Will foreign companies stay the course in Zimbabwe?

British companies doing business in Zimbabwe must find the noise from their government and the international community disconcerting.

British companies doing business in apartheid South Africa in the 1980s initially blocked out the noises against the pariah state, but eventually left when the pressure from their government and the international community became unbearable.

Late last month, British Prime Minister Gordon Brown urged companies to stop investing in Zimbabwe and said his government was preparing ”intensified sanctions” against individual members of Mugabe’s regime. This followed news that Anglo American was investing $400-million in a platinum mine in Zimbabwe — a decision whose announcement was described as unfortunate and ill-timed.

”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 British House of Parliament where some Tory MPs hold 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”.

An analyst working for a local bank says companies are taking a long-term view and considering the cost of re-entry if they were to leave. He says Barclays Bank moved out of South Africa in the 1980s and paid a hefty R33-billion — at the time the single biggest investment in South Africa — for a majority stake in Absa in 2005.

Tristen Taylor, a reparations activist, says Barclays’s loans to South Africa between 1982 and 1984 amounted to $725,4-million; between 1972 and 1978, Barclays helped the apartheid government obtain almost $500-million in loans.

Standard Chartered bank also left South Africa in the 1980s and tried to re-enter the country by buying into a troubled online bank, 20Twenty, which the British bank subsequently resold in 2005.

The analyst says that as long as no one pushes these companies out, they will ”stick around. No one will voluntarily leave.”

He says the lengths that these companies are willing to go to is shown by their negotiations with the Zimbabwean government over a law that forces them to cede 51% of their companies. Most companies are arguing that they should at least be allowed to retain majority shareholding, as it is their brands that are creating value.

Companies are also wary of ceding their turf to rivals. French carmakers Renault and Peugeot took advantage of the sanctions imposed on Rhodesia to enter Zimbabwe in the 1960s and the 1970s. This explains the popularity of these brands, unusually high for an Anglophone country.

If Western companies were to leave, Chinese, Russian and South African companies would be certain to move in and fill the void. Already China is active and has entered into partnerships with the Zimbabwean government in manufacturing and mining businesses.

Percy Chiweshe, an analyst at Imara SP Reid, describes this as the ”China effect”, saying: ”If they get out, someone will get in, especially in the resources sector.” He cites the pullout of BHP from a platinum mine in the Chegutu area in Zimbabwe in the late 1990s and how Impala Platinum was quick to move in.

Also, says Chiweshe, there is no guarantee that new companies will respect workers’ rights — some Chinese companies have been accused of exploiting their workers at home, and may do the same elsewhere.

”Companies can voice their concerns through other means,” as ”pulling out will cause more suffering to the people of Zimbabwe,” he says.

The companies operating in Zimbabwe won’t act in a political vacuum. They will consider moving out if the United Nations imposes sanctions on Zimbabwe — a very unlikely scenario as Zimbabwe’s backers at the Security Council, Russia, China and South Africa, will certainly resist such a measure.

They could argue that the crisis, now in its ninth year, is closer to a resolution than ever before and therefore it won’t make sense to leave when a solution is on the horizon.

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Percy Zvomuya
Percy Zvomuya is a writer and critic who has written for numerous publications, including Chimurenga, the Mail & Guardian, Moto in Zimbabwe, the Sunday Times and the London Review of Books blog. He is a co-founder of Johannesburg-based writing collective The Con and, in 2014, was one of the judges for the Caine Prize for African Writing.

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