ZIMBABWE CRISIS REPORTS Issue 16 ■ October 2007 Fresh insights into the Zimbabwean situation CENTRAL BANKER DISSENTS OVER NATIONALISATION The ZANU-PF administration presses ahead with a plan to take a controlling share in foreign-owned businesses, despite warnings about the consequences. By Mike Nyoni in Harare The Zimbabwean authorities are pressing ahead with a nationalisation scheme despite warnings from the country’s central banker that the economic effects will be ruinous. The dispute highlights the schism Lazele Credit: between politicians who place Main branch of Standard Chartered Bank in Harare. Picture taken October 17. ideological policies above pragmatism, and the technocrats in the administration. Zimbabweans. After the upper Mangwana likened the planned chamber, the Senate, passed the law takeover of foreign banks, mining and On September 26, the lower house of on October 2, only President Robert manufacturing firms to the parliament passed the Indigenisation Mugabe’s assent is required for it to government’s seizure of commercial and Empowerment Bill, which will enter into force. farms which started in 2000 — a move compel foreign-owned firms, including which critics say has been mining companies and banks, to cede Defending the bill in the lower counterproductive, destroying farming 51 per cent of their shares to black chamber, Indigenisation Minister Paul and ultimately the wider economy. NEWS IN BRIEF ■ Zimbabawe’s main opposition lobbying for a new constitution. At say Germany is opposed to the idea party, the Movement for Democratic least 20 students were arrested and while Nordic states agree with Change, said on October 15 that others were injured after being Brown. ongoing violence against its beaten by police at Masvingo supporters showed that President Polytechnic College during a peaceful ■ The mainly white Commercial Robert Mugabe and his ruling ZANU- protest to demand the release of a Farmers Union says it will continue to PF party were not committed to detained student leader. engage the government after a court dialogue. ordered white Zimbabwean farmers ■ Britain is at the centre of a to vacate farms earmarked for ■ On October 15, dozens of diplomatic row over Prime Minister resettlement. members of the Women of Zimbabwe Gordon Brown’s proposal to send a Arise group were arrested in Harare European Union envoy to Zimbabwe ■ A new satirical play titled for demonstrating against alleged — ahead of a landmark EU summit “Overthrown”, due to open in police brutality. The following day, with African states — to assess Bulawayo,was banned by police as several people were arrested when human rights abuses under President Mugabe arrived in the city to attend police broke up a march by activists Robert Mugabe. Diplomatic sources a university graduation ceremony. OCTOBER 2007 ■ 1 THE INSTITUTE FOR WAR AND PEACE REPORTING Mangwana said the new bill “Of particular concern to us as However, an economic analyst in represented a “political decision” monetary authorities would be any Harare said it was unlikely the central taken to correct the injustices of the attempts to forcibly push the envelope banker and his political masters would colonial past. of indigenisation into the delicate area be able to agree on the fundamental of banking and finance,” he said. issues. “They want to create white islands in a liberated Zimbabwe, but we will not Imprudent statements by politicians “Their imperatives are divergent,” said take that,” he said. “The 51 per cent is worsened Zimbabwe’s country’s the economist, who did not want to be only the minimum — we want 90 per sovereign risk factor and undermined named. “Mugabe sincerely believes cent. When you are carrying out a property rights, and this would act as we need price controls to cushion the revolution, you do not do it in half a deterrent to badly-needed foreign most vulnerable members of society. steps. Zimbabwe cannot be half investment, he said. He also wants to take over companies independent.” he believes are working in league with Gono warned that hasty decisions the opposition against his The minister scoffed at warnings that would have “unintended government.” partial nationalisation would prompt consequences”, just as he did in July, foreign investors to pull out of when the government to slash prices of Zimbabwe. goods and services in a bid to curb Powerful interest groups inflation. The result of that policy move want to use nationalisation was that basic goods disappeared from to get rich “in a starkly the shops in a rush of panic-buying. “The 51 per cent is only the greedy but irresponsible minimum — we want 90 Instead, the central bank chief manner” — Gono. per cent” — Indigenisation recommended that the indigenisation Minister Paul Mangwana. process should be managed in such a way as to ensure local people were The analyst said more of the same able to pay for shares. Thus, if a kind of populist rhetoric could be company had assets valued at 500 expected from the political leadership “If Standard Chartered Bank feel they million US dollars, it would take about as the March 2008 presidential and cannot continue their operations in 15 years for locals to acquire a 51 per parliamentary elections drew closer. Zimbabwe, they can simply go,” he cent stake. said, indicating that local banks would “People like Mangwana are more likely step in and fill the gap. to align themselves with the president Central bank chief warned before they are reined in by prudent A day before the Senate vote, against trying to impose advice from Gono, who better President Mugabe made it clear he indigenisation policy in the understands the implications of such agreed with this view when he reckless utterances on investor addressed ZANU-PF members at “delicate” area of banking confidence,” he said. “When Gono Harare airport on October 1 after and finance. said in his monetary statement that he returning from the United Nations was merely offering advice… he knew General Assembly meeting in New what he was up against. There will be York. Gono alleged that the present more wanton spending and even more nationalisation initiative was being economically damaging statements “The minerals are ours. We are offering backed by “well-connected cliques” until the elections in March. Any partners, good partners, friendly who wanted to use it to “amass wealth meeting of minds on policy issues can partners, a share, 49 per cent or for themselves in a starkly greedy but only be coincidental, although one thereabouts. If they won’t take it, hard irresponsible manner”. would expect government to luck — we will give it to our people,” appreciate the importance of getting he said, according to the DPA news In a pointed rebuke to Mangwana, into an election riding on a healthy agency. Gono challenged those who wanted to economy.” muscle into the banking and financial The same day, the governor of the sector to apply for operating licences Zimbabwe is in its eighth year of Reserve Bank of Zimbabwe, Gideon from the central bank. recession, with annual inflation put at Gono, adopted a very different line 6,600 per cent, unemployment at 80 on the issue. In a statement on Mugabe had a five hour meeting with per cent, and widespread shortages of monetary policy, he called for a “fine Gono on September 3, which fuel and basic foodstuffs. balancing act between indigenisation according to the Zimbabwe of the economy and investment Independent, resulted in a “temporary Mike Nyoni is the pseudonym of a attraction”. truce”. journalist in Zimbabwe. ■ 2 ■ ISSUE 16 ZIMBABWE CRISIS REPORTS BANK CHIEF OUT ON A LIMB Some say Gideon Gono is looking for a pretext to jump ship — if necessary by getting the president to push him. By Hativagone Mushonga in Harare For a senior Zimbabwean official, the central bank governor Gideon Gono has become unusually outspoken against the official line, condemning a new bill which will see foreign-owned businesses taken over. Some analysts argue that as the economy continues to implode and the Lazele Credit: latest government policies look more Central bank governor Gideon Gono presenting his mid-year monetory policy misguided than ever, the country’s top statement. Picture taken October 1. banker is looking for an exit route. In the latest of several outbursts, the appropriated farms in the hands of the a June decision to force traders to Reserve Bank governor publicly rich and powerful, even though it was slash the price of basic goods and attacked the government for pushing advertised as a move to help the foodstuffs, in hope that this restrain the the Indigenisation and Empowerment poorest landless peasants. massive inflation rate. Gono predicted Bill through parliament. The bill would that the immediate effect would be to force foreign-owned companies, empty the shops and slash production including banks and mines, to — and he was soon proved right. surrender 51 per cent of their shares We must avoid schemes to indigenous Zimbabweans. that create perceptions of Gono has also been critical of the instant gratification continuing policy of land seizures, The lower chamber passed the law on through grab, take and run” urging the government to end the September 26; the upper house or policy and stop extending cheap Senate approved it without — Gono. credit to the big-time farmers and amendment the day after Gono made instead focus assistance on his comments, and the bill now only smallholders. needs President Robert Mugabe’s “As monetary authorities, we also call assent to come into force. upon government to ensure that the When Gono took over as head of the empowerment drive is not derailed by Reserve Bank of Zimbabwe in In an October 1 report on monetary a few well connected cliques, some December 2003, he famously declared policy, Gono warned, “We must avoid who are already making the most that “failure is not an option”.