Business confidence in Zimbabwe stands at 2%, a new report showed last week.
A report prepared for the Confederation of Zimbabwe Industries (CZI), the country’s biggest business grouping, said only 2% of the country’s top business executives polled in the six months to June this year “are optimistic about the business environment”. The figure stood at 5% at the same time last year.
Industry shrunk 28% in 2007 and was operating at 18,9% of capacity, down from 33,8% in 2006, the Manufacturing Sector Survey said. “Only 4% of industry is operating above 75% [of capacity]. There is an unprecedented level of idle capacity in the economy,” the report said.
On average, it said, skilled workers earn the equivalent of between $8 and $10 a month, leading to a mass exodus of skills from the country.
The new report sheds new light on the despair in the business sector. Apart from operating under world-record inflation, officially estimated at 2,2-million percent — a rate private economists say is conservative — business has to deal with the constant threat of state seizure.
Last week, state media reported that a government audit had been launched to establish the extent of Western ownership of companies operating in Zimbabwe, “as part of a black empowerment drive and to counter the possible withdrawal of investment under sanctions imposed and proposed by Britain and the United States”.
This is a reaction to growing pressure on Western companies still operating in Zimbabwe to pull out of the country, or at least freeze plans for additional investment.
Robert Mugabe told supporters two weeks ago that he “cannot wait” for British-owned companies to “heed their government’s call to leave”.
The media reports said a preliminary audit had shown there was some British interest in 499 companies operating in Zimbabwe. Of these, 309 were majority-held by British shareholders and 97 were wholly British-owned.
The audit had also found 353 firms with shareholders from other European countries, state media claimed. Should these companies withdraw from Zimbabwe, investors from “friendly countries” would be invited to take over.
Last year, Zimbabwe’s Parliament approved the Indigenisation and Economic Empowerment Act, which compels large corporations to sell up to 51% of their shares to black investors. Separate legislation seeks to hand control of mines to locals, with exemptions made in exchange for social investment.
Empowerment Minister Paul Mangwana has previously sought to calm fears on the effects of the indigenisation law, saying there would not be a wholesale nationalisation and that the law would be implemented “on a case-by-case basis”.
But business is taking the new threats seriously. The CZI recently released a statement calling for the end of sanctions against the country’s ruling elite.
One business leader said last week that the statement was not a reflection of industry’s real views, but “a kind of white flag to Zanu-PF, a pragmatic move [by business] to calm things down”.
Large foreign corporations appear unfazed by the takeover threats or the pressure to withdraw.
Barclays Zimbabwe, 68%-owned by Barclays of Britain, said: “Barclays has operated in Zimbabwe for almost 100 years, serving the interests of the Zimbabwean people under successive governments in a way that we believe to be responsible and ethical. Wherever we operate, we are apolitical and we seek to comply with relevant laws.”
Last Wednesday, the CZI and the Zimbabwe National Chamber of Commerce said they hoped the talks in Pretoria “lead to the resolution of our problems, which have had serious political, social, economic as well as humanitarian” effects.