TALES of intrigue and political skulduggery are unravelling fast and furiously in the streets of Harare, focused on the country’s indigenisation programme. The saga has been dubbed “Nieebgate”, a reference to the acronym for the National Indigenisation Economic Empowerment Board (Nieeb) driving the programme under the direction of President Robert Mugabe’s handpicked Zanu (PF) minister, Saviour Kasukuwere.
The arrests of a prominent human rights lawyer and officials in the office of Prime Minister Morgan Tsvangirai have highlighted the spy-versus-spy scandal surrounding the government’s handling of the indigenisation programme. Tsvangirai’s office is believed to have been collecting information about the deals to date, which include those with mining companies Zimplats, Mimosa, Anglo American and Caledonia and Pretoria Portland Cement totalling a hefty $1.7bn. This appears to be the result of a power battle in Mugabe’s Zanu (PF) party between Kasukuwere and Reserve Bank governor Gideon Gono, according to reports. The Zimbabwe Anticorruption Commission has been frustrated in its attempts to search the premises of Nieeb and the Zimbabwe Mining Development Corporation.
Political patronage continues to undermine the moribund economy. Many people point to the once empty but now groaning shelves of supermarkets to highlight the positive economic trajectory of the past few years. However, this also highlights what is wrong with the local economy. Imported consumer goods have largely replaced domestic products as many industries battle to raise capacity utilisation and reduce operating costs. Trade statistics released this month show a growing trade deficit, with exports of $524m versus imports of $1.3bn since January, the bulk of which were manufactured goods for distribution and the retail sectors.
Mugabe and his ministers have criticised retailers for stocking stores with imported goods flooding into the country from other African countries and Asia since the end of hyperinflation.
Despite reports of millions of dollars generated unofficially from diamonds, there is little liquidity in the economy, making it difficult for companies to replace old equipment. Instead, factories are rationalising operations and relocating to Harare from smaller centres to take advantage of economies of scale.
Paper manufacturing giant Hunyani Holdings closed its operations in Bulawayo last year, while Dunlop, one of the city’s biggest employers, has reduced its production lines.
Food and beverages producer Dairibord is closing its Bulawayo factory, citing viability and liquidity challenges. A government study showed that 87 Bulawayo companies had closed since 2009, mostly in manufactured clothing and textiles and the motor industry, leaving more than 20,000 people unemployed. Many of those people now work in South Africa.
A similar situation exists in Mutare, a city near the multibillion-dollar diamond fields of Chiadzwa. The building that once housed Mutare Board and Paper Mills, a regional player with about 6,000 employees, is now being used as a school after the company folded. Afri-Safety Glass is operating at 5% of installed capacity.
David Whitehead, a textile manufacturer that once employed thousands in Zimbabwe’s smaller towns, is to be liquidated after collapsing under huge debts. There are many other examples.
The government has formed a Distressed Industries and Marginalised Areas Fund to rescue companies in Bulawayo. But of the $40m fund, less than $4m had been disbursed by the middle of last year. The Confederation of Zimbabwe Industries says reviving failed industries is a waste of funds as uncompetitive factories cannot compete with cheap imports. There is a new industrial plan on the table to double export earnings by 2016, but without the political will to prioritise business, this is unlikely to bear fruit.
Indigenisation, say its champions, is designed to empower Zimbabweans. But the grabbing of foreign assets in its name appears to be mostly enriching political elites. While the politicians argue over the spoils, the widespread disempowerment of Zimbabweans continues as thousands lose their jobs in a rapidly informalising economy.