Zimplats grab mars call for investments

Tsvangirai talks down takeover concerns

AS THE government in Harare threatened to take over the Zimbabwean operations of South African-owned mining company Impala Platinum (Implats), Prime Minister Morgan Tsvangirai attempted to put a positive spin on the investment attractions of South Africa’s troubled northern neighbour.

At the start of a two-day trade and investment conference in Johannesburg yesterday, Tsvangirai described indigenisation as “rhetoric rather than reality”. He noted that the proposed indigenisation plan made no mention of expropriation or nationalisation, which implied people would have to buy their shares. And he said Zimbabweans lacked the resources needed.

However, his comments came a day after Zimbabwe’s Indigenisation Minister, Savior Kasukuwere, said he would proceed with a takeover of Implats subsidiary Zimplats if the South African owners did not comply with orders to hand over more stakes in the company to black people, according to SAPA-AFP. The news agency quoted Kasukuwere as saying that there would be “no com- promise” over the eventual handover of 51 percent of the company’s stock.

Tsvangirai, who was attempting to drum up investment in Zimbabwe, conceded the issue around Zimplats had caused “consternation” among investors. “It’s the price of a coalition government,” he said.

Tsvangirai spoke of the problems posed by policy inconsistency of the coalition government, a compromise arrangement after the disputed elections of 2008, when President Robert Mugabe refused to concede defeat. This came after Mugabe had presided over more than 10 years of currency collapse and economic implosion between 1997 and 2008.

Tsvangirai noted that the “mixed messages” had turned away investment and he said the policy tensions had made it difficult for Zimbabwe to translate its wealth of natural resources into economic wellbeing. “If policy contradicts investment needs, that policy must be revisited,” he said.

On the positive side, Tsvangirai spoke of Zimbabwe’s economic track record since 2008, describing it as a “painstaking journey to normalcy”.

Finance Minister Tendai Biti filled in the numbers. In 2008, he said, the country’s gross domestic product (GDP) shrank by 14 percent. But he noted the figure was meaningless because, with inflation running at 500 billion percent that year, it was impossible to accurately quantify the contraction. Real GDP growth is calculated after stripping out .

In December 2008, monthly inflation was 1 billion percent. And this was after the subtraction of 50 zeros from the value of the local dollar in the previous months.

The remedy was the withdrawal of Zimbabwe’s worthless currency, replacing it with dollars, rands, sterling and the Botswana pula. Last month inflation was 4.3 percent.

Various other reforms have been introduced, including cash budgeting – the matching of monthly expenditure to monthly revenue.

The impact of reform was dramatic, with GDP growing 5.7 percent, 7.7 percent and 9.3 percent in the next three years. This contrasts with South Africa’s sluggish performance of just over 3 percent growth last year.

Biti noted that the success was achieved with “minimal foreign direct investment and without meaningful bilateral assistance”. Zimbabwe has no access to soft loans because it defaulted on its debt to international lending agencies in 1999.

Biti said: “If we managed to do this in just three years, imagine what we could do when we address the main issues.” He suggested growth of 18 percent to 20 percent was possible.

Among the main issues he identified were “cyclical politics – five years of normalcy and then the crisis comes back”. He said this in reference to the disruption and violence that accompany elections in Zimbabwe.

Mugabe’s announcement that he would call elections this year, before the necessary processes were in place for a fair election, has caused further anxiety among investors.