In Land’s Bounty, a Political Chip

Lydia Polgreen, New York Times, May 19, 2012

More than a decade after Zimbabwe’s government began seizing sprawling white-owned commercial farms, a new fight is brewing here over who will profit from the nation’s vast bounty of platinum, chromium, nickel and diamonds.

In a move rooted in politics, the party of the aging president, Robert G. Mugabe, has begun pressuring companies operating in the country to comply with a law requiring that black Zimbabweans own more than half their shares.

{snip}

As Mr. Mugabe pushes for new elections this year, the drive to put more wealth into the hands of black Zimbabweans is seen by allies as a politically popular path to victory.

Senior officials of Mr. Mugabe’s party, ZANU-PF, say that foreigners operating inside the country must not be allowed to profit at the expense of indigenous, or black, Zimbabweans.

“Am I going to assign another man to make my wife pregnant and get a child?” asked Savior Kasukuwere, the ZANU-PF minister overseeing the process known as indigenization. “Zimbabweans must be masters of their own destiny. Indigenization is a core feature of the values of our party: freedom, equality, peace.”

The opposition Movement for Democratic Change, along with many independent economists and analysts, says that the law, which was passed in 2010, but only widely enforced in the last year, spells disaster for the country’s economy just as it is beginning to expand after years of withering.

{snip}

Zimbabwe’s economy has been making a slow recovery after more than a decade of political and economic crisis brought on by the seizure of commercial farms. {snip}

{snip}

According to Zimbabwe’s indigenization law, black Zimbabweans must own 51 percent of shares of foreign companies operating here. About 20 percent of the shares are supposed to go to community trust funds, which in theory will pay for local development projects, and company employees. The rest must go to black Zimbabweans.

But exactly how these aims are to be achieved is unclear. Many of these companies are publicly held, and their shares are not the companies’ to give or sell. On top of that, few black Zimbabweans have the means to buy large numbers of shares at market value.

{snip}

In March, the South African mining company Implats—whose subsidiary, Zimplats, mines platinum in Zimbabwe—said it would give community organizations interest-free loans, to be repaid from dividends, for their shares, and do the same for employees.

But it said it expected full market value for the other 31 percent of shares required under the law, an amount few private investors in Zimbabwe could muster. Officials from Implats and other companies affected by the new law did not respond to requests for comment.

Government officials say that they will not pay a cent for those shares.

“Our contribution is the platinum they are taking from our soil,” said George Charamba, Mr. Mugabe’s spokesman. “They will get nothing more.”

{snip}

“What they seek to do is transfer wealth from rich white people to rich black people,” said Tendai Biti, Zimbabwe’s finance minister and a leader of the Movement for Democratic Change. “You are not creating any wealth, you are not creating any new jobs.”

{snip}

Topics: , , ,

Share This

We welcome comments that add information or perspective, and we encourage polite debate. If you log in with a social media account, your comment should appear immediately. If you prefer to remain anonymous, you may comment as a guest, using a name and an e-mail address of convenience. Your comment will be moderated.