Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Threat to seize foreign firms is ‘idle rhetoric’

Threat to seize foreign firms is ‘idle rhetoric’

RAY NDLOVU Mar 14 2011 13:28

President Robert Mugabe’s sabre-rattling about the possible seizure of major 
companies with “Western links” is an “idle threat, political rhetoric and 
mere browbeating by Zanu-PF to coerce foreign companies into speaking out 
against sanctions”, economist Eric Bloch said this week.

Until now Zanu-PF has been dilly-dallying over the implementation of the 
indigenisation and empowerment law enacted in 2007. However, it has been 
given new impetus by the party’s anti-sanctions crusade launched more than a 
week ago, which Mugabe explicitly coupled with threats to seize key foreign 

In the spotlight are the country’s “big five”, Nestlé, Rio Tinto, Old 
Mutual, Barclays and Standard Chartered and British American Tobacco. 
Saviour Kasukuwere, the indigenisation and empowerment minister said 600 
foreign companies have already submitted proposals to his ministry on how 
they will meet the indigenisation requirements. The empowerment law targets 
foreign companies with a value of more than $500 000, which must cede a 51% 
controlling stake to indigenous Zimbabweans.

Nestlé Zimbabwe
Swiss-based food conglomerate Nestlé fell out of favour with Mugabe over its 
decision, in response to international pressure, not to buy milk from his 
Gushungo dairy farm, but insists it remains “committed” to Zimbabwe. With 
more than 50 years of operation, it employs 1 000 Zimbabweans. At his 87th 
birthday celebration last month, Mugabe instructed Kasukuwere to go after 
Nestlé first.

Rio Tinto
The British-Australian mining company holds a 78% stake in one of only two 
known kimberlite diamond mines in Zimbabwe, at its Murowa operation. The 
remaining shares are already held by Rio-Zim, an independent, indigenous 
outfit that is likely to contest Zanu-PF’s ambitions to nationalise the 
diamond industry. Rio Tinto recently invested an additional $300-million in 
Murowa to increase the production of high-quality gems.

Old Mutual
Old Mutual is the largest investor on the Zimbabwe Stock Exchange and wholly 
owns Central Africa Building Society, the country’s largest mortgage lender. 
It is highly unlikely that Zanu-PF would go after this cash cow, from which 
it nets significant revenue in stock market trading. The Zimbabwe Chamber of 
Mines has warned that “picking a fight with Old Mutual would result in a 
flight of investment”.

Barclays and Standard Chartered banks
Barclays and Standard Chartered jointly employ 2 000 Zimbabweans and operate 
almost 60 branches in the country. As giant multinationals of high 
international reputation, they are unlikely to be expropriated. However, 
tension is running high between Standard Chartered and Zanu-PF over the 
bank’s alleged blocking of a uranium deal with China, which Zanu-PF has 
interpreted as a form of sanctions.

British American Tobacco
BAT is a dominant player in a sector which accounts for 40% of Zimbabwe’s 
earnings from agricultural production. After years of decline there are 
projections of a recovery this year, with nearly 200-million kilograms being 
harvested. A Zanu-PF minister said recovery of the agricultural sector was 
welcome, but BAT must comply with indigenisation laws and stop moving 
profits offshore.


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