The grim reality of Zimbabwe’s deepening financial crisis has forced the 90-day-old Zanu-PF government to back away from its recent election campaign to “indigenise” mines, industries and banks.
This week it agreed to review its plans to indigenise Zimplats (Pvt) Ltd, the South Africa-owned platinum company. And the Reserve Bank agreed to repay foreign currency it seized from private banks when it was in power on its own before the unity government was formed in 2009.
The biggest prize in the indigenisation campaign was always the platinum mines, among them the giant Zimplats, one of the most modern mines in Africa.
As the law stands, the state must pay for the majority shareholding it acquires in companies like Zimplats in its indigenisation campaign.
Zimplats agreed in principle in January to sell 51 percent of its shares. But it also said they would cost about R9 billion and no one can afford them.
Over the past year a group of Russian potential investors were in talks with dealmakers in Harare about fronting money for locals to buy a majority in Zimplats but those talks have ended, insiders say.
There are still a couple of possible deals floating around with speculation about accessing cash from financial institutions such as pension funds and regional banks to buy a majority shareholding in Zimplats for local businessmen. But those seem to be going nowhere.
In March, during the election campaign, President Robert Mugabe said Indigenisation Minister Saviour Kasukuwere “had made a mistake” to say indigenisation must be paid for. “The mineral resource is owned by us,” Mugabe said, causing some alarm among businesses.
A community trust for villagers near Zimplats’s main mine near Harare, was set up with a couple of million dollars that generated masses of headlines and many people believed that, like land, the mines were being given to the people.
And new Mines Minister Walter Chidakwa says the government still intends to take 26 000 hectares of “unused” land owned by Zimplats – continuing the pre-election Zimplats rhetoric. But an insider said this week: “There is a South African trade agreement. A South African company owns this land. We don’t believe it will be taken. There will be some other “convenient” arrangement made at some stage about that land.” This week Francis Nhema who took over the indigenisation portfolio from Kasukuwere after the elections, said the indigenisation of Zimplats was “under review”,
This was very important, said a mining economist who asked not to be named, “not because there was any real threat of Zimplats’s being taken over, but because it was said by a new Zanu-PF minister”.
And banks do not seem to be under threat of indigenisation either now. Central bank governor Gideon Gono, a Zanu-PF moderate, won that battle, even before elections. He knows all about the consequences of interfering with banks. He confiscated more than R4bn in foreign exchange from the bank accounts of private citizens, corporations, and even charitable institutions in 2007, which lead to the final collapse of the economy.
But bankers say they want the foreign currency taken from them repaid. This week the Reserve Bank finally agreed to do so after the courts decreed that Standard Chartered would have to repay foreign currency taken from the account of a Chinese corporation. But the Reserve Bank is broke and so there are grave doubts it will ever be able to repay the money.
The IMF will not lend money to Zimbabwe until it pays its debt of about R2bn. Its foreign debt is about R120bn and it owes a host of other institutions huge amounts it can never repay, such as The Paris Club, about R35bn, World Bank R20bn, African Development Bank R6bn .
This week the International Centre for Settlement of Investment Disputes heard evidence in a case brought by a German farmer whose vast estates were taken in the land reform programme, in contravention of a bilateral trade agreement with Germany. Heinrich von Pezold is claiming R6bn from Zimbabwe.
A dozen Dutch farmers had their farms taken despite a bilateral trade agreement and at the same court won about R300m in 2007. Interest is piling up as Zimbabwe cannot pay.
There are at least 400 South African farmers whose farms were taken – most, but not all, before the bilateral trade agreement was signed. But a group of them recently succeeded in attaching a small, property owned by the Zimbabwe government in Cape Town, to at least pay their legal bills.
Chinamasa says he will set up a sovereign wealth fund and a mining bond. There is no money for either. Chinamasa told journalists he is going to China looking for some cash. He did not answer his phone on Friday, nor did government spokesman George Charamba. - The Sunday Independent