Cabinet approves proposal for government takeover of private firms

By Tererai Karimakwenda
May 28, 2007

After taking over and destroying agriculture through the chaotic land reform programme, Robert Mugabe and ZANU-PF are now eyeing private industry. Economists are deeply concerned because they say the move means the end of private business in Zimbabwe. It has been reported that Mugabe's Cabinet has approved proposed legislation that would force all foreign-owned companies to give 51% of their shares to black Zimbabweans. Once a final draft of this ‘empowerment’ Bill is completed, the ruling party can easily pass it through Parliament due to its majority membership.

One report said government would target so-called "imperialist companies" which Mugabe accused of pursuing regime-change. Economist John Robertson said the government is always blaming others for its failed policy choices and believes the companies would be used as gifts to loyal supporters and members of government in order to retain power. He also said even more businesses would move or shut down.

Robertson expressed concern that companies taken over by government would become less efficient, more corrupt and with decreased production levels. Asked why the cabinet would approve such a proposal, he explained that although cabinet members know the move would destroy business in the country, they believe they would be the initial beneficiaries because they would be appointed directors or board members. The top economist added that cabinet members are instructed to vote for government’s wishes and debating in parliament is simply a formality to pretend there is democracy in Zimbabwe.

Believed to be on the hit list are companies such as Rio Tinto and Anglo American, which are listed on the London stock exchange, plus banks such as Standard Chartered and Barclays. Robertson explained that companies that have retained 100% foreign ownership would also be very vulnerable. He believes they would be forced to list their shares on the Zimbabwe Exchange so government could buy the shares that way. Barclays is already listed in Zimbabwe.