "Sanctions are catastrophic to
us," and "Pirate radio stations are stealing our sovereignty." The
group chanted anti-sanctions and pro-ZANU-PF slogans as it was
escorted by police through town.
¶3. (U) At approximately 11:00 the group arrived on Herbert Chitepo
Avenue, about a block east of the chancery. The crowd, following
directions from its leaders, peacefully marched in front of the
Embassy, pausing for about three minutes to boo, pump fists, and
sing ZANU-PF songs. The group also shouted anti-American and
anti-U.S. government slogans, directing some of their comments at
our locally employed guard force. The comments included: "Don't
you want land? What are you getting from the Americans?"; "We know
where you live, we shall get you one by one"; "We want war with
you Americans we are not afraid of you"; "Charles Ray must go, he
is responsible for sanctions"; "You are responsible for our
problems." After jeering for a few moments, the crowd peacefully
moved down the street. While stopped in front of the chancery, a
few in the group attempted to stand on barricades in front of the
entrance but stopped when told to do so by Zimbabwean police.
¶4. (SBU) After moving away from the Embassy, the group returned to
ZANU-PF's headquarters, where it appeared protesters entered the
building in turns, possibly to receive payment for participating.
Although it was rumored throughout the day that the group was going
to present petitions at the Embassy and at MDC headquarters
downtown, no one submitted a petition at either location.
Beginning at approximately 15:00, the group was loaded into buses
in downtown Harare. It appeared that some of the protesters
commandeered some public transport, but the crowds quickly
dissipated when it began to rain heavily.
¶5. (SBU) Although the police succeeded in ensuring the march in
front of the Embassy was peaceful, no one in the Embassy received
advance notice of the protest. The Embassy only learned of it at
10:45 from a civil society contact who heard about it from an MDC
official. The Embassy is still without regular protection by the
Zimbabwean police (reftel).
---------------------------------------
Journalist Detained, Released
---------------------------------------
HARARE 00000170 002 OF 002
¶6. (SBU) Before the march began, plainclothes police detained
freelance journalist Andrisson Manyere for about 15 minutes.
According to Manyere, the police objected to his taking photos
without having first sought permission from the police or ZANU-PF.
According to another journalist in the area, Manyere was
photographing the ZANU-PF youths scrambling for free t-shirts in
front of ZANU-PF's headquarters. Manyere was taken to the nearby
ZANU-PF headquarters building, where ZANU-PF officials and
officers of the Central Intelligence Organization recorded his
details and forced him to delete all of the photos from his camera.
(NOTE: Manyere has been a frequent target of the police. He was
arrested on January 18 in Harare while filming a march by Women of
Zimbabwe Arise. Manyere was abducted in December 2008 and held
incommunicado for several weeks by security agents who tortured
him. He remained in prison until April 2009 and still faces
charges of participating in bombings of police stations. END
NOTE.)
---------------
COMMENT
---------------
¶7. (SBU) Today's protest came as a complete surprise, despite our
slowly improving communication with ZANU-PF and the police. Our
contacts in civil society, who usually hear of large events in
advance, were also caught off guard. Although the rhetoric
expressed by the protesters is nothing new, it is evidence that
ZANU-PF is once again exploiting rural youth to do its bidding,
using enticements of free food, t-shirts, and a trip to Harare.
This was one of the largest protests in Harare in recent memory and
the first to take place in front of the Embassy in at least three
years. END COMMENT.
Dhanani
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), WIKILEAKS, ZIMBABWE
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(NEWZIMBABWE, XINHUA) New SME-based economy emerges: govt
27/12/2013 00:00:00
by Xinhua
We now have a new economy ... Samuel Undenge
DEPUTY Finance Minister Samuel Undenge said Friday a new economic model was emerging in Zimbabwe driven mainly by small-scale players in key sectors such as farming and mining.
Speaking at a post-budget breakfast meeting, Undenge said small-scale miners and farmers had played an increasingly bigger role in the economy in recent years, hence the need to acknowledge the changing dynamics.
“It is true that we are now having a new economy. In the past we had 2,000 tobacco farmers but now we have 90,000 farmers and much of the tobacco production is done by small-scale farmers. So a new economic model is in the making and we need to recognize and support it,” he said.
Zimbabwe’s economy is principally driven by agriculture and mining with tobacco the major agricultural export earner while gold is the leading mineral export earner.
Undenge said the new economic mode sought to decriminalize operations of small-scale gold miners so that they sell their gold through formal channels and contribute to national economic growth.
What was needed, the minister said, was for strict enforcement of environmental lawsto ensure the small-scale miners do not degrade the environment.
While presenting the 2014 national budget Thursday, Finance Minister Patrick Chinamasa revealed that he had secured a 100 million U.S. dollars line of credit to support artisanal miners.
He said the money would be primarily used to purchase basic equipment for artisanal miners.
Chinamasa also said last week that the old economy was dead and that a new one was emerging based on the activities of small-scale players in key sectors of the economy.
Small-scale miners once contributed 50 percent to total gold produced in the country in 2004 but this had declined to 20 percent due to viability and operational challenges.
The country’s sole gold refinery resumed operations this week after five years of closure and the development was expected to significantly improve operations in the gold industry.
With government banning raw gold exports with effect from next month, all small-scale miners would have no option but to sell their gold to state-owned Fidelity Printers.
In the budget, Chinamasa reduced the royalty paid by small- scale miners from 7 percent to 3 percent to boost their operations.
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), LAND REFORM, SAMUEL UNDENGE, SMEs
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MDC-T youths see the light
December 9, 2013
Farirai Machivenyika Senior Reporter
An association of youth groups drawn from NGOs and the opposition MDC-T have voiced their support for Government’s indigenisation programme and called for greater involvement of young Zimbabweans in policy formulation.MDC-T and a significant chunk of non-governmental organisations have largely been vociferous in attacking empowerment initiatives.
But after a meeting last Tuesday with the National Assembly Portfolio Committee on Youth, Indigenisation and Economic Empowerment chaired by Gokwe-Nembudziya legislator Cde Justice Meya Wadyajena (Zanu-PF), the youth groups changed their tune.
Joint Youth Working Group (JYWG) national co-ordinator Mr Nqobile Moyo said they were in support of the empowerment programmes.
“We met the committee and we were discussing how we as youth can benefit from the empowerment programmes being implemented by Government and how as youth we can have our voices heard in the corridors of power,” he said.
Mr Moyo said the youth were wiser now and wanted to be involved in national programmes from policy formulation to implementation.
“We have become educated and we believe it’s time that we are involved so that our issues are also addressed from our own perspective,” he said.
Cde Wadyajena said the realisation that these were national and not partisan programmes was a key development for Zimbabwe.
“I am really impressed that the youths despite their differences now appreciate the importance of empowerment because it is for the good of us all.
“As a young Parliamentarian myself I will also take up the issues concerning youth empowerment so that they are addressed,” he said.
Abseleme Mandizvidza, the administrator of the National Youth Associations Organisations – which also met the Cde Wadyajena-led committee – said Government should provide resources to train youths in entrepreneurial skills.
“Government should set aside funds to develop entrepreneurial skills of youth to prevent abuse of funds like we saw in past initiatives.
“We also want improved access to funds for youths especially those in the rural areas so that they can also be able to engage in meaningful economic activities,” Mr Mandizvidza said.
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), MDC
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(NEWZIMBABE) Indigenisation: Mugabe contradicts minister
Laying a hero to rest ... Brigadier-General Misheck Tanyanyiwa died in China last week
08/12/2013 00:00:00
by Staff Reporter I Agencies
PRESIDENT Robert Mugabe said Sunday that there will be no exceptions to the indigenisation law, quashing an offer by a Cabinet minister that platinum miners could be exempted from the rule if they establish a refinery.
Enacted in 2010, the indigenisation legislation requires foreign businesses operating in the country to cede at least 51 percent of the shareholding to black Zimbabweans.
Implementation started in the mining sector, a key pillar of the country's fragile economy with leading companies such as the South Africa-based platinum majors Implats and Amplats moving to comply with the programme.
The government is keen to see a platinum refinery established in the country with Mugabe recently threatening to ban exports of the mineral to force the issue.
However,mines minister Walter Chidhakwa was recently quoted as saying the companies could expect indigenisation concessions if they establish a refinery in the country.
"The government is simply saying that the guiding principle is 51/49 percent but if the investment does something to this country that can convince us to graduate or move away from the 51/49 percent, we will do so," Chidhakwa said during a tour of the Zimplats operations late last month.
"And I think that in so far as in establishing a platinum refinery in Zimbabwe is concerned, yes, I think there is that flexibility.”
Not so, said Mugabe Sunday as he addressed mourners during the burial of independence war hero Brigadier-General Misheck Tanyanyiwa at the Heroes Acre in Harare.
"I have heard in some quarters that there can be exceptions but I am saying no. We are saying 51/49 percent. It's very clear, that is our stand," said the veteran Zanu PF leader.
According to industry lobby group, the Chamber of Mines, Zimbabwe produced 350,000 ounces of refined platinum in 2012 - 6 percent of world production.
But platinum miners argue that it is not yet viable to establish the refinery as less than 500,000 tonnes is currently produced in the country.
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), ROBERT MUGABE
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(NEWZIMBABWE) Indigenised mine ups dividend 20pc
25/11/2013 00:00:00
by Business Reporter
CALEDONIA mining has confirmed a 20% hike in the ordinary dividend for next year and a new quarterly payment policy.
The Canada-based miner, which owns 49% of the Blanket gold mine in Zimbabwe, has announced a dividend of six Canadian cents for 2014 with a first quarterly payment of C1.5c to be paid in January.
Caledonia announced a C5c payment for the 2013 trading year in April, which followed a C5c per share special payment in February. The special was the company’s maiden dividend.
Caledonia is currently debt-free and had gross cash of over C$25m outside Zimbabwe at the end of September.
The company expects Blanket’s production to expand to 48,000 ounces of gold in 2014 and 52,000 ounces of gold in 2015. Future dividends will depend on its performance and its capital investment requirements, it added.
The planned pay-out represents a yield of 7.4% at current prices and it makes Caledonia something of a rarity among the junior miners; an income stock.
“To increase the dividend is a major show of confidence, particularly in the current gold price environment,” said one analyst.
Labels: DIVIDENDS, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE)
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(HERALD ZW) ‘Indigenisation Act necessary for reluctant companies’
November 26, 2013 Musah Gwaunza Local News
Lloyd Gumbo Herald Reporter
THE Indigensation and Economic Empowerment Act must be amended to give it compliance enforcement power to deal with foreigners who are reluctant to comply with the law, Parliamentarians heard. Secretary in the Ministry of Youth, Indigenisation and Economic Empowerment, Mr George Magosvongwe said some foreign businesspeople stalled the indigenisation exercise as a result of compliance gaps in the Act.
Appearing before a joint meeting of the Parliamentary Portfolio Committee on Youth, Indigenisation and Economic Empowerment and the
Thematic Committee on Indigenisation and Empowerment last week, Mr Magosvongwe said there was need to expedite the indigenisation exercise as enshrined in the law.
The committees were co-chaired by Zanu-PF legislator for Gokwe-Nembudziya Cde Justice Mayor Wadyajena and Harare Metropolitan Senator Cde Cleveria Chizema respectively.
“Some businesses have been slow to react to the instruction to indigenise,” said Mr Magosvongwe. “This is a legal instruction. It is legislated. There are certain gaps in our legislation, particularly in relation to enforcement that need to be rectified perhaps by this
Parliament so that we are able to ensure that all our companies comply with the indigenisation requirement.
“What we are basically saying is: the existing company must indigenise to the extent of 51 percent. The investing company must come through with indigenisation formulae that guarantee that 51 percent will be achieved for Zimbabweans in a given time-frame that they agree with the Minister. And the Minister is just acting on behalf of this House, Mr Chairman.
“There are a number of businesses that have reneged or refused deliberately to comply with the indigenisation law. These businesses take advantage of compliance enforcement gaps in the law to refrain from disposing 51 percent shares to indigenous Zimbabweans.”
Mr Magosvongwe said the Ministry had processed 1 434 applications on indigenisation transactions since 2010 with most of them tilted toward the manufacturing and mining sectors.
He said 481 applications in the mining sector were processed between 2010 to date, while 431 have been processed in the manufacturing sector.
In finance and tourism, the ministry, Mr Magosvongwe said, has processed 118 applications.
He said 59 Community Share Ownership Trusts have been registered in each administrative district of the country.
Mr Magosvongwe bemoaned underfunding of the National Indigenisation and Economic Empowerment Board and the National Indigenisation and Economic Empowerment Fund.
“Lack of adequate financial resources continues to be a major impediment to the fund in executing its mandate of indigenising the economy and undertaking broad-based economic empowerment programmes,” he said.
“As a result, the Board has over the years relied heavily on overdraft facilities with CBZ, First Banking Corporation and Agribank,” said Mr Magosvongwe.
He said his ministry was owing over US$560 000 to its creditors with service providers demanding their outstanding bills, while others were threatening to stop providing their services to the ministry.
Mr Magosvongwe said the ministry urgently needed extra US$2 million before year-end to clear debts and finish planned programmes.
In terms of staff establishment, he said, 15 971 employees were approved, but only 6 948 were employed.
Labels: GEORGE MAGOSVONGWE, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE)
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(NEWZIMBABWE, REUTERS) Nhema: Flexibility on banks only, not mines
21/11/2013 00:00:00
by Reuters
ZIMBABWE is not softening its drive to force foreign-owned mines to sell majority stakes to blacks, but could be flexible with banks if they agree to lend more, especially to young people, a cabinet minister said on Thursday.
The government has said it is reviewing black economic empowerment deals agreed in the last two years, raising hopes among investors that Harare could roll back on its demands that foreign-owned firms sell at least 51% shares to locals.
But Francis Nhema, the new youth and economic empowerment minister said those reviews did not signal a major policy shift toward mining companies.
"Government is not letting up and is in fact saying let all companies take note," Nhema told Reuters.
"Most of the mines are asking questions, they want us to confirm that it is a win-win situation and that they are not disadvantaged."
But he was more flexible over foreign-owned banks, saying the government would want to see them increase their lending.
A team set up by the government in 2010 recommended that locals could own up to 40 percent shares in foreign-owned financial services firms while the central bank has urged caution when it comes to banks.
"The banks, we have asked them to come forward and we are looking at that sectoral recommendation. There is no one-size- fits-all approach. Every sector is different," he said.
Foreign banks active in Zimbabwe include units of Barclays Plc and Standard Chartered Plc as well as South Africa's Standard Bank.
Labels: BANKING, FRANCIS NHEMA, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), MINING
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(NEWZIMBABWE) Nothing wrong with indigenising current foreign businesses
13/11/2013 00:00:00
by Kuthula Njokweni
COMMENT - For further reading, check out:
Bad Samaritans, by prof. Ha-Joon Chang
Reclaiming Development, by prof. Ha-Joon Chang
23 Things They Don't Tell You About Capitalism, by prof. Ha-Joon Chang - MrK
LOVEMORE Fuyane, in his article titled, “Indigenisation? Absolutely, but”, states that he supports indigenisation but opposes an approach that does not create its own businesses but takes over the existing ones. He says such an approach is a political tool that has a destabilising effect on the market, and will unlikely solve the problems of inequality and sustained economic growth.
First, this is an opinion which is not substantiated by empirical evidence. By his own admission, Fuyane argues that, “Distributive indigenisation via corporate transactions is simply no viable short cut to Zimbabwe and Africa’s economic emancipation. There is no successful precedent for it; South Africa has been at it since 1994 yet remains one of the most unequal societies in the world, this in spite prattling nonstop about broad based empowerment.”
First, Fuyane must understand that there is no contemporary precedence in Africa where such a program has been undertaken, not even in the world to compare against, to warrant using “no successful precedent”. However, the fact that there is no contemporary precedence to compare against in this world should not make it conclusive that indigenisation will cause inequality and fail to sustain economic growth.
Second, it is a bad example to compare the South African Black Economic Empowerment programme with Zimbabwe’s indigenisation and empowerment programs because they are based on two different models. The former intends to gradually integrate blacks into the mainstream without requiring changing the structure of existing foreign controlled businesses. Meanwhile, the latter intends to radically change the structure of the existing foreign-owned businesses as well as grow and integrate a new class of black businesspeople.
My main concern with Fuyane’s article is his preoccupation with wanting to see indigenisation become a process whereby local people have to start their businesses instead of taking over the existing ones! What is wrong with taking over the existing businesses in transparent commercial transactions, not along the rumoured approach suggesting that government will forcibly acquire businesses?
That rumour is nothing but a big lie. Businesses are taken over regularly: Nigel Chanakira’s bank, Kingdom Financial Holdings was taken over; TA Holdings has taken over many businesses. Internationally, the European Commission recently gave permission for Olympic Air to become a subsidiary of Aegean Airlines in a €72m deal. In Canada, Blackberry is lined up for possible takeover.
So the argument that Zimbabweans should start their own indigenous companies is flawed as it suggests that it’s not standard business practice to buy into a company. Government is not acquiring the shares forcibly but creating a framework that allows local investors to buy shares in a company if they (potential local investors) have capital or have struck up some agreed financing scheme. This is not a scandal at all.
Actually, Fuyane provides very convincing arguments why Zimbabwe should indigenise the current businesses under the current model. He states that all developed countries have ten of their biggest publicly traded corporations indigenous to their countries. He says, “Contrast that with Zimbabwe, where among the top ten largest companies you only really have the likes of Econet Wireless, Innscor, and National Foods among a list that includes the likes of South Africa’s SABMiller controlled Delta Corporation, Old Mutual, Shoprite South African controlled OK Zimbabwe, Hippo Valley Estates controlled by South African entity Tongaat Hullet Sugar and British American Tobacco whose name says it all. A substantial number of Zimbabwe’s largest corporations are foreign owned and/or controlled.”
I argue that it is for this very reason that we should indigenise these companies so that they resemble the international trend where the biggest national corporations are indigenous. It’s not that Zimbabwe abrogated creating these corporations, but they were created in a colonial historical context, and they have maintained dominance.
What the government of Zimbabwe seeks to do now, is to break that dominance and create equity in the business ownership structure, not equality as Fuyane suggests. The market mechanisms have failed to provide corrective measures. Now the obligation to intervene and take corrective measures to the problem lies with the government. The primary role of a government is to protect and advance the interests of its people. Fuyane has identified a situation which requires that intervention in order for Zimbabwe to establish its own corporations. The problem is that the current foreign controlled companies dominate the market and can manipulate the financial system and stifle competition. It is for this reason that government should step in and ensure that the playing ground is levelled.
Government intervention in the market to promote the national interest is not anything new or illegal. It is a standing internationally recognised and practiced standard! Social sciences like political economy, economics or development studies understand it as interventionist state or else a developmental state. As for the claim by Fuyane that the Zimbabwe indigenization model will not create sustainable economic growth, it’s just an assumption which is not backed by empirical evidence.
The people of Zimbabwe built these foreign corporations through blood and sweat. The workforce and the resources that have made them household names come from the sweat and blood of both professional and non-professional Zimbabweans. So it’s difficult to understand when someone suggests that we should start “our own companies” as if we already don’t have a stake invested in these companies. It’s like the value chain is composed of solely the foreign owners without any Zimbabwe human and non-human resources already invested.
Fuyane should understand that many of the companies that he provides as national champions were fostered predominantly by the state. Countries that he portrays as economic champions are a result of United States strategic geopolitical considerations. Economic advancement by South Korea and the then West Germany were both a result of such political intervention. The US poured enormous funds into South Korea and created preferential trade terms in order to create a buffer zone against the spread of communism. Same with West Germany through the Marshall Plan.
As a way of concluding, I offer the following: Government, as a developmental state, should perform its primary role of advancing the economic interests of its citizens by correcting a legacy of colonialism; Zimbabweans can build once again their own businesses from scratch even though they have spent a greater part of their productive years working for these foreign owned/controlled businesses, however, that should not preclude them from investing in these companies where they have already invested their blood and sweat; the indigenous businesses, will create equitable wealth and sustainable economic growth as demonstrated by the experience of other countries mentioned by Fuyane.
Kuthula Njokweni writes in his personal capacity. He can be contacted on kmnjokweni@gmail.com
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), MDC
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Mugabe bans export of raw platinum
By Felex Share
Tue 12 Nov. 2013, 14:01 CAT
THE Zimbabwean government through the Zimbabwe Mining Development Corporation will now take an active role in the mining of diamonds and ban all exports of raw platinum until companies in the sector build a refinery to ensure the country gets maximum returns from its resources, President Robert Mugabe has said.
Addressing the 94th Ordinary Session of the Zanu-PF Central Committee in Harare, President Mugabe said government was strengthening systems in the mining sector because it was one of the key sectors expected to fund the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset), the new economic blueprint drafted to turnaround the economy in the next five years.
"We already have big companies mining and we must be present in the operations," President Mugabe said.
"What is our ZMDC doing? It does not seem to be present in the management of the operations of these mines at all. It is folding its arms wanting to be given dividends at the end of the day. Whether it is Mbada, Anjin or the Lebanese, the three big mining companies, we are going to look into these systems," the President said.
Former mines and mining development minister Dr Obert Mpofu, President Mugabe said, gave platinum miners a two-year ultimatum to set up a refinery, but nothing has materialised "Let us close our doors immediately and say no raw platinum will go to South Africa," he said.
"The former minister gave them two years and we must see them now arranging to build a refinery. If they have not started, after that warning, building a refinery then when the time comes for us to demand that all refining has to be done here they should not blame us."
President Mugabe said all raw gold should now go through Fidelity, while illegal gold panners should be legalised as small to medium enterprises.
"Don't tell us we do not have money to steer Zim Asset," he said.
"We have gold everywhere and it is going to South Africa through makorokoza. Kune tuma groups, ndege dzinomhara musango and there are people ready to receive those boxes of raw gold. That must stop."
President Mugabe said the 51 per cent shareholding equity in companies meant that indigenous Zimbabweans should have a say in the day to day running of the firms.
"This is not what has been happening, we say 51 per cent and stay aloof," he said. "We want 51 per cent of active participation and not just of stretching hands. We mean 51 per cent of what we worked together. If you are not there in the operations they hide a huge chunk of proceeds from you and that, we do not want."
President Mugabe said the pledges Zanu-PF made during the elections should be fulfilled.
"Zim Asset must start unfolding and work must start," he said. "Travel less, meet less and more action. That is Zanu-PF, otherwise people will start asking you where are the pledges you said you would fulfil.
"What is happening in agriculture and industry? There is no change, the roads and railways are still the same. Where is your Zim Asset which you preached to us? The country is ours and we have the resources, but we have to turn them into work and it means action."
President Mugabe said it was the Zanu-PF election manifesto that saw people dumping the MDC-T.
"We presented real, solid and tangible promises to the people while our contestants, with the backing of their western masters, tried to sell a dummy to the electorate," he said.
"The people realised that Team Zanu-PF offered them a more realistic chance of improving their livelihoods. They were able to separate the genuine from the bogus. We, as servants, we must work to get people enriched."
Everyone, the President said, should shun corruption to ensure government achieves its goals.
He said Zimbabwe's problems will only be solved by Zimbabweans not whites, who still saw themselves as superior to black people.
President Mugabe said it was sad that the MDC thought the British and Americans would bring salvation in the country and hence together with their western masters claimed Zanu-PF rigged the harmonised elections.
"We do not look outside for the source of our own thinking, political ideology," he said. "If you give them a chance they come, as history has shown, and establish restrictions, rules and regulations that exclude indigenous people from even entering their forests calling it trespassing.
Those people are good, as Kwame Nkrumah said, when they are six feet down."
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), PLATINUM, ROBERT MUGABE
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(NEWZIMBABWE, REUTERS) Mugabe threatens to stop raw platinum exports
11/11/2013 00:00:00
by Reuters
ZIMBABWE may halt exports of raw platinum to South Africa to force mining companies to build a refinery in the country as a two-year deadline has expired, state media quoted President Robert Mugabe as saying.
The threat, if carried out, could affect the world's two largest platinum producers, Anglo American Platinum and Impala Platinum Holdings, both of which have operations in Zimbabwe.
The country has the world's second largest known platinum reserves but mining companies send the raw product to neighbouring South Africa for processing.
Mugabe, who at the age of 89 won re-election in July, told a weekend meeting of his ruling Zanu PF party that platinum producers were ignoring a government directive two years ago to set up a refinery in the country.
"Let us close our doors immediately and say no raw platinum will go to South Africa. The former minister gave them two years and we must see them now arranging to build a refinery," the state-run Herald newspaper quoted Mugabe as saying.
"If they have not started, after that warning, building a refinery then when the time comes for us to demand that all refining has to be done here, they should not blame us."
Zimbabwe produced 350,000 ounces of refined platinum in 2012, which is 6 percent of world production, according to the Chamber of Mines, the country's mining industry lobby group.
The Chamber has said Zimbabwe would need to raise platinum output to 500,000 ounces a year to justify a refinery, which it estimates would cost at least $2 billion to build, equal to close to a fifth of the country's gross domestic product.
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), PLATINUM
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(HERALD ZW) Zim future bright, says Tanzanian army chief
October 18, 2013
Takunda Maodza Senior Reporter
The economic future of Zimbabwe is very promising despite the illegal sanctions imposed on the country by the West, visiting Tanzanian People’s Defence Forces Chief, General Davis Adolf Mwamunyange has said.In an interview with The Herald after touring Mbada Diamonds mining operations at Chiadzwa in Marange and the Chisumbanje Ethanol Plant on Wednesday, Gen Mwamunyange said Zimbabwe was a country positively moving forward.
“The country is moving forward inspite of the sanctions. The social-economic environment is different from the perception people have outside the country.
“Zimbabwe is moving forward. It is a very good country to live in with a huge economic potential,” he said.
Gen Mwamunyange was impressed by developments at the Chisumbanje ethanol plant and at Mbada Diamonds, especially the fact that these are indigenous companies.
Speaking after touring the ethanol plant, he said: “I am really amazed. This is a good and inspiring project. It augurs well with the country’s economic and social development. The economic future of Zimbabwe looks very brilliant and very promising.”
Green Fuel that runs the Chisumbanje Ethanol Plant is a joint venture company between the Agricultural Rural Development Authority (Arda), Macdom Investments and Rating.
Gen Mwamunyange applauded Zimbabweans for their vision saying indigenous people were increasingly owning the economy.
He also commended Mbada Diamonds for operating a well organised mine at Chiadzwa.
“It is a well managed place and I am very much impressed by the diamond mining operations. The workers are conversant with their job. Regarding the investment that has been made by the company, it is quite commendable and enormous,” he said.
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), TANZANIA
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(NEWZIMBABWE) ‘Soft’ Nhema toughens indigenisation talk
New portfolio ... President Robert Mugabe with Francis Nhema when new Cabinet was sworn in
13/10/2013 00:00:00
by Gilbert Nyambabvu
NEW empowerment minister Francis Nhema has vowed to “vigorously pursue” the indigenisation programme, signalling there would be no let-up in the implementation of a policy that has unnerved foreign investors and sparked divisions in the ruling establishment.
The former environment minister, who is not generally associated with the ruling Zanu PF party’s hard-line factions, was handed charge of the empowerment portfolio in President Robert Mugabe’s new cabinet line-up after the July 31 vote.
Nhema replaced Saviour Kasukuwere, whose the “Law is The Law” approach divided the former coalition government, ruffled investors and led to public spats with central bank governor Gideon Gono who urged caution with regard to the financial services sector.
Kasukuwere’s shunting aside, seen by observers as a demotion, was welcomed as a possible indication Mugabe probably wanted a less radical approach in the implementation of a policy that requires foreign firms to transfer to locals control and ownership of at least 51 percent of their Zimbabwe operations.
However, addressing a Confederation of Zimbabwe Industries (CZI) conference in Bulawayo last week, Nhema said the programme, a key part of Zanu PF’s election campaign manifesto, would be driven with just as much vigour.
“It is undisputable that as a country we should vigorously pursue the indigenisation and economic empowerment agenda for the benefit of the generality of Zimbabweans while ensuring that we retain our comparative advantage as a nation especially with regards to our manufacturing sector,” he said.
Mugabe also insisted in interviews with state media that claims Nhema’s appointment suggested a change of tact were wide of the mark.
“That is not the case; the ideas, the objectives of Government must be pursued by every member of Cabinet,” he said.
“Yes, they may be different in terms style or presentations of individual ministers but this does not change the objectives set by Government.”
Prior to the ‘verbals’ with Gono - who argued against a one-size-fits-all approach - Kasukuwere managed to reach compliance deals with leading players in the country’s key mining sector, although not without controversy which included allegations of possible corruption.
Nhema howeve, hinted that the Gono’s one-size-cannot-fit-all suggestion would likely be the new approach going forward.
“There is no debate on the imperative of indigenisation; it is the process of implementation that attracts interrogation. The whole issue here is we want to dialogue; tell us the limitations with regards to the law,” he said.
“We are not applying a one size fits all approach. The peculiarities in each sector and nuances therefore are taken into account in the implementation process.
“Some big foreign-owned companies such as Zimbabwe Platinum Mines and Mimosa Mining Company have since come up with term sheets on how they intend to comply.”
Labels: FRANCIS NHEMA, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE)
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(NEWZIMBABWE) Furious Gono denies indigenisation U-turn
16/08/2013 00:00:00
by Staff Reporter
CENTRAL bank governor Gideon Gono on Saturday accused the Zimbabwe Broadcasting Corporation (ZBC) of carrying out a hatchet job on him, following a TV report on Friday night claiming that he had performed a U-turn on his opposition to the indigenisation of banks.
Gono said the ZBC had removed his comments from their context and selectively omitted certain qualifications to his statements before the Bulawayo business community "for reasons best known to themselves”.
The RBZ chief, who is due to present his Mid-Term Monetary Policy statement later this month, said it was also curious that the ZBC had waited a whole week before running their report.
“The ZBC decided to select certain speech bites from both my statement and that of Dr Eric Bloc, with whom I shared a platform in Bulawayo on Wednesday, August 7,” Gono said in a statement.
“What ZBC did to both of us is akin to running with a portion of a statement while leaving out a very important condition to that statement. It's like telling people that the Highway Code says ‘do not drink’ or ‘do not drive’, when the full sentence says ‘do not drink and drive’! That’s what the ZBC did to us.”
Gono has been vocal in his opposition of a “one size fits all” approach to the indigenisation of banks, to bring them in line with Zimbabwean law which requires foreign companies to hand-over a controlling stake to locals.
London-based Standard Chartered and Barclays are among the banks that would be targeted for indigenisation – a policy being vigorously pursued by the Indigenisation and Empowerment Minister Saviour Kasukuwere.
Gono said: “Let me reiterate for the umpteenth time and state that there can never be a U-turn by the central bank or by the governor or board on this matter. We will not allow untrained hands to play with gun-powder to the detriment of this whole economy, depositors or the wishes of my principal, President Robert Mugabe, who is very clear with regards to the sensitivity and critical importance of the financial sector.”
The RBZ chief, who has already filed a complaint with Tarzen Mandizvidza, the ZBC General Manager, said he told his audience in Bulawayo that “we’re not opposed to indigenisation in the banking sector, but we insist that it be done in an orderly manner”.
“I want to assure all stakeholders that there will not be the kind of forced, unstructured, chaotic or illegal interventions in the banking sector along the lines that some quarters have been calling for. That will not happen, nor will that ever be allowed under my watch,” he said.
“Indigenisation can never be a euphemism for self-enrichment or disorder. I’m quite convinced that when we come to it, the programme will be handled professionally by experienced, competent, mature, steady and knowledgeable hands of which the central bank will be an integral part in as far as approving feasible parameters and guiding the process is concerned and ensuring that the country's banking and exchange control laws are judiciously followed."
Labels: BANKING, GIDEON GONO, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE)
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(HERALD ZW) Zanu-PF set to Implement campaign promises
August 14, 2013
Herald Reporter
ZANU–PF is set to roll out a series of developmental programmes soon in fulfillment of its election promises following the revolutionary party’s victory in the harmonised elections, outgoing Defence Minister Emmerson Mnangagwa has said.
Minister Mnangagwa, who is also Zanu-PF Secretary for Legal Affairs, said it was pleasing to note that the Zimbabwe Defence Forces commemoration held on Tuesday coincided with the party’s election victory.
He was speaking on Tuesday at a dinner he held as part of celebrating the Zimbabwe Defence Forces Day.
“I am delighted that this year’s commemoration comes at a time when the country is celebrating the historical triumph of the Head of State and Government President Mugabe of Zanu-PF in the just-ended harmonised elections,” he said.
“The party is now set to roll out its social and economic programmes as applied in its election manifesto.”
Minister Mnangagwa said what delighted the ZDF most was the peaceful environment that existed during the holding of the polls.
He said it was pleasing to note that former Nigerian president General Olusegun Obasanjo who led the African Union election observer mission commended the elections as free, fair and peaceful.
General Obasanjo, said Minister Mnangagwa, had indicated that the Zimbabwean elections were one of the most peaceful elections that he had ever observed.
“That coming from Gen Obasanjo, we felt good and I will not elaborate,” said Minister Mnangagwa.
He said while the security forces were commended for ensuring peace during the election, Zimbabweans had demonstrated their desire to vote peacefully.
“It is the people of Zimbabwe who decided to be mature, to have elections peacefully and we give credit to the people,” said Minister Mnangagwa.
Zimbabwe, he said, was not worried by some Western countries who sought to discredit the election.
“We are not worried of people who cross seas and are not happy because we have other friends, close friends of us, who also come from far away, who are happy with us,” said Minister Mnangagwa.
The commemorations were also attended by ZDF Commander General Constantine Chiwenga, Zimbabwe Republic Police Commissioner General Augustine Chihuri and diplomats accredited to Zimbabwe, among others.
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), ZANU-PF
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(NEWZIMBABWE, RUSSIA TODAY) Mugabe win: Dictatorship or decolonisation?
14/08/2013 00:00:00
by Nile Bowie I RT.com
FEW modern African leaders have been both so passionately supported and endlessly condemned as President Robert Mugabe, an ardent nationalist and black liberation figure who has ruled Zimbabwe since its independence in 1980.
Despite the hardships and crippling hyperinflation brought on by Western sanctions as a result of ethnically polarising land reform policies, Mugabe’s legacy as the country’s national liberator – as the man who laid down the core demands for national independence, and won – provokes an intense national fervour that has secured his victory in every election.
It wasn’t so long ago that every inch of Zimbabwe, once known as “Rhodesia” after the British mining magnet Cecil Rhodes, was owned by a clique of white colonialists who made up 4.3 percent of the population. The masses of black Africans were brutally enslaved and forced to live under punishing exploitation, while Zimbabwe’s land and natural resources were taken violently and divided amongst European settlers.
The landslide victory of Mugabe in the July 31 elections suggests that much of the population views him as the answer to the post-independence “black man's burden” – reaping meagre profits from resources exploited by multinationals while continuing to be subservient to non-Africans who monopolise the continent’s most arable land.
Mugabe’s ideology is that political independence is merely nominal without economic freedom, and thus argued during liberation negotiations in 1979 that Zimbabwe would only agree to a “willing buyer, willing seller” agreement provided that the United Kingdom offer black Zimbabweans the funds needed to purchase land forcibly taken from them by white landowners. The problem was that the UK never committed to the pledge made by Margaret Thatcher's government to raise hundreds of millions of pounds for long-term land reform, and many white landowners were unwilling to sell their land, which kept nearly the entire black population confined to less than a quarter of the country’s landmass.
Africa’s Hitler?
In 2000, in the midst of gouging austerity measures imposed by the IMF, Mugabe’s Zanu PF party did what no other post-independence government has dared to do – it fast tracked its indigenisation policies, leading to the forcible seizure of white-owned land, sometimes by violent means. Some 6,000 white farmers were replaced by 245,000 black farmers, and while the move initially created chaos and earned Mugabe titles like “Africa’s Hitler,” agricultural production has normalised to 1990s levels, and resettled farmers grow 40% of the country’s tobacco and 49% of its maize.
Today however, empowerment minister Saviour Kasukuwere, admits food production is only at about 50 percent of capacity, and there is no doubt that major challenges still need to be overcome before the land reforms can be seen as a viable policy for Zimbabwe’s neighbours to emulate. International condemnation and crippling sanctions only added to the chaos following the land seizures, resulting in a hyperinflationary crisis that saw the printing of one-hundred-trillion-dollar banknotes, and finally the abolishment of the national currency in favour of the US dollar and the South African rand.
Although there have been undeniable economic consequences, such as the loss of the national currency and monetary sovereignty, and sanctions imposed from European capitals as a result of the indigenisation policies, the latest round of elections were essentially a public referendum on Mugabe’s policies, which the majority of Zimbabweans feel is the only effective way to lift the centuries’ old burden of Mugabe proclaimed that, “we must re-write the economic books for our children. Those books were written to suite the West's agenda of exploiting our resources. Our children must know that our resources are more significant, more precious than their capital.”
Zanu PF’s next moves are to grant Zimbabweans at least 51% of controlling equity in foreign-owned businesses, resulting in what the party says will create a value of US$7.3 billion across 14 key sectors of the economy. Mugabe’s party is also planning a $5 billion investment in physical infrastructure including the energy, roads, and railway sectors, as well as in areas concerning health, education, housing, water, sanitation and security.
Squeeze the economy
Morgan Tsvangirai, the leader of the MDC-T and prime minister under the outgoing coalition government, declared the vote a sham even prior to the results being tallied. Mugabe, who won 61.09 percent of the vote to Tsvangirai’s 33.94 percent, refused to allow election observers from Western countries to monitor the polls. Despite claims from the opposition to the contrary, the United Nations, the African Union and other observer groups found the election results to be sound, free, and fair.
The only countries that have not recognised the vote results are the UK, Australia, and the United States – Secretary of State John Kerry claimed that the results did not reflect “a credible expression of the will of the Zimbabwean people,” an incredibly deceitful statement given the groundswell and undeniable campaign surge around Zanu PF, further putting the Obama administration at odds with the political judgment of both international and African institutions.
There is good reason why the West backed Tsvangirai to the hilt – he espoused an economic program that represents the direct opposite of Mugabe’s indigenisation policies. The MDC-T championed a foreign-investment-led growth agenda, promising one million new jobs by 2018, re-established relations with the West, a repositioning of the country as being “ready for business,” as well as renewing relations with the international financial community. Tsvangirai has been a consistent opponent of indigenisation, land reform, and even opposed the nationalisation of the lucrative mining sector – his poor showing in the polls reflects his endorsement of unpopular neoliberal policies.
The MDC-T leader lost significant public support after WikiLeaks documents showed that he urged the US to maintain sanctions against the country, while taking the opposite position in public. In a statement to the UN Office of the High Commissioner for Human Rights protesting the economic embargo, a Zimbabwean delegation made the case that they were being unjustly sanctioned, citing former US Assistant Secretary of State for African Affairs Chester Crocker, who told the US Senate that, “To separate the Zimbabwean people from Zanu PF, we are going to have to make their economy scream, and I hope you, Senators, have the stomach for what you have to do.”
WikiLeaks cables also revealed statements made by former US Ambassador to Zimbabwe Christopher Dell, who said, “He [Tsvangirai] is the indispensable element for regime change, but possibly an albatross around their necks once in power.” Tsvangirai may have convinced many of the youth and downtrodden in Zimbabwe that his was the right agenda, but the significant majority clearly isn’t buying it.
Indigenisation blowback
From 2008, Zimbabwe operated under a coalition government with Mugabe as president and Tsvangirai as prime minister. Given Zanu PF’s strong mandate and two-thirds majority in parliament, however, Mugabe’s party is again firmly in the driver’s seat and set on making the country’s most ambitious indigenisation reforms yet. In this light, it can only be expected that Western pressure will be redoubled in an effort to sabotage coming reforms, in fear of other African countries emulating them if they yield success.
The last thing multinationals want is for other African leaders to look at Zimbabwe and Mugabe as a positive point of reference. One consequence of indigenisation reforms may result in a sharp decline in capital inflows and foreign-investment, simply because few investors, be they from the West or elsewhere, want to be stripped of half a business after pouring in the capital and know-how. Just as the land seizures created short-term instability and eventual normalisation, there is a strong possibility that further reforms will create turbulence and economic insecurity if Zanu PF fails to ensure a smooth and harmonised investment environment. That foreign-investment in the first quarter of 2013 amounted to approximately $36 million, compared to about $136 million in the same period in 2012 is telling.
China is the main international supporter of Zimbabwe, and Beijing has backed Mugabe since the pre-independence days. Since the diplomatic fallout with the West, Mugabe has relied on a “Look East” policy that offered priority to Chinese investment and capital from other Asian states. China, with its insatiable appetite for cigarettes, is the biggest buyer of Zimbabwean tobacco, and has sold Harare millions worth of military hardware. Beijing has furthermore spearheaded development projects which include everything from developing hydroelectric power to financing local cotton production.
The Chinese government sent an observer mission to monitor the recent elections, which noted that the voting process proceeded smoothly, and that China “appreciates the Zimbabwean people's patriotic zeal and independent consciousness.” Investment from China fell from $1 billion in 2011 to $667 million in 2012, and similar trends have followed between Harare’s key trading partners like South Africa. The challenge ahead will be ensuring key partners that the country’s investment climate will remain stable during the process of democratising the economic space, which should be done with care.
Labels: 2013 ELECTIONS (ZW), INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), LAND REFORM
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