Political doubt hits Zimbabwe investors
By FARAI MUTSAKA in Harare, Zimbabwe and PETER WONACOTT in Johannesburg
A daily stream of multinational executives ask Zimbabwe's Industry and
Commerce minister the same question: Does President Robert Mugabe plan to
seize my company?
"I can't give them any firm assurance," said the minister, Welshman Ncube,
who belongs to the Movement for Democratic Change, one of three political
parties that form Zimbabwe's fragile coalition government. "That is always
going to be difficult when we have people in government who are speaking
strongly in favor of takeovers."
Indigenization Minister Saviour Kasukuwere, who works a few floors above in
the same building, had a different answer. He said companies from Western
nations targeting Mr. Mugabe and his allies with sanctions are likely
candidates for a majority local acquisition, or "indigenization," as it's
known under an embryonic Zimbabwean law. That stance is sowing doubt among
"Hostile Western countries are not showing any signs of relenting, and the
only way to protect ourselves against that hostility is by making sure those
companies are in the hands of local people," said Mr. Kasukuwere, who
belongs to Mr. Mugabe's Zanu-PF party.
On Tuesday, Mr. Mugabe, who has ruled the country since 1987, faced not only
external pressure but the threat of protests by local opposition groups. A
heavy police and military presence that included armored cars, trucks of
riot police and water-cannon vehicles appeared to be effective in deterring
the planned antigovernment protests in Harare, the capital. Activists who
tried to organize via Facebook and mobile phones said they were inspired by
the ongoing Middle-East protests.
Mr. Mugabe doesn't tolerate gatherings of political opponents. Zimbabwe's
security forces recently arrested 45 political activists for allegedly
plotting to end his rule. The U.S. embassy called on Zimbabwe's government
to investigate allegations the activists were tortured.
On Wednesday, Mr. Mugabe will continue efforts to halt the Western sanctions
with a mass rally in Harare. His party aims to get two million people—or
about one-sixth the country's population—to sign a petition to protest the
Zimbabwe's president has resorted to draconian economic measures before to
drum up political support. In 2000, he allowed his supporters to seize
white-owned farms ahead of elections.Amid the war of words over foreign
investment in Zimbabwe, the economy is suffering collateral damage. Foreign
companies have been considering exit strategies, scaling back or not
investing in the south ern African country renowned for its mineral riches,
fertile farmland and educated workforce.
Following violent elections in 2008, Mr. Mugabe and his political rival,
Morgan Tsvangirai, were forced into a coalition government, with Mr.
Tsvangirai becoming prime minister. Mr. Mugabe has argued for elections this
year, while Mr. Tsvangirai has said constitutional reforms must be tackled
first. The two are also butting heads over the indigenization law, with Mr.
Tsvangirai warning that expropriation of assets will scare away investors.
The prospect that the fractious "unity government" could break up and lead
to elections this year is heightening uncertainty among investors.
South Africa's Massmart Holdings, a company Wal-Mart Stores Inc. is in talks
to buy to pave its way into the Africa's billion-person market, said it was
in the process of selling two of its stores in Zimbabwe to a local retailer.
A Massmart spokesperson cited uncertainty over the indigenization law.
"Zimbabwe is not ready for prime time," said R. Michael Jones, CEO of
Platinum Group Metals, a group that has invested heavily in South Africa but
is steering clear of its neighbor despite its massive platinum reserves.
"Until there's a change in the business environment, we won't be investing
Aside from depriving a weak economy of capital and jobs, the investor
caution also means Zimbabwe's factory and mines often aren't getting
technical upgrades needed to stay competitive, analyts say.
The Confederation of Zimbabwe Industries says factories on average are
operating at 30% capacity because of lack of lending and the reluctance of
foreign firms to invest in their Zimbabwe subsidiaries.
Zimbabwe's economy grew 8.1 % in 2010 compared to 5.1% the prior year thanks
to a confidence-building political settlement and the introduction of the
U.S. dollar as an official currency. Officials and economists say the figure
would have been far higher without the controversy around the indigenization
"Industry is suffocating," said the confederation's president, Joseph