/ 6 July 2008

The big firms that prop up Zim

The demand for full-blown sanctions against Zimbabwe grew louder this week with the announcement by a Munich-based company, Giesecke & Devrient, that it would stop supplying blank paper to make the country’s bank notes after coming under pressure from the German government.

The decision followed hard on the heels of the decision by British supermarket group Tesco to stop buying produce from Zimbabwe ”while the political crisis exists”.

To date, ”smart” sanctions imposed on Zimbabwe by the European Union and the United States have taken the form of travel bans and of freezing the foreign bank accounts of about 130 members of the ruling elite.

Moves to isolate the country may now be extended to sport. The International Cricket Council is set to discuss whether to exclude Zimbabwe from international competitions.

This week the United States was preparing to propose the imposition of international sanctions at the UN, including an arms embargo. A draft resolution, formulated by the American authorities, says the financial assets held abroad by Mugabe and 11 other Zimbabwean officials should be frozen.

If the resolution is adopted by the UN Security Council Mugabe and his associates will also be banned from travelling anywhere in the world.

Late last month British Prime Minister Gordon Brown urged British companies to stop investing in Zimbabwe and said his government was preparing ”intensified sanctions” against individual members of Mugabe’s government.

This statement followed news that Anglo American would invest $400-million in a platinum mine in Zimbabwe. The investment is equivalent to the total foreign direct investment Zimbabwe received in 1998, during relatively more peaceful days.

”Businesses and individuals who have any dealing with Zimbabwe must examine their own responsibilities and must not make investments that prop up the regime,” Brown told the House of Commons, where some Tory MPs are known to have shares in Zimbabwe-based companies.

Brown’s Minister for Africa, Lord Malloch Brown, warned companies active in Zimbabwe to ”look very carefully at their investment portfolio”.

Despite Mugabe’s ranting about British imperialist designs on Zimbabwe, British companies still control vast swathes of the country’s economy, with interests ranging from petroleum to banking.

Standard Chartered and Barclays Bank are among the biggest British-owned banks. British American Tobacco has cornered what remains of the tobacco crop, while BP has a large slice of the fuel retail sector and Rio Tinto and Falgold are involved in gold mining.

US companies Chevron and Coca Cola also have a presence, as does the Canadian-owned Bata shoe company.

South African capital is another big player in Zimbabwe, with many continuing to do business there while no longer reflecting the performances of their Zimbabwean operations on their books.

These include AngloAmerican Corporation, which has interests in agro-industry and mining; Standard Bank, whose Zimbabwean subsidiary is Stanbic; Old Mutual, which is involved in real estate and insurance; PPC Cement; Murray and Roberts; Truworths; Edcon, which owns the Edgars clothes retail chain;

Hulett-Tongaat, which has a stake in Hippo Valley Sugar Estates; grocery chain Spar; and SAB Miller, which has a stake in Zimbabwe’s Delta Beverages.

The country’s mining sector is dominated by foreign companies that include South Africa’s Impala Platinum and Mzi Khumalo’s Metallon Gold.

Mugabe has in the past threatened to nationalise British-owned companies. He has also passed a law compelling foreign-owned companies to cede 51% of their shares to Zimbabweans.

Zimbabwe’s total export revenue last year was $1,7-billion, to which mining contributed $850-million and agriculture $500-million, tobacco exports accounting for half of this.

Metallon Gold, which owns five gold mines in the country, produced more than 50% of the country’s revenue from gold production.

In the last six months of last year, Zimplats, the Zimbabwean arm of South Africa’s Impala Platinum, recorded revenues of $99-million (about R750-million).