Zimbabwe's political elite eyes mines
Zimbabwe’s wealthy political elite is closing in on the country’s large foreign-owned mines, after at least 30 major mining companies submitted plans on how they plan to hand over majority stakes to locals.
And Economic Empowerment Minister Saviour Kasukuwere has said foreign companies may not be allowed to choose their own empowerment partners—raising fears that investors will be forced into partnerships with politically connected figures.
The next battle for company and mine owners will be to fend off bids by powerful politicians and choose their own local partners.
Senior Zanu-PF figures already hold vast business interests, from diamond mines and farms to property. Many of them see the empowerment programme as a chance to broaden these interests.
Regulations under the indigenisation law originally required all companies valued at more than $500 000 to sell 51% of their shares to local investors.
However, the regulations now cover all foreign-owned companies, regardless of value.
Alex Mhembere, chief executive of Zimplats, the Zimbabwean subsidiary of Impala Platinum, plans to publish a list of bidders for his company, the largest platinum producer in the country and one of its biggest investors.
“There is a big appetite for a stake in Zimplats by people in business and political office,” he said.
The proposals submitted by the mines are now being “evaluated”, said Kasukuwere. But he made it clear that the government will reject proposals in which mines choose their own partners. “We have realised that in some proposals, some companies are specifying particular partners to cede shares to. This is not acceptable. That remains the prerogative of the National Indigenisation and Economic Empowerment Board,” said Kasukuwere.
That board is tasked with monitoring the implementation of the empowerment law and is headed by David Chapfika, a Zanu-PF official.
According to previously published regulations, investors would be required to sell shares to “designated entities” such as the National Indigenisation and Empowerment Fund, the Zimbabwe Mining Development Company (ZMDC) and a sovereign wealth fund. These shares would then be transferred to approved shareholders. The government will not pay the foreign-owned companies for any shares.
Among a string of Zanu-PF officials bidding for Zimplats is Bright Matonga, an MP in the Mhondoro-Ngezi area, south of Harare, where Zimplats has mining operations. Matonga says he is bidding only as part of a community consortium that includes local traditional leaders.
His community wanted to follow the example of South Africa’s Royal Bafokeng nation, who bought into Implats in 2006. “We feel Implats should apply these same principles in Zimbabwe,” Matonga said.
President Robert Mugabe’s opponents fear he could use the programme to extend this patronage system, which so far has been based mostly on the allocation of farmland. But the opposition MDC knows it cannot completely dismiss the empowerment programme without handing Mugabe the moral high ground on pro-poor issues.
Prime Minister Morgan Tsvangirai last month called the indigenisation drive a vehicle for “looting and plundering” by a “small, parasitic elite”. But last week he told a World Economic Forum session in Cape Town that he backed the principle of empowerment and investors must not compare it to the land seizures.
“Indigenisation is not about appropriation or nationalisation, it’s about setting fair value. Across the political divide we agree on the principle of citizenship empowerment.”
What was important was how the law would be implemented, he said. “We are trying to model a matrix that will satisfy both the investor and our desire to see people [participate more in the economy].” At the heart of the radical empowerment campaign is Mugabe’s belief that greater control of the economy by his allies will secure his hold on power.
“If our economy is controlled by outsiders, similarly the politics will be controlled by outsiders,” Mugabe said last month.
There have been other smooth transfers of ownership recently, giving hope that the exercise may not be as disruptive as feared.
Last week Costain, one of Zimbabwe’s largest construction companies, was sold by its London Stock Exchange-listed parent company, Costain plc, to local management. Tendai Samuriwo, who, as chief executive, led the staff buyout, said his group had bought up 100% of the company for £500 000.
“As Zimbabweans who have run this business without any expatriates for the last 16 years, local ownership was now overdue. We are very happy that the former shareholders in London have been proactive and supported our bid to purchase the business outright,” Samuriwo said.