South African businesses face backlash in Zimbabwe

It may no longer be business as usual for South African companies operating in Zimbabwe.

At its national conference in Mutare, Zanu-PF is intensifying its efforts to drum up support for the country’s indigenisation programme in a bid to rein in what it sees as the growing influence of foreign business in the country.

South Africa is Zimbabwe’s largest trading partner in the region and, since the dollarisation of the economy in February 2009, it has increased its foothold in Zimbabwe by clinching lucrative deals in the mining, manufacturing and retail industries.

But Zanu-PF’s national conference, under the theme “Total control of our resources through indigenisation”, will focus on the economic roadmap that the party intends to adopt in “safeguarding the country’s sovereignty” and as the central plank in its election platform.

Rugare Gumbo, the Zanu-PF spokesperson, told the Mail & Guardian: “Our position is very clear, South African businesses and any other investor must come in as joint partners in the 51%-49% policy arrangement. We don’t expect any foreign investor to come in and buy up everything.”

Tiger Brands is the latest South African company to line up to the equity requirements. The food giant is looking at acquiring a 49% shareholding in Lobels Bakery.

History repeating itself
However, market observers fear a repeat of the Arcelor Mittal South Africa (Amsa) saga, in which Amsa’s bid for steel company Ziscosteel was subjected to intense political pressure and lobbying because the multinational was judged “too big for Zimbabwe”.

A Lobels official who requested anonymity said: “The empowerment watchdogs in the country are keenly watching all business deals going on and this Tiger Brands and Lobels deal is likely to come up on their radar as well.”

Saviour Kasukuwere, the Youth Development Indigenisation and Empowerment Minister, told the M&G: “We are not against any foreign investment, but maintain that resources must benefit the people of this country first and foremost. The requirements set for businesses are done with people’s overall interests in mind.”

Zimbabwe’s empowerment laws stipulate that foreign companies with a value of $500 000 or more must cede a controlling stake to indigenous Zimbabweans.

Meanwhile, South Africa’s Massmart has announced the sale of its Zimbabwean subsidiary, Makro, to local retail giant OK Zimbabwe.

It is understood that the sell-off was spurred by “the fact that Massmart has a policy that prefers 100% control of assets in foreign territories”.

Economic analyst Erich Bloch warned on the business risks Zanu-PF is incurring by over-hasty empowerment programmes. Said Bloch: “No international investors will be willing to take up an indigenisation offer where they will become minority shareholders and effectively have no authority in their investments.

“We can only hope that Zanu-PF is merely posturing on this matter and common sense will prevail.”

It is in the Marange diamond field that South African operations are most at risk. A “unanimous” Zimbabwean Cabinet decision on Tuesday to give the government 100% control of all alluvial diamonds in Marange effectively shut down South African interests there.

South African-linked Canadile Miners and several of its South African shareholders have already been blacklisted from operating in the country following allegations against them of fraud, corruption and diamond smuggling.

Said Bloch: “It sends out a very bad message to investors that we can lay a 100% claim to minerals. Who knows? The next claim could be on gold or platinum, or the manufacturing sector.”

We make it make sense

If this story helped you navigate your world, subscribe to the M&G today for just R30 for the first three months

Subscribers get access to all our best journalism, subscriber-only newsletters, events and a weekly cryptic crossword.”

Ray Ndlovu
Ray Ndlovu has been a correspondent for the Mail & Guardian in Zimbabwe since 2009. His areas of interest include politics and business. With a BSc honours degree in journalism and media studies, Ray aspires to become a media mogul.

Related stories


Already a subscriber? Sign in here


Latest stories

One movie, two takes: Good luck to you, Leo Grande

Brave, entertaining and hopeful, this British sex comedy-drama delivers 97 very well-spent minutes

Promote agriculture so that more women are landholders and not...

The inequality is reflected in the statistics: 60% to 80% of smallholder farmers in sub-Saharan Africa are women but only 15% to 20% have rights over the land

South Africa to brace itself for new VW Golf 8...

The Tiguan R arrives in October but you'll just need to exercise a bit of patience for the Golf 8 R, which arrives in early 2023

Former Man Utd star Giggs goes on trial for assault

The 48-year-old, who until recently served as coach of Wale, has pleaded not guilty to the charges, which carry a maximum jail term of five years

press releases

Loading latest Press Releases…