Mnangagwa recently toured the Savanna factory in Harare where he accused international corporates like BAT of sabotaging the local cigarette manufacturer. Adam Molai controls the majority shareholding in the company and is married to President Robert Mugabe’s niece, Sandra.
Mnangagwa declared that he would personally ensure that Savanna was protected from what he called international mafia that he accused of sabotaging Molai’s company. He said they had ordered a probe into what he referred to as industrial espionage that was costing the country millions of dollars in lost tobacco export revenue.
He said BAT and South African tobacco companies were conniving with customs officials and private investigators and spying on the local industry.
"Because the allegations are there, they ought to be investigated," he said. "We would want our people to interrogate these allegations to make sure we remove them, if they are there. Industrial espionage must be dealt with because it has constrained our own growth and by doing so, it also denies revenue to our fiscus," Mnangagwa said.
Suspicious
"I think we need to protect our own industries. I am told the tobacco industry in Zimbabwe is not growing as much as we would wish it to grow because of the bigger boys who would want to make sure that upcoming business people in this industry are constrained to expand," he added.
However, Vince Musewe, an economic analyst, said Mnangagwa’s statements and promise to personally protect Savanna were suspicious.
“It raises eyebrows when a vice president steps into the matters of a single company. These are issues that should be treated at policy level by relevant officials, not a whole vice president ,” said Musewe.
He said matters to do with company ownership were in some cases shrouded in mystery that came with political patronage.
No records
“It is difficult to pin down Mnangagwa for that matter on ownership of Savanna. People can only speculate because those with vested interests in some of these companies don’t say and there are no public records to show it,” added Musewe. “As a result, it is difficult to penetrate these companies to get the real owners.”
John Robertson, an economic consultant, said private companies should not seek political protection but instead strive to be competitive and engage in legal activities. “Some of these local companies are constantly looking for someone to blame for their own actions and crisis in business. They conveniently seek political patronage to make a statement,” said Robertson.
“It must be remembered that the tobacco business is a hard hat area. Competition is tough and when you start having problems, look into yourself and see how best to survive. It is unfortunate that some of the proprietors are politically connected and tend to use their connections to engage in illegal activities such as smuggling, even though it has not been established that Savanna is guilty,” he added.
Kickbacks
He said some local companies felt they deserved to make profits “even though they are not good at the business” and blamed customs officials, the police and other security officials who helped smugglers in return for kickbacks.
Savanna has denied smuggling cigarettes out of the country, and blamed BAT for corporate espionage. Speaking during the tour, Molai said: "We have allowed a scenario where foreigners come and dictate the pace of our own development, sending their own officials, intelligence to make sure we do not grow as an industry.”
Reports indicate that Molai has used his political links to evade taxation at the border and more than $50 million worth of cigarettes from Savanna have been seized from the company in South Africa.
According to research commissioned by the Tobacco Institute of South Africa, R9.5billion worth of illegal cigarettes were smoked in that country in 2012, while independent research says Savanna has captured almost 10 percent of the R4 billion cigarette black market there. Local smokers have not warmed to Pacific cigarettes despite the low value pricing of the products.
Post published in: Business