How recent history shapes Zimbabwe government attitudes to foreign investors

Jun 6, 2011

To many observers the words and actions of the current Zimbabwean government often seem irrational. It can seem hard to fathom why Robert Mugabe's government so often seems at odds with 'conventional' thinking that has more or less been accepted by most other governments.

One example of this is the very different attitudes towards trying to attract foreign investment between Zimbabwe and its neighbour South Africa.

An outburst by one minister helps to provide part of the answer to why there are obviously very mixed feelings about foreign investment. At best the attitude of the Mugabe government can be said to be very grudging and unenthusiastic about accepting the need for it.

Zimbabweans have been urged not to collude with foreign-owned companies who have to comply with the Indigenisation and Economic Empowerment Act.

In an interview, National Indigenisation and Economic Empowerment Board chairman, David Chapfika, said the act is supposed to empower Zimbabweans through acquisition of stakes in foreign companies.

Chapfika said allowing foreigners to own the economy gives them the opportunity to hold the country at ransom as was the case at the height of the illegal sanctions when foreign firms starved the market of basic commodities.

"There was a time when Zimbabweans had to go to Botswana to buy fuel after foreign fuel companies stopped supplying the market. Government later realised that there was need for local players to venture into the energy sector and facilitated their entry," said Chapfika.

No doubt part of this rhetoric is self-serving. Fuel shortages were indeed a critical problem for some years, and partly became less so when the government was finally convinced to let go of its control of the sector, ushering in many private local players to replace the handful of foreign multinationals that dominated under tight government control. It is stretching the truth to suggest that the then dominant foreign players 'stopped supplying the market' because they wanted to 'hold the country to ransom.'

A big part of the reason for the shortages then was that in the hyperinflation of the time, foreign currency to purchase fuel was expensive, but the government expected importers to sell the fuel at prices often below the cost of buying the foreign currency. The importers reacted the way any business would; by stopping the importation of the fuel. It was only when these controls were lifted that importers, foreign and local, began to supply the market with fuel again. It was not a foreigners versus locals issue.

But it is true that when multiplying economic problems began to coincide with sanctions from the West, the government suspected that foreign companies dominant in 'strategic' national sectors like oil/fuel were acting in collusion with their host country governments to further squeeze the government. And it is not at all far-fetched to believe that France would put pressure on Total-Zimbabwe or the British/Dutch governments on BP-Shell Zim as part of their sanctions measures on the Mugabe government.

There is a measure of paranoia in the Mugabe government's suspicion of foreign investors having "too much" influence over the economy. But looked at from its view of from where the country has come in recent years, it makes sense that the government is hyper-alert to what it believes are unceasing efforts by Western countries to use any means at their disposal to undermine or topple it.


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