Zimbabwe Minister of Youth Development, Indigenisation and Empowerment – Mr. Saviour Kasukuwere is on a life-threatening collision course with free market fate – and not by coincidence. He is a protégé of President Robert Mugabe, the autocrat who unleashed a ‘decade of fiscal madness’ between 2000 and 2009 that decimated the Southern African economy.
Mr.Kasukuwere is the new hatchet man on a mission to resuscitate President Mugabe’s fading political fortunes by implementing the notorious Indigenisation and Economic Empowerment Act. Just like in 2000 when five thousand commercial farming properties of white Zimbabweans were expropriated, mining corporates are facing the same ‘punishment’. Mugabe’s ‘land reform’ cost the country billions of dollars in lost GDP, ushered an era of ‘full unemployment’ and attracted the ire of North America and Europe in travel and economic sanctions. If the commercial farmers employed more than fifty thousand people with a dependency variable of three hundred thousand families, the mining sector is a notch up.
Mines currently contribute the greatest to Zimbabwe’s GDP, with gold, platinum and diamond exports raking no less than US$3 billion in exports in 2011. For almost fifty years, corporates like Anglo-American, Union Carbide, Rio Tinto and of late Ashanti Gold, Mwana Africa Nickel, Impala Platinum and Hwange Colliery have invested billions of dollars in transport, energy, social and education infrastructure. Shurugwi, Kwekwe, Bindura, Kadoma, Selous and Gwanda are officially labeled ‘mining towns’. Selous, a mere fifty kilometres from Harare is home to some of the world richest platinum deposits, while Marange near the Mozambique border has assumed a global position as world’s top diamond exporter. Mr. Kasukuwere has ignored all these.
Renown Zimbabwean liberal economist Enoch Bloch observes how the indigenisation and economic empowerment law demands that local black Zimbabweans be given at least 51% ownership of all the thirty foreign-owned mines. Opposition Prime Minister Morgan Tsvangirayi and his team insist that Kasukuwere’s law is outright nationalisation since, in Zimbabwe Platinum Mine’s case, the government refuses to pay for three hundred million dollars worth of expropriated shares. Mugabe has conjured up the National Indigenisation and Economic Empowerment Fund, Statutory Sovereign Wealth Fund, Employee Share Ownership scheme and Management share ownership scheme and Community Share Ownership Trust to hold equity shares in trust for villagers. Critics argue that this anti-free market behaviour of ‘grabbing’ shares is meant to benefit only his cronies, like in the ‘land reform’ were rich tracts of land are now owned by ZANU-PF politicians.
You couldmistake Mr. Kasukuwere’s rhetoric for disgraced ANC youth league Julius Malema who was expelled from that country’s ruling party. South Africans have watched in awe as their northern neighbour’s economy go up in flames due to nationalisation of farms. Firebrand left capitalist Malema – who himself is a beneficiary of South Africa’s version of black empowerment – had been threatening to ‘Zimbabwenise’ what he termed ‘white-control mines and land’. His party”s boss Gwede Mantashe publicly chided him for advocating for Zimbabwean-style madness, but Malema remained resolute in his anti-market paradigm that has now cost him his party position as youth league president.
SouthAfrica has reason to be jittery about expropriation and nationalisation. Its citizens in Zimbabwe are casualties. Hundreds of their farms were lost to ZANU-PF and several of their mines now nationalised, ignoring the numerous Bilateral Investment Promotion and Protection Agreements (BIPPAs) with South Africa. President Jacob Zuma was appointed Southern African Development Community [SADC]emissary to restore rule of law in Zimbabwe, but he has failed to persuade Mr.Mugabe to abandon his course of self-immolation. The fragile Government of National Unity [GNU] between Mr. Mugabe and the two rivals in the Movement for Democratic Change – Morgan Tsvangirayi and professor Welshman Ncube have failed to stem the tide of anti-free market madness.
Mr.Kasukuwere claims there is no such thing as a market value for mining shares, but he knows the deadly cost of government monopolies. Since 1980, his government has been trying to run almost 100 companies known as parastatals. They are either bankrupt, tottering on the brink of liquidation or as in the case of ‘national’ airline Air Zimbabwe, in debt of more than US$140 million. Iron ore miner and steel processor Zisco Steel of Kwekwe had been closed for almost ten years until MDC minister for industry and commerce professor Welshman Ncube brokered a partnership with an Indian multinational company. Now because of corruption, Mr. Mugabe’s cronies are attempting to use Kasukuwere’slaw to lay claim to iron ore mines supplying Zisco Steel. Thousands of jobs in the mining town are under jeopardy.
The MDC leaders may not be strictly liberal by ideology, but their ministers would be wary of anti-liberal behaviour and the cost of despising free market economy. It is a case of double jeopardy. With such a depleted money market, MDC is pushing for foreign direct investment while ironically South Africa is not only the port of entry of most Zimbabwean fuel imports but also supplies some of the country’s electricity and grocery requirements. Zimbabwe can hardly afford to run a protectionist economy merely to ‘protect fledgling local industry’.
Mugabe knows how destructive nationalisation is because he lived in Mozambique before Zimbabwe’s independence. He has presided over violent property rights violations that have reduced his country from a net exporter to an importer of food. Government companies cost the fiscus almost one million dollars per month in subsidies, while anti-market price controls decimated local production. Unfortunately, Prime Minister Morgan Tsvangirayi and his opposition rival, professor Welshman Ncube, do not wield sufficient power in the GNU to cut Kasukuwere’s proverbial tail. If minister Kasukuwere and his boss President Robert Mugabe are not voted out in next year’s election, their nationalisation policies will once again send Zimbabwe to the abyss of economic anarchy.
Rejoice Ngwenya, Coalition for Market and Liberal Solutions, 10 April 2012, Harare, Zimbabwe
