Wednesday, February 10, 2010

More Chaos in Zimbabwe...

Agency problems, corruption, arbitrary subsidization, central disintermediation, etc., etc. This is outrageous and will only get worse as Mugabe continues to hold onto power by whatever means available. He needs to go.

By Peta Thornycroft in Harare and Sebastien Berger

White-owned companies in Zimbabwe are to be forced to hand majority control to black businessmen in a move that could lead to chaos rivalling the seizure of the country's commercial farms. The new regulations demand that all foreign and locally owned companies hand over at least 51 per cent ownership to black Zimbabweans. Thousands of firms, including the Zimbabwean operations of giants such as Barclays Bank, Standard Chartered Bank and the mining company Rio Tinto, will be affected, and they must submit their plans to comply by March 1. Owners who fail to comply could be jailed. The new law plunged the unity government into deeper crisis.

Morgan Tsvangirai, the leader of the former opposition Movement for Democratic Change turned prime minister in the coalition, told The Daily Telegraph the move had been made without his knowledge. "I am in charge of all policy formulations by cabinet and these regulations were gazetted without being seen by either myself or cabinet," he said. "They were published without due process and in contravention of the global political agrement [which set up the coalition] and constitution of Zimbabwe and are therefore null and void." The new law will come as a huge blow to the efforts of Tendai Biti, a former opposition politician who is now finance minister in the coalition government, to persuade foreign investors to pour money into the country to rebuild its shattered economy.

The move dates back to an indigenisation bill passed by the previous parliament, in which President Robert Mugabe's Zanu PF party had a majority, before the violence-wracked election of 2008 in which the MDC won control of the legislature. The law had been on hold until supplementary regulations were drawn up by the government, which quietly published them in an official gazette at the end of last week, with no formal announcement. Indigenous Zimbabweans are defined as anyone who before independence in April 1980 was "disadvantaged by unfair discrimination on the grounds of his or her race and any descendant of such person". As such white Zimbabweans are excluded, and the position of Zimbabwean Asians, some of whose families have been in the country for generations, is open to question.

Whites are barred from some sectors altogether, including agriculture, retail and transport, as well as barbers, bakeries and beauty parlours. Harare's business community was left in shock by the development. A banker who did not want his name or his bank identified said: "This is absolute madness." A fuel trader, who asked not to be identified, said: "These regulations are theft of any business in whites have an interest, it's just like the farms." Nick Cobban, a spokesman for Rio Tinto, described the regulations as "draconian and unworkable". The company operates a small diamond mine in Zimbabwe which it considers has potential for expansion, but it has not taken a decision to do so "partly because of the uncertainty". Some sectors could win an exception from the 51 per cent requirement, he pointed out, and the Chamber of Mines was negotiating on the issue. "We remain encouraged by the fact that there still is dialogue," he said. But he added: "This will have to be eventually agreed by the indigenisation ministry though."

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