/ 22 May 2014

New Zim land invasions raise concerns for foreign firms

Zambia Sugar allegedly paid an effective tax rate of 0.5% when Zambia has a corporate tax rate of 35%.
The Zambian government promotes large-scale agricultural investments to diversify its economy and reduce rural poverty.

Hundreds of illegal settlers invaded sugar estates owned by the Zimbabwe units of South Africa’s Tongaat Hullett this week, raising new concerns about the security of foreign investment in the southern African country.

While production was not affected, the invasions will worry investors already uneasy over President Robert Mugabe’s black empowerment policy that seeks to force foreign-owned companies, including mines, to sell at least a 51% stake to locals.

Zimbabwe made world headlines in 2000 when thousands of settlers occupied white-owned farms with the blessing of Mugabe’s Zanu-PF party, leading to a collapse of commercial agriculture that triggered a decade-long economic slump.

Lands and Resettlement Minister Douglas Mombeshora told Reuters on Thursday that police were evicting about 600 families that had moved onto sugar estates owned by Tongaat’s Hippo Valley Estates and Triangle Sugar in southern Zimbabwe.

“We do not allow that. This is why police have moved in quickly to put an end to the invasions,” Mombeshora said.

Tongaat is the largest foreign investor in Zimbabwe’s agriculture sector, employing 18 000 workers.

Some villagers around the sugar estates have in the past accused the government of failing to fulfil its promise to parcel out some of the land belonging to Hippo Valley and Triangle and may have taken the matter into their own hands, local media reported.

The illegal occupation of the estates will feed longstanding investor perceptions that Zimbabwe does not respect property rights.

The Commercial Farmers’ Union (CFU), which now has fewer than 400 members, compared with 4 500 when the 2000 land invasions started, said its farmers continued to be harassed and evicted from their land despite government pronouncements that land reforms had ended.

CFU president Charles Taffs said a white farmer and his daughter had died after a violent attack by unknown assailants this week on their property in Guruve, 160km north of the capital Harare.

A police spokesperson said she was unaware of the incident.

“After 14 years this surely must come to end,” Taffs said in a statement.

Illegal occupations
Adelaide Chikunguru-Musvovi, a spokesperson for the two Tongaat estates, said this week’s illegal occupations had not disrupted production and “the matter is being dealt with appropriately by authorities”.

Triangle is wholly owned by Tongaat, which also has a 50.3% stake in Hippo Valley.

The two estates’ sugar mills have a combined milling capacity to crush nearly five million tonnes of cane annually and produce over 640 000 tonnes of raw sugar. Their refining capacity is 140 000 tonnes per annum.

In October 2012, the government gave Hippo Valley and Triangle two weeks to submit a plan detailing how the companies planned to sell 51% of their shares to locals under Mugabe’s black empowerment drive, or face forcible seizure.

The government has not followed through on the ultimatum.

Tongaat’s estates in Zimbabwe have contracted about 700 black farmers who supplied 850 000 tonnes of cane in the half year to September 2013. Plans are underway to contract another 600 farmers. – Reuters