Nestlé shuts Zim milk factory over harassment

By Alex Bell
23 December 2009

International food giant Nestlé has shut its milk processing plant in Zimbabwe, amid mounting threats by Mugabe loyalists to resume its commercial contract with Grace Mugabe’s dairy farm.

The food group announced in a statement on Wednesday that it was shutting the plant temporarily, saying it can no longer guarantee the safety of its employees. This came after staff at the site were forced on Saturday to accept a milk delivery, believed to be from Grace Mugabe’s Gushungo dairy estate, under instruction from two government ministers and police officials. That same day two Nestlé executives were briefly detained and questioned by police, in an effort to force the company to take the milk.

“Two Nestlé Zimbabwe managers were questioned by the police and released without charges the same day,” Nestle said in a statement. “Since under such circumstances, normal operations and the safety of employees are no longer guaranteed, Nestlé decided to temporarily shut down the facility.”

Agriculture Minister Joseph Made and Youth Minister Saviour Kasukuwere, who were accompanied by a senior police officer, arrived on Nestlé Zimbabwe premises on Saturday. It’s understood that they forced staff to accept the milk delivery after accompanying the two Nestlé officials to a nearby police station. Apparently the ministers threatened the Nestlé officials, saying their refusal to take the milk could result in Nestlé Zimbabwe’s closure or arrest of senior officials. The also accused Nestlé of placing ‘sanctions’ against Zimbabwe by not accepting the milk.

Gushungo dairy farm, formerly Foyle Farm, was seized at the height of the land ‘reform’ programme after a sustained campaign of violence, and handed to Grace Mugabe. In October this year Nestlé ended its commercial ties to the dairy estate, following international criticism of the business deal that saw the food giant buying more than ten percent of its local milk from the Mugabes. The deal outraged human rights groups who accused Nestlé of funding repression by doing business with the First Lady and dubbed her produce ‘blood milk’.

But Nestlé’s decision to stop doing business with the Mugabes has resulted in growing intimidation over the past two months. Shortly after the group’s decision, the company’s bank accounts were frozen by the Reserve Bank in what was described as a ‘petty retaliation’. That move was reversed days later, but it was only the start of the harassment and intimidation that has now led to the temporary closure of Nestlé’s Zimbabwe branch.

In October a group of youths tried to force the branch to buy more than 20 000 litres milk from Gushungo Estate. It’s understood the group, led by Youth Minister Kasukuwere and his ZANU PF politburo member brother Tongai, tried to force Nestlé staff to offload the milk tanker that had been transported from Gushungo farm. But after a four hour stand-off, including intense debate and negotiations with Nestlé Zimbabwe management, the tanker and the ZANU PF youth group were turned away.

A local black empowerment group then lashed out at Nestlé a week later, saying the international group should be forced to sell its Harare branch to local black Zimbabweans if it refused to renew its relationship with Mrs Mugabe. The Affirmative Action Group (AAG), whose members are reported to be closely linked to ZANU PF, said Nestlé’s refusal to buy milk from Gushungo farm was part of a ‘foreign regime change agenda’. The group added that the international firm should not be allowed to continue ‘embarrassing’ the president’s family.

Nestlé’s decision Wednesday, to temporarily shut its Zimbabwe branch, is now being described as a setback for the already flailing unity government, because of the implications it has for future foreign investment. The Finance Ministry, since the government’s formation in February, has been trying to convince foreign donors that their investments in Zimbabwe would be safe. But the situation with Nestlé is likely to further dissuade investors from a relationship with Zimbabwe, where it’s clear that any investment carries a high risk.

Economic analyst Bekithemba Mhlanga agreed that the move is a setback for the government, explaining the different implications the decision has. He first explained that the move further damages Zimbabwe’s already tainted reputation as a safe investment haven, saying “there is no investor anywhere who will invest if they cannot even protect their personal interests on the ground, such as staff.” Mhlanga added that the move also highlights how divided the so-called unity structure is because of the ‘conflicting signals’ from within the government.

“On one hand you have Gorden Moyo (Minister of State in the Prime Minister’s Office) calling for sanctions on businesses to be lifted, and Finance Minister Tendai Biti saying investments will be safe, but on the other hand you have ministers who are actively threatening businesses because of their political loyalties,” Mhlanga said.

Moyo has called for the lifting of sanctions from 40 businesses on the European Union’s targeted sanctions list, saying they need to be given a chance to recover economically.

Biti meanwhile told a conference in the UK last week that Zimbabwean expatriates need to start assisting the country’s economic recovery, saying their investments would be safe under the unity government.