The message was clear. We must respect and enforce the rule of law, we must enforce compliance with contracts, we must guarantee investment and protection of private property, must pay full compensation when those rights are violated for whatever reason. We must create an investor friendly and conducive environment where business can expect to make a fair return on their capital and technology.
We must guarantee all essential support services – education and health services for staff and management, transport and communications, access to regional and global markets at a reasonable cost. We must curb corruption and the activities of parasitic state agencies that must collect rents from our enterprise to survive.
They all said that our desire to control what goes on in our economy was similar to the position of all their governments. They did not think that indigenisation was a threat in any way – but we had to pay for our equity and respect the needs and requirements of our partners. They asked for strong government that was principled and for consistency and predictability with the ground rules being set out clearly and with guarantees that they will not change once the game is underway.
Gone wrong
A quick review of what we have done to the mining industry (which grew at 35 per cent per annum in the period of the GNU) shows very clearly where we have gone wrong. Not only has the line Ministry been corrupt, demanding large payments for decisions and in the case of the Marange diamond fields, violating, without compensation, the rights of ACR who found the diamonds and had legal rights to a large part of the deposit and then simply taking over and exploiting the largest diamond find in a century.
There was no transparency; no accountability and the wealth created found its way to a few politically connected people. Then, without consultation, we imposed massive fees on the industry and then in early 2014 new rates of royalties that are already closing down hundreds of small mines throughout the country.
When three world class mining companies invested billions in the platinum industry, employing thousands of Zimbabweans and virtually no expatriates, instead of being proud of what they had accomplished, we threatened them, made unreasonable demands on them, forced them to enter into share deals that were not in the interests of the company or the communities they work amongst.
Now we have imposed heavy royalties and threatened punitive taxes on “unprocessed” platinum being exported, even though the value addition is minimal. The present product being exported is highly processed and concentrated and there is little financial prejudice to the country and in any event we cannot provide the electrical energy needed for such development.
Track record
As for agriculture our track record is even worse. We have taken over by force, the assets of over 6,000 companies and individuals, we have destroyed the productive infrastructure that had been built up and paid for over the previous 100 years by enterprise and effort. We have not paid compensation or dealt with the human suffering that has resulted.
We point to the partial recovery in tobacco production and the increased number of players without recognizing that the same effect could have been achieved without disruption. We have taken more than $10 billion in assets out of the economy and the great majority of these once productive enterprises are now derelict and abandoned.
Right now we cannot pay for even the most basic needs and priorities in government. The economy is again contracting and State revenues declining. If we want to get out of the hole we are in we have no choice but to harness our business sector and get foreign direct investment in large quantities into our economy. There is no alternative, we have to change the way we are doing things, that is the stark reality facing Zimbabwe.
Post published in: Analysis