Hundreds of British businesses are facing potential expulsion from Zimbabwe after President Robert Mugabe laid down plans to seize majority stakes in all foreign-owned companies in the country.
The companies, including Barclays, Standard Chartered and BP, have started drawing up contingency plans, following news that Mr Mugabe's cabinet is considering pushing through dramatic legislation aimed largely at companies linked to Zimbabwe's former colonial ruler.
Experts have warned that the plans could be catastrophic for the country, which is already facing hyper-inflation and a shrinking economy.
The legislation, approved by the cabinet and now before parliament, will demand that all companies give up at least 51pc of their shares in their local businesses to "indigenous'' Zimbabweans. Insiders thought originally that the law would apply only to mining companies - similar to black empowerment legislation in South Africa - but it is now being aimed at all foreign companies.
One minister has claimed that "imperialist companies'' are being targeted for supporting a "sinister, regime-change agenda''. Banks are also being picked out because they are regarded as having "sabotaged'' the country's controversial land reform plans by refusing financial support to black farmers.
It is thought that the government will take measures to protect companies linked to the country's friends, such as China and South Africa.
The minister said: "The president made it clear, when cabinet approved the bill, that the time had come to empower our people. He said the indigenisation exercise must be undertaken in the same fashion as the land-reform programme.''
There are still several hundred UK businesses operating in Zimbabwe, despite the fact that the threat of this legislation has been hanging over them for a number of years. Now, however, with the Mugabe regime ever more desperate to cling to power, it is thought to be keen to push through the scheme. The UK businesses include Anglo American, British American Tobacco and Unilever. Other companies such as Lonmin have sold off their interests to locals.
Rio Tinto still has some diamond mining interests in the country, though it has scaled back its operations recently. Aim-listed Mwana Africa mines for gold, nickel and diamonds in Zimbabwe.
BAT has had offices and a processing plant in the country for nearly 100 years, though it has also cut back its operations. BA flies three times a week to Harare.
Because many of these companies' histories date back to early colonial days they are especially vulnerable to nationalist rhetoric.
Britain remains one of the largest suppliers of goods and services to Zimbabwe and is still one of the largest investors, although the Foreign Office says these flows have dropped recently "owing to the current unstable economic and political situation".
Trade has declined from UK exports of £78m in 1998 to £34m in 2002, while exports from Zimbabwe have declined from £123m in 1998 to £86m in 2002.
The UK remains Zimbabwe's most favourable trading partner, with a significant deficit in the African country's favour.
Many believe that if the Mugabe regime enacts these changes it could be the final crippling blow for the economy, as countries including the UK cut their economic links with Zimbabwe.
They fear that the biggest beneficiaries would be the president's cronies within the ruling Zanu-PF party, who largely benefited from the farm grabs under land reform.
Mr Mugabe first suggested the move in 2000, at which point Peter Hain, Foreign Office minister responsible for Africa, said it would "risk bankrupting the country".
However, the growing financial links with China are likely to have increased Zimbabwe's confidence about breaking its connections with Western partners. China has signed a number of key deals with African nations for mining rights and building contracts. According to the World Bank, China last year spent more than $10bn on infrastructure projects in Africa.
Tuesday 29 May 2007
By Patricia Mpofu
HARARE - Zimbabwe Industry and International Trade Minister Obert Mpofu on
Monday told ZimOnline that President Robert Mugabe's government was
determined to compel foreign-owned private businesses to cede controlling
stake to local blacks.
"It is government policy that we have to indigenise all foreign-owned
companies. Our people need a stake in the running of our economy," Mpofu
said when asked to confirm whether it was true that the government was
planning to force private firms including banks to sell controlling stake to
Foreign-owned firms have remained jittery since the government first
announced about two weeks ago plans to enact an Indigenisation and
Empowerment Bill to force them to sell majority stake to black Zimbabweans.
But many were also optimistic Mugabe would not order them to surrender
controlling stake to blacks with no experience or financial resources,
especially after the disastrous consequences his seizure of farms from
whites to give to blacks has had on food security and the economy in
A draft mining law to force foreign-controlled mining firms to cede stake to
blacks that the government has held back for the past two years was also
another reason for many to think it would not follow through on plans to
compel private firms to sell shareholding to indigenous Zimbabweans.
Mpofu said the government was now looking at the "nitty-gritties" of how
financing would be raised for blacks to take control of foreign-owned firms
as well as the issue of availability of skills among blacks to run the
"Those are the nitty-gritties that we are looking into now," he said.
News that the government plans to follow up farm redistribution by forcing
private foreign shareholders to sell stake to local blacks is surely going
to scare foreign investors away and make the few still running businesses in
Zimbabwe to reconsider whether or not to pull out.
Zimbabwe, which was once a regional breadbasket, has battled acute food
shortages since 2000 when Mugabe began seizing commercial farms from whites
to give to blacks, crippling the mainstay agricultural sector.
Farm seizures also had a knock-on effect on industry which depended on
agriculture for orders and inputs and has operated at below capacity since
Tuesday 29 May 2007
By Edith Kaseke
HARARE - President Robert Mugabe's government will shortly gazette a law
allowing locals to own majority stakes in all businesses, as part of Harare's
controversial indigenisation drive, but analysts warned that such plans will
further worsen an already hemorrhaging economy.
Zimbabwe is facing its most severe economic crisis since independence in
1980, which economic analysts say has been accelerated by Mugabe's seizure
of white-owned farms for blacks and in the process stoked widespread food
But the veteran leader, who has pursued controversial economic policies
since 2000, has indicated the government wants all the country's resources
in the hands of majority blacks.
The Indigenisation and Empowerment Bill is expected to be tabled in
parliament next month and will among other things compel businesses to sell
51 percent of their holding to locals.
"This has serious consequences for the economy and if you look at the skills
base it is shrinking, so you ask who will be able to manage these
businesses," John Robertson, a Harare-based consultant economist said.
"But nothing makes sense anymore and what I can only think is that this is
part of the government's patronage system to reward supporters. It started
with the farms and now because there are no more farms to give they have to
look for other opportunities," said Robertson.
The southern African nation's economic crisis has seen inflation
accelerating into hyperinflation territory and last month rose by 100
percent on a monthly basis, pushing the annual figure past 3 700 percent
while unemployment has surged above 80 percent.
The economy has shrunk by 35 percent in real terms since 1999 and is seen
contracting further without tight monetary and fiscal policies.
The crisis has heightened political tensions and led to clashes between
opposition supporters and law enforcement agents, while government workers
have previously downed tools to press for better wages and working
There are still dozens of British and South African-owned companies
operating in Zimbabwe and Mugabe has on numerous occasions said it was out
of the benevolence of his government that British firms had not been seized.
But he has threatened to seize the businesses for what he calls London's
continued interference in the country's domestic affairs.
Some of the top British companies include London-listed resource groups Rio
Tinto and Anglo American and financial institutions Standard Chartered and
British American Tobacco, which once ranked Zimbabwe among its lead growers
has dramatically scaled down operations in the country while Rio Tinto sold
its gold and nickel mining operations to local subsidiary RioZim in 2003.
On Sunday, Barclays issued a statement saying: "We are assessing the
potential impact of the proposed legislation on our business in Zimbabwe. It
is early days and the proposed Bill may not become law."
Political analysts said the latest move could further compound the country's
"These are the signs of a desperate regime, it is becoming more and more
ridiculous and Zimbabwe is confirming its pariah status," John Makumbe, a
political science lecturer at the University of Zimbabwe said.
"But we are not surprised that the government will resort to such tactics to
buy the loyalty of a few individuals. Certainly this will not benefit the
majority and once again the economy will take a big knock," he added.
The government is expected to table the long-awaited Mines and Minerals
Amendment Bill in August, which will require foreign miners to cede majority
stakes to locals. This has sent shivers in the sector and most of the miners
have stopped all expansion projects.
Mugabe has sharply criticised the business sector for rampant profiteering
and accused them of increasing prices on a daily basis to foment anger among
consumers so they can turn against his government.
Analysts said the legislation would sail through both Houses of Parliament,
which are dominated by the ruling ZANU PF party.
The veteran Zimbabwean leader, now 83 and seeking another term in 2008, has
defended his policies, which have put him at odds with the West and says
instead sanctions and sabotage by his enemies has bled the once breadbasket
of southern Africa. - ZimOnline
Tuesday 29 May 2007
By Nqobizitha Khumalo
BULAWAYO - Amnesty International says the Zimbabwean government is
continuing to hinder and frustrate efforts to provide shelter to thousands
of people who were left homeless during a controversial clean-up campaign
two years ago.
In a country report on Zimbabwe that was released at the weekend, Amnesty
expressed serious concern at the plight of thousands of people who were left
without homes following the home demolition exercise.
At least 700 000 people were left without shelter after President Robert
Mugabe sanctioned the demolition of their houses and backyard shacks in the
military-style clean-up campaign.
A United Nations report compiled after the demolitions said another 2.6
million Zimbabweans were also directly affected by the home demolitions that
Mugabe said were necessary to rid cities and towns of squalor.
"The situation of thousands of people whose homes were destroyed as part of
Operation Murambatsvina (Restore Order) in 2005 continued to worsen, with no
effective solution planned by the authorities.
"The government (has) continued to obstruct humanitarian efforts by the UN
and by local and international non-governmental organisations," says the
The latest report is set to renew pressure on Mugabe barely a week after
another international rights group said the veteran Zimbabwean leader could
be dragged to The Hague over the slum clearance campaign.
The Centre on Housing Rights and Evictions (COHRE) last Wednesday said "the
magnitude of the crimes committed during Operation Murambatsvina deserved an
international response" and urged the UN's Security Council to "bring the
perpetrators of these crimes" to book.
Amnesty International had no kind words for a housing programme, Operation
Garikai/Hlalani Kuhle that was launched in July 2005 by Mugabe to deflect
international criticism of his government's actions.
Amnesty said the housing programme had failed dismally to provide houses for
thousands of displaced families.
"By May (2006), one year after the programme's launch, only 3 325 houses had
been built, compared to 92 460 housing structures destroyed in Operation
"Construction in many areas appeared to have stopped. Many of the houses
designated as "built" were unfinished, without access to water or sewerage
facilities, and uninhabited," says the report.
The Zimbabwean government, which is battling its worst economic recession,
in late 2005 admitted that it did not have the financial resources to finish
building the houses.
In an embarrassing turn for the Harare authorities, the government urged all
those who were allocated the houses to finish building the houses on their
Mugabe turned down an offer by aid agencies to provide temporary shelter to
the homeless saying Zimbabweans were not "tent people".
At a church-led commemoration of Operation Murambatsvina in Zimbabwe's
second city of Bulawayo last weekend, victims of the clean-up exercise said
they were still sleeping in the open two years after the government promised
to allocate them new houses. -ZimOnline
World Net Daily
Posted: May 29, 2007
1:00 a.m. Eastern
The London Sunday Telegraph reports Zimbabwe's President Robert Mugabe is
"spending almost $4 billion on a grandiose project - a monument to himself.
"Work has already begun on a museum dedicated to the life and dubious
achievements of the 83-year-old president. . The country's economy is
crumbling and its people are struggling to survive in the face of 4,000
percent inflation, food and fuel shortages and the prospect of power cuts
for up to 20 hours a day. .
"Mr. Mugabe's policies, such as the seizure of white-owned farms, are blamed
for an economic crisis in which unemployment is running at about 80 percent
and there are severe shortages of staple foods such as corn and wheat. .
"Mr. Mugabe's extravagance is well known. Besides his five official
residences, he owns a number of private houses, including the most recent
addition: a palatial three-story, 25-bedroom, $15.8 million residence in the
exclusive Harare suburb of Borrowdale."
What also needs very much to be remembered is the considerable amounts of
money liberal American church denominations contributed to Mugabe when his
terrorist group, Zimbabwe African Nationalist Union (ZANU), was fighting to
overthrow the Rhodesian government.
That ZANU was indeed terrorist was evident in the death of Southern Baptist
clergyman Archie Dunaway of that denomination's missionary hospital in
Senyate. He was taken from this hospital and his body was subsequently
found - after he had been used as a live target for bayonet practice.
Mugabe was not at all displeased by this atrocity - or in his proud claim of
blowing up a Woolworth's store in Salisbury (now Harare), wounding 76
civilians and killing 12 more - including two children and two expectant
mothers - all blacks.
Earlier that year, Mugabe's men massacred seven Catholic missionaries at
Musame - including four nuns. They also murdered several Pentecostal
missionaries at the Elim Mission - preceding these murders with gang rape.
None of this stopped liberal church denominations through councils of
churches from sending money to murderous, so-called "liberation" groups like
Despite all this, Robert Mugabe was described as: "a notable world leader,
exemplifying the finest aspects of humanity" in achieving "liberation and
justice" based on "decency" and "freedom" in "a result which thrills the
Who made this tribute to Robert Mugabe?
President of the United States Jimmy Carter - who welcomed Mugabe to the
In Nashville, the Rev. Mr. Dunaway's son, Mark, recalled:
"My father was murdered at almost the same time Jimmy Carter was down there
at the Southern Baptist Convention in Atlanta trying to get votes. We heard
(messages of sympathy) from many others at that convention - but we never
heard from Carter."
By Nicol Degli Innocenti in London
Published: May 28 2007 22:06 | Last updated: May 28 2007 22:06
Diamond retailers in the UK are failing to play their part in the battle
against conflict diamonds and risk undermining the United Nations-backed
initiative to clean up the industry, according to a report to be released on
The report is the product of a survey of 42 of the most prominent UK
jewellery retailers by Amnesty International and Global Witness, the
campaigning group that first alerted the world to the issue of conflict
diamonds in the 1990s.
A majority of companies contacted replied in writing to the survey. However,
the 11 who failed to respond are among the top 50 jewellery retailers in the
UK by market share, with annual sales of more than £20m. Among them are
Cartier, Graff Diamonds and Fraser Hart. John Lewis and House of Fraser also
failed to provide any information on their diamond policy. Most companies
were contacted four times.
Since then the so-called Kimberley Process (KP), an agreement between
governments, industry and non-governmental organisations, has sought to
combat illicit trade and to prevent diamond smuggling from fuelling wars.
The industry agreed to provide guarantees on the origin of all diamonds
traded or sold to ensure they did not come from a conflict area.
Despite these pledges, "most top-selling UK jewellers still lack adequate
policies to effectively combat the trade in conflict diamonds", the report
"Most companies adhere to the industry's minimal systems of self-regulation
but these are not effective in preventing the trade in blood diamonds. A
voluntary system will not bring the necessary change within the diamond
Conflict diamonds from West Africa "are still reaching the international
market place", and there are "credible reports of illegal diamond
trafficking from Zimbabwe and Venezuela".
Last year the publicity generated by the Oscar-nominated Hollywood movie
Blood Diamond, which highlighted the link between civil conflict and diamond
smuggling in West Africa, prompted the industry to launch a massive
information campaign to educate retailers and prepare them to answer
consumers' questions about the issue.
The survey shows that awareness has increased: 96 per cent of respondents
stated that they had adopted the KP-sanctioned system of warranties, the
rules of self-regulation agreed to by the industry. Both the British
Jewellers' Association and the National Association of Goldsmiths encourage
their members to seek a warranty as to the provenance of their diamonds, but
few retailers were able to explain how the system was implemented.
Only two companies, Tiffany & Co and Signet (including its subsidiaries
Ernest Jones, H.?Samuel and Leslie Davis) have taken stronger measures,
commissioning rigorous internal and third-party auditing procedures to
ensure the diamonds they buy are responsibly and ethically sourced.
The UK report follows a survey of the $33bn US jewellery industry, conducted
earlier this year, which revealed a similar pattern. With a few notable
exceptions, US retailers have no auditing procedures in place to combat
conflict diamonds, despite the recommendation to do so by the trade
association Jewellers of America.
KP members account for 99.8 per cent of all diamond production. As rough
diamonds are a small, precious and easily smuggled commodity, some gems
inevitably escape the net, but the KP has succeeded in imposing a regulatory
system on the $60bn (£30.25bn, ?44.6bn) a year industry.
The percentage of diamonds coming from conflict zones has dropped from 4 per
cent to 0.2 per cent, although the end of several wars in Africa has
contributed to this. But despite its achievements the KP is a slow-moving
machine, hampered by its choice to use the carrot rather than the stick. The
KP faced criticism last year for its slow response to the threat posed by
the civil war in Ivory Coast.
Tuesday, May 29, 2007; 3:36 AM
HARARE (Reuters) - Zimbabwe will put 40,000 more people on life saving
anti-retroviral drugs by the end of the year despite an economic crisis that
has hobbled the country's health care, state media reported on Tuesday.
The southern African country is among the worst hit by the HIV/AIDS
epidemic, killing more than 3,000 people every week and accounting for 70
percent of hospital admissions.
But Zimbabwe, in the grips of a deep recession, has also become one of the
few AIDS bright spots on the continent after its HIV prevalence rate
declined to 18.1 percent last year from 25 percent six years ago.
Health Minister David Parirenyatwa said the number of people receiving the
life-prolonging medicines has increased from 60,000 in December to 80,000
this month but that the government would add another 40,000 patients by the
end of the year.
"Currently the number of people on ARVs has grown to 80,000 since December
last year and we hope to achieve our target of getting 120,000 by the end of
the year," Parirenyatwa told the official Herald newspaper.
Parirenyatwa said that at least 300,000 people living with HIV/AIDS were in
urgent need of ARVs.
Zimbabwe's drive to increase access to ARVs has been hampered by a severe
shortage of foreign currency, itself a sign of an economic crisis that has
pushed inflation past 3,700 percent and increased poverty levels.
The crisis has been particularly felt in the health sector, where basic
drugs are in short supply while strikes for better pay by doctors and nurses
have worsened the situation.
President Robert Mugabe -- who says Zimbabwe is showing the way for Africa
in the fight against HIV/AIDS -- rejects charges of mismanagement and blames
the West for sabotaging the economy as punishment for seizing white-owned
farms to distribute to blacks.
Tue 29 May 2007, 5:23 GMT
By Nelson Banya
HARARE (Reuters) - Zimbabwe will not seek foreign partners to mine diamonds
in the east of the country and has stopped all illegal mining in a
controversial area granted to a state firm, a government minister said on
Over 20,000 illegal miners descended on the Marange diamond deposit in the
eastern province of Manicaland last August, sparking fears by the World
Diamond Council (WDC) that some of the diamonds were finding their way to
the black market against rules set up to curb trade in gems from conflict
President Robert Mugabe's government sealed off the area and took over the
diamond claim previously allocated to the London-listed African Consolidated
Resources, which is contesting the move in court.
Mines Minister Amos Midzi told journalists that all illegal mining
activities had been stopped and that the state-owned Zimbabwe Mining
Development Corporation (ZMDC) had since begun trial mining on site.
"So far we have dealt with some of the problems we are all aware of, chiefly
that problem with illegal mining," Midzi said.
"The situation has been contained ... and starting on 22 April, ZMDC started
the first run of the trial mining, starting with two tonnes of ore and they
were able to produce the first carats from Marange," Midzi added.
He said the trial runs had since risen to 25 tonnes of ore per day and
indications were that the yield would be enough to allow full-scale
operations, but added that ZMDC would not seek foreign partners in the
Mugabe's government is currently considering legislation to transfer control
of foreign-owned mines into government and local ownership.
"The decision of the government is that the ZMDC should go it alone. From
what we've seen, there is no need for that (external investors). ZMDC has
not drawn on any expertise or equipment from outside, which is testimony
that we are able to do it on our own," Midzi said.
The minister said a six-member delegation from the WDC's Kimberly Process
Committee, which was currently in the country for consultations was free to
visit Marange and other diamond mines in the country to assess the
"We expect the team to visit River Ranch, Murowa and Marange so that they
can make their own assessment. I'd like to dispel the notion that the team
has imposed itself on us ... they are here at our invitation," Midzi said.
The Vigil marked Africa Day with a sad sense of betrayal. The latest kick in the teeth for Zimbabweans has been the election of Zimbabwe as Vice-Chair of the Common Market for East and Southern Africa, Africa’s largest trading bloc. London’s Mayor, Ken Livingstone, has arranged a big event to mark Africa Day next door in Trafalgar Square on Monday (28th May), the Spring public holiday, with the wonderful Miriam Makeba gracing the occasion. But the Vigil spokesperson, Julius Mutyanbezi-Dewa said Zimbabwe had nothing to celebrate because Africa had done nothing for Zimbabwe. He read one of his poems “Africa” from a collection published recently “Preaching to Preachers”: “Africa must change, Africa has eyes, she must learn to see. Africa should change, Africa has ears, she must listen. Africa must change, Africa has tastebuds, she must taste. Africa should change, Africa has nostrils, she must smell. Africa must change, Africa has a skin with receptors, she must feel”. Julius’s aunt, Fatima Machekanyanga, was planning to come to the Vigil but unfortunately was rushed to hospital. We wish her a speedy recovery.
For the first time in ages we had rain at the Vigil. But despite the damp we were happy to celebrate the birthdays of four Vigil supporters: Luka 25/5, Addley 26/5, Yeukai 28/5 and Chipo 29/5. We shared a big chocolate cake to celebrate.
Addley’s sister, Grace Kwinjeh, is visiting family in the UK at the moment. Grace, as you will all know, was one of the MDC leaders who was so brutally beaten up in March. She is still in a lot of pain and needs medical attention. The Vigil was appalled to hear that the UK government has given her a visa allowing her to stay only until 30th May. We are making urgent representations to the authorities here on her behalf. Vigil supporters reported that she addressed a church service in Vauxhall, South London, last Sunday. After prayers she was so unwell she had to be lifted to her feet by friends. Zimbabwe Embassy staff attend this service – they couldn’t lift their heads up for embarrassment..
Tales from the table: We always get South African visitors passing by because of our close proximity to the South African High Commission. It was interesting to note the different attitudes of two of our South African visitors today. One young man who had arrived in London only a few hours beforehand saw our “ANC loves Mugabe” poster and asked if we hated the ANC. Our response was that we were unhappy about their support for Mugabe: in five years of protest we had not once heard a member of the South African government condemn him for the human rights abuses in Zimbabwe. Our South African friend was very sympathetic. The second South African visitor was a bad-tempered woman who was irritated by the number of Zimbabwean refugees in South Africa. We don’t really understand why she stopped by at all as she refused to sign our petitions calling for change in Zimbabwe which would lessen the Zimbabwe refugee problems in South Africa.
Our sister Vigil in Bristol had their anniversary rally today – see separate report.
For this week’s Vigil pictures: http://www.flickr.com/photos/zimbabwevigil/
FOR THE RECORD: 50 signed the register.
FOR YOUR DIARY:
- Monday, 28th May – no Central London Zimbabwe Forum because it’s a public holiday.
11th June – The Zimbabwe Solidarity Campaign based in
co-ordinator The Vigil, outside the Zimbabwe
Embassy, 429 Strand,
place every Saturday from 14.00 to 18.00 to protest against gross violations of
human rights by the current regime in Zimbabwe. The
Vigil which started in October 2002 will continue until
internationally-monitored, free and fair elections are held in
The Vigil, outside the Zimbabwe Embassy, 429 Strand, London, takes place every Saturday from 14.00 to 18.00 to protest against gross violations of human rights by the current regime in Zimbabwe. The Vigil which started in October 2002 will continue until internationally-monitored, free and fair elections are held in Zimbabwe. http://www.zimvigil.co.uk