Economists warn Mugabe

HARARE - President Robert Mugabe’s threat to seize the assets of British companies operating in Zimbabwe is likely to deal a fatal blow to the country’s economy, economists warned yesterday.

Condemning comments by the 89-year-old president, economists described Mugabe’s threat to nationalise foreign-owned firms as “dangerous posturing”, which would only discourage foreign investors Zimbabwe desperately needs.

Threats to take punitive measures against British firms if Western powers refuse to lift sanctions will suffocate foreign direct investment (FDI) and damage the economy, analysts warned yesterday.

Mugabe told mourners at the burial of former National Railways of Zimbabwe boss Mike Karakadzai at the National Heroes Acre on Sunday that “enough and enough of passive attitude towards the West”.

“There are so many British companies operating in this country, we haven’t done anything to put any sanctions on them, but soon we will hit back at them,” warned the re-elected Zanu PF leader who is starting a seventh five-year term.

“Time will come when we shall say tit-for-tat, you hit me and I hit you as well. You impose this on me and I will also impose that on you,” Mugabe added.

Analysts said this cannot help Zimbabwe create jobs, wealth and opportunities. Zimbabwe is currently suffering from a crippling economic meltdown and these threats, if carried out, would risk bankrupting the country.

While efforts to get comment from Deborah Bronnert, the British Ambassador to Zimbabwe late yesterday were futile, embassy officials however are keeping their criticism muted.

“We don’t want to make a bad situation worse,” said one diplomat.

Last week, Britain said Mugabe’s re-election could not be deemed credible without an independent investigation into allegations of voting irregularities.

British foreign secretary William Hague said: “I am extremely concerned that the MDC had to withdraw its legal challenge due to concerns over the independence of the Judiciary.

“I strongly believe that an independent investigation of any allegations of election irregularities would be required for the election result to be deemed credible.”

As Mugabe threatened to hit back against sanctions, economists joined a chorus of condemnation of his threats.

Analysts said “the utterances are not sustainable and not in anyone’s interests.”

“These threats will not serve anyone’s interests. It is their governments that have imposed sanctions on Zimbabwe not the firms,” independent economist John Robertson told the Daily News, adding that “these firms have been behaving well and victimising them will only stifle FDI.”

Zimbabwe is currently struggling to attract meaningful FDI due to several factors, particularly political uncertainty and the indigenisation policy — compelling foreign firms to cede 51 percent shareholding to black locals.

The country’s FDI marginally increased last year to $400 million from $387 million in 2011 according to statistics from the United Nations Conference on Trade and Development.

Robertson said Mugabe’s threats “only painted an unattractive picture to investors who already have adopted a wait-and-see attitude towards Zimbabwe.”

Takura Mugaga, another economic analyst said “the battle between foreign companies and the president is becoming more of a personal than national battle.”

“The president’s tit-for-tat attitude might actually be evidence of how much he could have lost through asset freezing after sanctions were implemented.

“Obviously the economy won’t benefit, I think he is aware that he has to have a trade-off between growing the economy and losing his hold on power and to him it’s obvious the convenient option is to throw the fight into the ring,” Mugaga said.

Economists said Mugabe’s comment, especially about the economy, are extraordinary for a president with 33 years’ experience.

“They are a real blow to our chances of attracting foreign investment.”

Mugabe’s particular target appeared to be dozens of British companies and some of them in the mining sector.

Even though South African investment was growing, Britain remained of “critical importance to Zimbabwe’s economy”.

The British have played a dynamic role in the economy of Zimbabwe, with Rio Tinto subsidiaries, Dunlop, and Chloride chemicals as some of the major players.

Other British companies operating in Zimbabwe include banking groups Standard Chartered Plc and Barclays Plc.

The financial institutions are already under pressure to comply with the controversial empowerment policy.

Mugabe’s comments drew disbelief from the mining industry, which generates 30 percent of export earnings, making it second only to agriculture as a foreign currency earner.

A mining consultant in Harare said: “If he treats the mining industry in the same way as he has the land, it would be the end.”

Mugabe and members of his inner circle are subject to financial and travel sanctions imposed by the United States and European Union.

The sanctions were imposed by Washington and Brussels over alleged electoral fraud and human rights abuses, among other concerns.

Mugaga said: “Obviously these utterances are potentially fatal. It goes without saying that these threats are going to suffocate FDI.”

Comments (14)

but trully these british guys are acting unfairly to us .thats why we need look east policy

blessmore h manjese - 27 August 2013

We were told a long time ago that Zim is now loooking east - why then worry about the west. mazvionaka kuti hakuna zviriko. Chinse investment is strategy to redistribute its population and find a market for sub-standard products. they will wake up soon rather than later i hope. We need to know who makes the world rock, whether we like him or not. It's not the non-entities like Chomushango (or is it Guebuza, liitle Sata, young Kabila, Banda or the gabonese or Guinean leader. They are small boys in the whole scheme of things

Watikiritai - 27 August 2013

Tit for Tat is a fair measure why should we always be on the receiving end of bullies and we expected to put our tails between our legs every time the west say jump. They are really concerned about human abuses and yet the dark skinned or immigrants are not even considered equals in their own countries. Mugabe is right. We all have interests to protect if the investors do not like the policies meant to uplift the disadvantaged groups they can go mine gold in the UK etc if they can find. Lets not be gullible and perpetuate the evil schemes meant to deprive us of our economic opportunities.

Munazvo Mapuranga - 27 August 2013

Mugabe is interested in seeing more unemployment in the country like what he did in the farms. People were saying ndivo vano rima varungu vanenge vakagara but we are now importing food from zambia from the same whites we chased from farms. how can he run companies which requires financing and modern technology , achitadza mupurazi chaimo very stupid MAOPIC AGED DICTATOR just resign mhani zidunamutuna iwe

EARTHQUAKE31JULY - 27 August 2013

Gushungo is dragging his feet. We should have reciprocated long back and by now we could have forgotten about them. To hell with Britain and America especially Obama who is a white man's conduit just like MoGay

martz - 27 August 2013

Mugabe suffers from little man syndrome which clouds his judgement and the fact that he is on his way out doesnt help, its those who remain who will be picking up the pieces. There will be many many small pieces to pick up. Foreign companies operating in Zimbabwe are not owned by the respective governments where they are registered nor do they help craft the foreign policies of those governments.

Lt General - 27 August 2013

Former Independent award winning writer Joram Chombo used to have a famous saying..the Zimbabwe authorities are behaving like people who like the opposition are SURPRISED they won the election. Now like Joram used to say, it is like a dog that chases after a car but does not know what to do when it catches up with it. ZANU should be showing us they are ready to govern by laying out their programs of action to make life better for everyone. Could it be the winning of the election is all that matters to the detriment of everyone else..Those slightly older will remember words from a song by pop-reggae group Third World with these telling words.."Now that we have found love, what are we gonna do with it?" ZANU appears to be at sixes and sevens this early in the game about which way to take the that the election is one and the country waiting what are they gonna do with it???

gutter poet - 27 August 2013

Poor fellow - so some Zimbabweans with crooked heads think Stanchard and barclays International make profits through the subsidiaries in Zimbabwe, and that if the ranches here close the British economy will collapse. Little minds indeed! Like presidents like its people - they think Zimbabwe is the world - alas

Watikiritai - 27 August 2013

Apologies all round- the award winning scribe from the former Independent is Joram Gumbo not Chombo..Chombo is the other minister guy who has no clue what is exected of him as local government minister, one hopes the president punishes him by making him continue as minister in this portfolio then we can all take some popcorn for his howlers that we know will come without fail..more like Biti's theatrics, you know they will come down the line without fail.

gutter poet - 27 August 2013

Good lord what has come over me..that scribe is Joram see I have contracted a severe case of politicasis- an insanity inducing disease caused by reading too much politics. Please forgive me.

gutter poet - 27 August 2013

CHINA is looking to the west.

sdc - 27 August 2013

Bob is a little bully who likes battering infants. He has no clue what to do withZim. When he opens his mouth he says stuoid idiotic things which expose that HE is the ignoramus. Ranting old man with no soul. He is the ignoramus who is ignorant of his ignorance. He is better off kept mouth shut. Is he gaining FDI by opening his mouth? The old man should just die.

munhu - 27 August 2013

Bob is a little bully who likes battering infants. He has no clue what to do withZim. When he opens his mouth he says stuoid idiotic things which expose that HE is the ignoramus. Ranting old man with no soul. He is the ignoramus who is ignorant of his ignorance. He is better off kept mouth shut. Is he gaining FDI by opening his mouth? The old man should just die.

munhu - 27 August 2013

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