12 Nov 2005 12:21:34 GMT
By MacDonald Dzirutwe
HARARE, Nov 12 (Reuters) - Zimbabwe's infrastructure is fast decaying,
worsening sanitary conditions and threatening the health of a population
already burdened by a six-year economic recession.
"Our budgets are failing to cope with the demand for services but our hands
are tied because we can only increase rates with government approval, which
usually is not forthcoming," Japhet Ndabeni-Ncube, mayor of the second city
of Bulawayo, told Reuters on Saturday.
"The threat of a serious health crisis is there, but we try to manage with
the few resources we have," he added.
State media has reported more than 200 people have been diagnosed with
dysentery in Harare and Chitungwiza town, 30 km (19 miles) southwest of the
capital where there are water shortages and a broken sewage system.
On Saturday, the official Herald newspaper reported diarrhoeal infections
had killed 14 minors in the capital Harare since September as a result of
Zimbabwe's economic crisis, the worst since the end of British rule in 1980,
has paralyzed the country with rising unemployment, and shortages of fuel
and food. It has also produced a foreign currency crunch that has hit
imports, including of key treatment chemicals.
Service delivery has nearly collapsed in the country's cities and towns as
local authorities battle to provide residents with water, garbage collection
and repairs to a creeking infrastructure.
Critics say President Robert Mugabe inherited a thriving economy at
independence in 1980, but that years of mismanagement has turned the
southern African nation into a near failed state.
Mugabe blames the country's economic woes on sanctions and economic
isolation imposed by Western nations led by former colonial power Britain.
Built in colonial Rhodesia, most of Zimbabwe's infrastructure was meant to
cater for a small black urban working class but a surge in the population
and years of neglect has seen most cities and towns failing to cope. State
television has often shown graphic images of some residents in Chitungwiza
fetching water from open wells, often near streams of human waste. Some
residents in Harare and small towns around the country face the same
Erratic water supplies are blamed on a combination of drought and the
shortage of treatment materials.
Chris Tapfumaneyi, the medical superintendant at the state-run Harare
Central Hospital, said the deadly cases of diarrhoeal infections were
reported in the black townships Mbare, Highfield, Mabvuku and Mufakose,
which have been the most hit by a collapse in services.
"What is alarming is that it seems the disease keeps attacking more under-5
children and at the moment we have a number of cases we are dealing with,"
Chris Tapfumaneyi, the medical superitenant at state hospital Harare Central
Hospital told the Herald.
Mail and Guardian
12 November 2005 09:30
Fourteen children have died from food poisoning in the
Zimbabwean capital, Harare, in recent weeks, an official newspaper reported
on Saturday, a day after reports of an outbreak of dysentery in Harare and
its satellite town of Chitungwiza.
The children, all under the age of five, are suspected to have
contracted a virulent form of food poisoning -- salmonella -- from chicken
or eggs sold in unhygienic food stalls that are common in poorer quarters of
"We saw that there was an outbreak of this disease in children
from areas such as Mbare, Highfield, Mabvuku, Waterfalls and Mufakose
[low-income Harare suburbs]," Harare Central hospital medical superintendent
Chris Tapfumaneyi told the Herald.
He said patients brought to the hospital had initially been
treated for typhoid. Laboratory tests later revealed an outbreak of
"What is alarming is that it seems the disease keeps attacking
more under-five children, and at the moment we have a number of cases we are
dealing with and seem to be able to control," said Tapfumaneyi.
On Friday, reports here said more than 200 people in Harare and
Chitungwiza had been hospitalised for dysentery. The highly infectious
diarrhoeal disease was blamed on unhygienic water supplies.
Many suburbs in Harare and Chitungwiza are experiencing erratic
water supplies. Some suburbs go without running water for several weeks,
resulting in people drawing water from unprotected wells and streams. --
Dear Family and Friends,
Wearing a little red paper poppy on my shirt this second week of November
has been something I've done ever since I can remember. I was disappointed
this Friday to see just a dozen or so scrappy paper poppies lying in the
bottom of the cardboard box two days before Armistice Sunday. At first I
thought that this international day of remembrance must have become the
latest casualty in Zimbabwe's determination to cut itself off from the
rest of the world. I was wrong. The reason there are no poppies this year
is because 20 000 little red paper flowers sent from the UK have been
impounded by Zimbabwe's department of customs. Apparently even scraps of
red paper used for charitable purposes and to remember the end of World
War One, are not exempt from our government's desperate attempts to raise
money. Customs want 53 million dollars to release the poppies and so,
those of us lucky enough to find them, are wearing crumpled poppies left
over from last year and I wear my tatty one with outrage but also with
It has been altogether a very shocking week in Zimbabwe and trying to keep
track of the events has been very difficult due to almost no coverage by
state media. ZBC TV, whose motto is "When it happens we will be there",
have obviously been in other places this week but even so, bit by bit, one
way or another, the real news does eventually get out. This week the MDC
Mayor of Chitungwiza was detained by police. Six University of Zimbabwe
student leaders were arrested for trying to embark on a demonstration
about deplorable conditions on campus. Tuesday's country wide
demonstrations by the Zimbabwe Congress of Trade Unions and the National
Constitutional Assembly left all their combined leaders arrested and
between 120 and 200 others who had been brave enough to take to the
streets with them.
Also this week came the shocking news that airfares have been increased by
1600% and for anyone planning on visiting their families in South Africa
this Christmas, a return ticket will cost 34 million dollars. Each return
ticket to the UK now costs 140 million dollars and this is crushing news
for hundreds of thousands of Zimbabwean families which are split up across
continents. With an average teacher taking home less than 10 million
dollars a month, there is no hope at all that even professionals will be
able to be united with their families this year.
I will end this week with the good and the bad news. The good news is that
the rains have started and in Marondera we have had 104 mm (4 inches) in
five days. The bad news is that what little wheat there is this year is
sitting out there in the fields getting wet. The wheat is not being
harvested because of chronic diesel shortages that have persisted since
the March elections. I came across these shocking figures this week which
say it all for Zimbabwe's so called agricultural revolution in the last
five years. In 2001 Zimbabwe produced 360 000 tons of wheat; in 2002 we
produced 280 000 tons; in 2003 the figure dropped to 150 000 tons and in
2004 a paltry 80 000 tons was grown . And this years figure ......its not
in yet because its still sitting out there in the rain. And this one
simple little agricultural blunder joins the others to explain why we are
hungry, tired, broke and away from our families Until next week, love
cathy. Copyright cathy buckle 12 November 2005
12/11/2005 20:20 - (SA)
Harare - The Zimbabwe government is to "take action" against the Zimbabwe
Congress of Trade Unions (ZCTU) which this week held a series of
anti-poverty demonstrations across the country, the state-controlled Herald
newspaper reported on Saturday.
The paper said there had been allegations of embezzlement and corruption
levelled against senior officials in the main labour body. The labour
ministry is to decide what action to take, it added.
"The director of Labour Administration in the Ministry of Public Service,
Labour and Social Welfare, Mr Paul Dzviti, said the ministry was expected to
come up with a decision on what course of action to take against the labour
body next week," the Herald said.
More than 150 people were arrested in the cities of Harare, Bulawayo and
Mutare during anti-poverty protests organised by the ZCTU on Tuesday.
The ZCTU's president Lovemore Matombo and secretary-general Wellington
Chibebe were among those detained.
Dzviti says he has been given "inside details of the problems rocking the
umbrella labour body", the Herald says.
President Robert Mugabe's government accuses the ZCTU leadership of being
closely linked to Morgan Tsvangirai, the leader of the opposition Movement
for Democratic Change (MDC).
Tsvangirai is facing a party revolt over his refusal to allow MDC candidates
to take part in this month's senate polls.
State newspapers have speculated that Tsvangirai, himself a former secretary
general of the ZCTU, may try to co-opt some ZCTU leaders into the leadership
of the opposition party if it splits.
Tsvangirai's spokesperson denies this. - Sapa-dpa
New York Times
By MICHAEL WINES
Published: November 13, 2005
BULAWAYO, Zimbabwe - President Robert G. Mugabe has one word for reports
that Operation Drive Out Trash, the urban-demolition campaign aimed at slum
dwellers that his government describes as a civic beautification program,
has rendered thousands of his impoverished citizens homeless.
"Nonsense," he told ABC News in an interview broadcast on Nov. 3. "Thousands
and thousands and thousands and thousands. Where are the thousands? You go
there now and see whether those thousands are there. Where are they? A
figment of their imagination."
Clearly, Mr. Mugabe has not been to Bulawayo.
Just three miles west of the center of Bulawayo, Zimbabwe's second-largest
city, Robson Tembo and his wife, Ticole, live in the open air in a small
pen, 12 feet by 12 feet, built of deadwood and scrap. Rows of plastic
grocery sacks hold the collected assets of their 72 years.
Five miles north, Nokuthula Dube, 22, her two daughters and two orphaned
relatives are squatting in an unfinished two-room house of cinder blocks.
During a reporter's recent visit, an unidentified woman lay curled up on the
concrete floor of the house's only closet, sleeping.
On the other side of town, Gertrude Moyo, 28, lives with her four children
and seven other families in tents, pitched in the bush.
More than simple homelessness binds the three families. Until a few months
ago, they all lived in Killarney, a shanytown with an improbable name that
had housed Bulawayo's less fortunate citizens since the early 1980's.
Today, Killarney is a moonscape of sunbaked dirt, scrub and burned-out
rubble. Last May and June, police officers reduced its huts to wreckage,
burned their remains and routed the area's more than 800 residents as part
of Operation Drive Out Trash.
"They had iron bars as long as this," Mr. Tembo said of the police,
stretching his arms wide. "They demolished part of every hut, and then they
told us to destroy the rest."
Mr. Tembo said he refused, and so the police finished the job, leveling his
two-room home built of wooden poles and metal walls.
More than five months after the demolitions began, Zimbabwe's government
continues to insist that the destruction of 133,000 households, by its own
count, was a long-overdue slum-clearance effort that has caused its citizens
only temporary inconvenience.
The government contends that the vast bulk of those made homeless have been
relocated to the rural villages where they lived before migrating to the
cities, mostly to look for work. Others, it says, will be placed in
thousands of new homes being built to replace the illegal huts that have
Mr. Mugabe has rejected the United Nations' attempt to raise $30 million to
aid the victims of Operation Drive Out Trash on the ground that Zimbabwe has
no crisis. Despite a public appeal by Secretary General Kofi Annan on Oct.
31, the government so far has rejected any assistance that implies that its
evicted citizens are in distress.
Yet many are in great distress. Relying on the estimates of Zimbabwe's
government, the United Nations says 700,000 persons were displaced by the
May and June demolitions and a later campaign, Operation Going Forward, No
Turning Back, in which police officers routed those who tried to return to
the cities and rebuild.
An August survey of more than 23,000 Zimbabwe households by the South
Africa-based advocacy group ActionAid International places the number of
those made homeless as high as 1.2 million - more than 1 in 10 Zimbabweans.
Where many have gone is a mystery. The government carted thousands to
holding camps that were later disbanded, and transported thousands more by
trucks into the countryside and left them there, ostensibly near their rural
homes. Those people are registered with local officials, but almost
certainly, they are but a fraction of the total.
In the Nkayi district, a vast expanse of bush terrain north of Bulawayo with
110,000 people, fewer than 700 families are known to have been relocated,
according to church officials involved in assisting them.
Similarly, the government's home-building plan has fallen far short of its
promises and of the demand. Mr. Mugabe pledged three trillion Zimbabwe
dollars for construction in July - about $30 million in American dollars,
and dropping steadily given Zimbabwe's 400 percent inflation rate. But the
national treasury is all but bare, and in Bulawayo, where 1,000 homes were
promised in short order, fewer than 100 are being built.
So where are the homeless?
"This remains what I'd call an invisible humanitarian crisis - invisible to
international eyes, the reason being that those who were displaced have been
dispersed," said David Mwaniki, who oversees ActionAid's work in Zimbabwe.
Many are probably with relatives; a few have fled the country. Others are in
the bush, surviving off the kindness of neighbors. Many more have vanished
into hovels and tents and half-built houses.
The United Nations says 32,000 of Bulawayo's 675,000 residents lost their
homes and were ordered to leave the city during the demolition campaign;
city officials put the number at 45,000. Torden Moyo, who directs an
alliance of local civic groups called Bulawayo Agenda, says there is no
doubt where they have gone.
"Ninety-five percent are now back," he said. "They're still struggling,
still homeless, still penniless, still shelterless. They've been made
refugees in their own country."
Killarney is proof of that. Before the demolitions, it was dirt-poor but
thriving, subdivided into three villages with stores and services. All that
has been razed and burned. Northeast of town, not far off the road to
Bulawayo's airport, Nokuthula Dube, her own children and an orphaned niece
and nephew share the two rooms of a half-finished home. Ten stunted
cornstalks and some greens grow in a makeshift plot outside, but the five
live on donated cornmeal from a nearby church.
Ms. Dube returned from her niece's school in June to find her home in
Killarney's Village One wrecked and on fire. Homeless and pregnant, she lost
her housecleaning job in a nearby suburb. Her husband, Nomen Moyo, had to
move away to keep his job as a gardener. Ms. Dube said she and the children
walked for a week, sleeping by the road, before finding the shell where they
In September, Ms. Dube had a daughter, Mtokhozisi. She left her 3-year-old
daughter, Nomathembe, and the two orphans - 10-year-old Pentronella and
14-year-old Kevin - alone while she gave birth in a local hospital. She
walked home from the hospital with her newborn. "I left in the morning," she
said, "and arrived around 3."
A few weeks ago, a man who said he was the house's owner appeared. "He wants
us to leave," she said. "He's claiming that this is his house."
Asked where they would go, she said, "Only God knows."
Across town, Gertrude Moyo, who lived in Killarney for 23 years before being
driven out on June 11, lives in a 10 foot by 15 foot tent with her four
children. Her husband died a year ago. She said the police first took the
family to a transit camp for the homeless, then to the tent. Mrs. Moyo said
she was told to wait for a new home.
In fact, the government is building a row of houses next to her tent, and
says they are for victims of the demolitions. But Ms. Moyo said the police
had told her that her family was going not to a new home, but to a plot of
farmland north of town.
Robson Tembo and his wife drifted from one church to a second, then to a
succession of relatives' homes before finally returning in late September to
Killarney's Village Three. They built their scrap-metal enclosure not far
from the two-room home in which they once lived, and which the police had
razed in May.
Once a miner, Mr. Tembo is now too infirm to walk very far, much less work.
A son who cleans houses gives the couple maize; a second sometimes brings
Mr. Tembo's great worry, he said, is that the police, who cruise up and down
Killarney's main dirt road, will evict the couple again. "I'm from Malawi,"
he said. "But if they tear down this hut of mine, I will stay here, because
I have nowhere to go in Malawi."
Local church workers, who have assumed much of the burden of finding and
caring for the homeless here, say that about 240 of Killarney's residents
have returned, many living in the sort of scrap-metal lean-to's that the
Tembos cobbled together.
Down a dirt path, past the charred remains of huts in what was once
Killarney Village Two, Mhulupheki Tshuma, 29, his wife, Ncadisani, and their
20-month-old son survive by scavenging plastic containers and collecting
white pebbles, which Mr. Tshuma sells as decorations for graves. Two other
children have been sent to live with relatives elsewhere in town.
Mr. Tshuma was born here, and his parents died here. The family lived in a
two-room mud hut when the police arrived in early June and burned it down.
"The only thing I took out," Ms. Tshuma said, "was the children."
After wandering for three months, they returned on Sept. 4 and built a
hovel. The police demolished it on Sept. 29. Now they live in the open air,
their living space bounded by knee-high mud walls and pieces of rubbish.
Mr. Tshuma said the police returned early this month and beat him roundly,
telling him he had to leave. But that is impossible. "We came here," he
said, "because we didn't have anywhere else to go."
Nairobi, Kenya, 11/12 - The African Regional Organization of the
International Confederation of Free Trade Unions (COSATU-AFRO) has written
Zimbabwean President Robert Mugabe, protesting the arrest of more than 300
workers and trade union leaders.
The confederation`s African Regional Office in Nairobi on Thursday said it
was shocked and dismayed on learning of the arrests.
In a complaint Mugabe, the organization secretary-general, Andrew Kailembo,
demanded the immediate and unconditional release of all those arrested.
According to the organisation, the workers trade unionists and activists
were arrested in Harare and other parts of the country as they held peaceful
demonstrations protesting the high cost of living in Zimbabwe.
Kailembo urged Mugabe to prevail upon the armed forces to respect the rights
of workers and uphold their dignity.
"We urge you to ensure that trade unions are allowed to do their work
without government interference whatsoever," Kailembo said in a statement
released here Friday.
He said 120 workers, including civil servants, were arrested in Harare on 8
November and over 200 others nabbed in other parts of the country as they
participated in the demonstration organised by the Zimbabwe Congress of
Trade Unions (ZCTU).
"Those arrested included the entire leadership of ZCTU and activists from
affiliated unions and some civic organizations," said the confederation.
He said the demonstrations in Harare were in protests against high taxation,
high cost of living, transport problems, cash shortages and violation of
The confederation said it fully supports the ZCTU in its campaign to impress
the Zimbabwean on the seriousness of the situation.
`Kailembo said the facts are that official inflation in Zimbabwe is
currently 360 percent, while unemployment is pegged at 80 percent.
He said 8-percent of the population live in abject poverty and mist
households can no longer afford a decent meal a day.
He urged the Zimbabwean authorities to listen and respond positively to the
workers views and demands.
"The government of Zimbabwe must take full responsibility for this and
reverse its disastrous polices," he said in strongly- worded statement.
Islamic Republic News Agency
Tehran, Nov 13, IRNA
At a ceremony attended by Iran's ambassador to Harare and Zimbabwean
minister of Public Cooperation and a number of academic personalities of
Zimbabwe, hundreds of books on history and Iranian and Islamic civilization
were donated to the Zimbabwe University .
According to the Foreign Ministry Media Department, the ambassador of Iran
referred to the importance of cultural ties in developing relations between
the two countries and said, "Expanding cultural ties with Zimbabwe along
with economic cooperation has a special position in Iran's foreign policy."
At the ceremony, the Chancellor of Zimbabwe University appreciated Iran's
embassy book donation and called this measure very valuable and called for
more connection and cooperation with Iran's universities.
Sunday Mail Reporter
THE monthly cost of importing electricity into Zimbabwe has shot up from $5
billion to a whopping $500 billion, prompting the Zimbabwe Electricity
Regulatory Commission (ZERC) to award the Zimbabwe Electricity Supply
Authority (Zesa) a cost-reflective tariff increase.
In an interview yesterday, ZERC commissioner-general Dr Mavis Chidzonga said
regional electricity import costs had risen this month because the power
utility is now accessing foreign currency at prevailing market rates.
Previously, the Reserve Bank of Zimbabwe provided a concessionary window
through which Zesa could obtain foreign currency for power imports at lower
However, the liberalisation of the foreign exchange regime announced in
October means Zesa must now import electricity at prevailing market rates
instead of the previous concesssionary rates.
Zimbabwe imports a cumulative 300 megawatts (35 percent of total
requirements) monthly from Eskom (South Africa), SNEL (Democratic Republic
of Congo) and EDM (Mozambique).
Dr Chidzonga said new electricity tariffs would be announced this week in a
move expected to help Zesa stay afloat in the face of viability challenges.
"The monthly cost of importing power has with effect from this month
increased since the Reserve Bank of Zimbabwe is no longer subsiding the
company. Following this increase, the cost attribute had to be factored into
the new electricity tariff structure," said Dr Chidzonga.
According to the ZERC commissioner-general, the commission was over the past
few weeks carrying out a "due diligence" exercise under which it assessed
proposals for a tariff increase that the power utility submitted a few
The last increase of 100 percent, effected in August this year, was only an
interim measure meant to cushion the company from crippling operational
costs while the commission worked on cost- reflective tariffs.
Before the interim tariff was announced, Zesa
had gone for almost two years without reviewing its charges, a situation
that the company said was compromising service delivery.
The interim relief, therefore, only addressed part of the company's
challenges and was expected to push the firm through to such a time ZERC
came up with cost-reflective tariffs.
Dr Chidzonga said the commission recently completed assessing the relevant
cost build-up factors and had now approved a new electricity tariff regime.
In coming up with the tariffs, ZERC considered factors such as the exchange
and inflation rates, as well as energy costs, which had continued to
increase over the past few months.
Although she could not be drawn to reveal the new charges, Dr Chidzonga
indicated that the tariffs sought to ensure Zesa's viability while making
sure they are affordable to the customer.
She said domestic charges would largely depend on one's consumption pattern,
emphasising that the commission had also considered the different salary
scales prevailing in the country.
Industry, on the other hand, had even advocated tariff increases in order to
ensure Zesa provides efficient services, as it had, in some instances,
disrupted their operations.
"The tariffs that were being charged for some time were actually
comparatively cheaper than the cost of other goods and services. Electricity
charges cannot continue to be subsidised hence the need to come up with a
new tariff structure.
"However, in considering the charges, the commission looked at vulnerable
groups, cognisant of the social disparities in the country. I cannot reveal
the tariffs at the moment but it is expected that they are going to be
announced next week (this week).
"Despite the approval of the new tariffs, the foreign currency challenges
that the country is facing are, however, likely to continue to affect the
company," she said.
In recent months, some customers have been complaining about Zesa's poor
service delivery, which includes frequent power interruptions, load shedding
and the company's failure to timeously respond to electricity problems.
The company has attributed the inefficiency to viability constraints.
It often argued that cost-reflective tariffs would help improve its
services, a development which is expected in light of the new tariff
structure that is set to be announced.
Dr Chidzonga said ZERC officials would this week visit power stations in
different parts of the country with a view to establishing the "quality of
machinery and the reliability of power being supplied".
She added that the commission had also pinpointed specific areas where Zesa
could implement measures to cut costs.
Richard Wachman reports on how the giant diamond producer has become a
partner in social change
Sunday November 13, 2005
The winds of change are blowing across South Africa - 11 years after the
apartheid regime was dismantled - and nowhere more so than at De Beers, the
world largest diamond producer.
Nicky Oppenheimer, Harrow-educated chairman of the group, has agreed with
the government to sell 26 per cent of his company to a black empowerment
group. He must do so under new legislation, passed by the ruling African
National Congress, designed to give Africans more power in a country where
much of the wealth is still held by whites.
Oppenheimer, who studied philosophy at Oxford, is a realist and says: 'De
Beers is here to make a profit, but we must benefit the people and
communities where we operate.'
But with a raft of new legislation either on the statute books or being
looked at by the ANC, there are worries that De Beers - part of the mining
empire set up by Cecil Rhodes at the turn of the 19th century - might lose
its grip on an industry it has dominated for 100 years.
De Beers is not alone in having to comply with black economic empowerment
(BEE) legislation, which forms part of a broad push by the ANC to rebalance
the country's racially skewed economy. If only it was that simple. Critics
have dubbed BEE 'black economic enrichment', complaining that the programme
has mostly benefited a tiny black elite which has political ties to the ANC.
That picture is not altogether accurate. For the first time, there is a
thriving black middle class and property prices have rocketed. Yet, few
would deny that some individuals have done particularly well under BEE. In
the early days, former ANC luminaries such as Cyril Ramaphosa, Tokyo Sexwale
and Saki Macozoma became multi-millionaires.
Elsewhere in South Africa, poverty and mass unemployment are still
alarmingly high, although Alec Hogg, editor-in-chief of South African media
group Moneyweb Holdings, believes that South Africans should be given the
benefit of the doubt: 'You have to remember where we were a decade ago. The
country has made great strides.'
But immediately after Oppenheimer's announcement, opposition politicians
attacked the De Beers deal for not doing enough for the black majority.
Pierre Rabie, shadow trade and industry spokesman for the Democratic
Alliance said: 'We support broad-based empowerment which benefits the
majority of South Africans - but not empowerment aimed at enriching a small
Those comments will irritate Oppenheimer because the deal was structured in
a way designed to avoid such criticism. Under the terms of the package, 50
per cent of the R3.8 billion (£324 million) stake being sold to the BEE
group, called Ponahalo Investment Holdings, will go to De Beers employees
But Rabie and others point out that about half a dozen beneficiaries are
individuals with close links to the ANC including Manne Dipico, chairman of
Ponahalo and a former premier of the Northern Cape province; Moss Mashishi,
a leading figure behind South Africa's Olympic committee; and Cheryl
Carolus, the former South African high commissioner to Britain. Three of
Ponahalo's directors will be co-opted on to the De Beers board.
Rabie highlights the flaws of the arrangement: 'It is commendable that
18,700 ordinary De Beers employees will benefit to the tune of R1.4bn, but
Manne Dipico takes a R342 million slice, which sees him benefit 4,700 times
as much as an ordinary member of staff.'
But if black empowerment legislation in South Africa is assailed by
politicians, how is it viewed by the business and investment community?
According to Oppenheimer: 'What we have now, is better than what went
before.' But he adds: 'One day we will get past the need for quotas and
targets because the playing field will simply level out.'
It is this transitional period which is, perhaps, the most difficult. De
Beers' grip on the South African diamond industry is now threatened from
another quarter. A bill before parliament would compel diamond producers to
offer an undefined percentage of their production to a new state diamond
trader. It would also impose a 15 per cent export duty and require producers
to offer rough stones destined for export to a central diamond exchange.
Black dealers, gem cutters and polishers support the bill, but De Beers says
it could make mining in South Africa less appealing. Once the mainstay of
the company, only 29 per cent of De Beers global diamond production now
comes from South Africa - and the company is looking to diversify further.
Free-market economists wonder whether South Africa will become less
business-friendly in the future. But the ANC must walk a political tightrope
by making certain the country is sufficiently capitalistic to attract
foreign investment, while meeting the expectations of a largely
disenfranchised constituency at home.
De Beers, like others, has taken account of the changing reality on the
ground by ring-fencing its South African operations inside a company called
De Beers Consolidated Mines and moved capital elsewhere.
One mining analyst in London said: 'There is some political and regulatory
risk for companies investing in South Africa - look at the relatively poor
share price performance of Anglo-American [which owns 45 per cent of De
Beers] in relation to its peers.'
Big companies formerly listed on the Johannesburg exchange, such as
Anglo-American and financial services company Old Mutual, have moved their
headquarters and primary listings to London. One analyst said: 'When was the
last time you heard about a mining company coming to the market in South
Africa. Exchange controls mean that you risk having your capital trapped in
South Africa, who wants that?'
For many mining companies, diversification has been given added impetus by
the strong rand, which has all but wiped out profits at many gold producers.
Michael Rawlinson, an analyst at JP Morgan Cazenove, said: 'If the rand is
too high, it doesn't matter about the your gold reserves. Gold is valuable,
but not at any price. At some point, it becomes a worthless piece of muck in
No one believes South Africa will go the way of Zimbabwe, but there are
questions regarding land rights, export taxes and government royalties.
There are signs that the country is trying to strike a sensible balance
between social re-engineering and free market economics. Only last week,
officials at South Africa's central bank said that exchange controls may be
abolished. Even with controls, British companies such as Barclays and
Germany's Deutsche Bank have made multi-billion pound investments in the
As long as the South African economy continues to hold its own, creating
jobs and prosperity, the ANC government could achieve that balance. But for
previously white-dominated companies which thrived under apartheid, it is
hardly surprising that life has become less comfortable.
1800 Geological evidence suggests that the diamond story began 3.3 billion
years ago, when the first stones were formed deep under the Earth.
1880 saw the start of protracted battles for overall control of the South
African diamond fields between Cecil Rhodes and pedlar-turned-diamond
magnate Barney Barnato.
1896 De Beers Consolidated Mines was incorporated by Rhodes.
1924 Anglo American Corporation was admitted to membership of the London
Diamond Syndicate, dominated by De Beers.
1952 De Beers formed the De Beers Investment Trust to hold the portfolio of
industrial, gold and agricultural interests the company had built up to
diversify its income.
1980s A recession caused De Beers' sales to slump to almost half their 1980
level. In 1982, the company cut its dividend for the first time since 1944.
2000 De Beers rethinks its business model to comply with black economic
empowerment legislation and deal with the impact of globalisation.