The Theft of Private Assets
Written by Eddie Cross, Bulawayo, June 6, 2002
As NEPAD activity reaches new heights in global forums, the full implications of the economic delinquency of the Mugabe government and its effects on investors in the continent have still not been spelt out.
Businessmen understand the implications and we act accordingly, but it seems as if African leaders, including Mbeki and Obasanjo, for all their sophistication, do not.
Perhaps its time to spell out just what it means.
In the past two years, the Mugabe government, with the tacit support of the entire continent, has taken away from several thousand private investors in Zimbabwe, assets worth at least one trillion Zimbabwe dollars. For those who do not know what that sort of sum means, its Z$1 000 000 000 000.00 or US$18 billion in private assets. In Zimbabwean terms that is three times the annual GDP and more than the entire
continent received in foreign aid in the past year (US$14,6 billion).
These assets were largely created after independence in 1980, with 83 per cent of the owners acquiring them since 1980 - the majority with specific government approval, which stated in clear terms that the properties they were buying, were not required for land resettlement. What were those assets? The full list is too long to publish here but it includes 8,5 million hectares of land, 258 000 hectares of irrigated land, 48 000 hectares of planted timber. 1,5 million head of beef cattle, 60 000 head of dairy cattle, 12 000 hectares of citrus orchards, 2 700 hectares of deciduous fruit orchards, 12 000 homesteads, 350 000 workers houses. 2 800 dams of various sizes, 3 500 automatic tobacco curing facilities, 37 000 tobacco barns. 2,5 million square meters of storage space, 20 000 tractors of 75 horsepower and some 1 700 tractors of greater horsepower. Thousands of implements, ploughs, harrows, planters, fuel storage facilities, combine harvesters, hay balers and thousands of kilometers of fencing, water pipelines cattle handling facilities, spray races and dip tanks.
These investors spent up to Z$120 billion a year on inputs, were supported by 3 000 industrial and commercial firms, borrowed Z$30 billion last year to finance the crops grown during the summer of 2001/02. When they made money most of these investors simply spent it on their farms. Many were highly intensive and well developed properties that would be the pride of any country in the world. They funded research and training, marketing efforts that reached across the world, they made Zimbabwean tobacco, cotton,
flowers and beef amongst the best known products of Africa.
They not only invested their own money, but borrowed money to invest. They also invested their time and knowledge and many were active in their communities helping the peasant communities in their districts to improve their output and quality. They took out Zimbabwe citizenship and paid taxes. They obeyed the law of the land in all respects.
Their reward for trusting Africa? Their government comes under threat from democratic forces in their own country and decides that the white farmer is an easy target and can be used, ruthlessly and without regard to the rule of law or any other standard of human behavior, that they should be sacrificed on the alter of political expediency. They have been killed (12 have died since the dispossession campaign started) beaten, imprisoned, harassed, expelled from their properties by unruly mobs with weapons while the police watched. They have been vilified and dammed by the state media, accused of every crime in the book and a lot that are not listed. Now they are watching helplessly as their hard won assets are stolen, vandalized or worse - simply given to people with no experience of farming who qualify simply because they are connected to the ruling party.
Not a single farmers association in the rest of the world has come to their assistance. Not a single government in Africa has condemned this wholesale theft of private assets in Zimbabwe and no one has proposed any form of assistance for the people who are being dispossessed of everything they own in many cases. Many of these farmers are literally sitting in car parks with their personal effects wondering what to do next. They are being forced in some cases to take their children out of school because they cannot afford school fees and most are planning to move to another continent where this nightmare will not happen to them again.
Would you trust Africa with your money - if leaders who do this are allowed to get away with it and in fact are lauded by the ignorant and prejudiced in other countries, for taking action which will "correct the injustices of the past"? Start talking that language and where would any of us be? Land is at the core of the Zimbabwe crisis - I agree, but what crisis? The crisis of governance, human and legal rights, the security of investment in a foreign land?
If you add this litany of theft and abuse to the issues of sound fiscal and macro economic policy then you have an outlook for investment in Africa which only the completely blind and deaf could ignore. If you owned a pension in Zimbabwe and it was invested in the money market here, it would be shrinking at the rate of about half its value annually at present. If you retired on a pension after 35 years of faithful service to your company, your pension would not buy you groceries in three years.
If you invested in an export industry and intended to attack world markets with your finished product, when you were paid, the State would take 40 per cent of your gross receipts and convert it at 25 per cent or less, of its true value. If you invested in a gold mine, they would take 80 per cent of your gross receipts and pay you 40 per cent of its true value. Then if after all that you made any money, you would be subject to some of the highest tax levels in the world - Zimbabwe collects over 30 per cent of its GDP in
taxes each year. If you were employed on a standard contract of employment you would start paying taxes on an income of US$85 per month and pay up to 80 per cent of what you earn to government in one form of tax or another. You would get nothing back - no free education, no free health, and no long-term security of any kind.
On top of that you might be told who to employ, denied residence permits for essential staff, obligated to take into your company, partners who would contribute nothing but demand to be treated as principals. Or you might be faced with price controls which prohibit you from making a profit, or be faced with demands for bribes in order to get your trading license or a health certificate or even an import permit. If you wanted a telephone line into your new factory you might have to wait 5 years or pay a bribe to
have a line taken from another customer and given to you. You might be faced with a state-sponsored trade union that will make impossible demands on you for wage increases and other perks. Dismissing an employee who fails to turn up to work or simply is incompetent might prove to be impossible.
Investors in Zimbabwe today face every one of these problems every day - no matter how large or how powerful. Foreign ownership does not protect you from these pressures and in fact sometimes is a liability, because you have no local political sway.
Mbeki says that Africa is changing - I agree, but if they allow Mugabe to get away with this outrageous behavior in economic and political terms, then what guarantee can Mbeki give that it will not happen tomorrow in South Africa, or Zambia, or anywhere else on the continent. Globalisation means that people who want to invest can place their money anywhere in the world and they can choose to do so. Choice means that Africa has to attract investment and to do so it must protect and succor the investors who are already here. Not treat them as economic prisoners behind prison walls where they can do what they want to them and the rest of the world will not give a damn.
During the struggle for independence, dignity and freedom in Zimbabwe, the liberation movements claimed they were working for democracy (one-man one vote), freedoms of association and expression, human rights and dignity and equality before the law. One of the things that distresses me most in the present crisis in Zimbabwe is that so few African intellectuals and leaders are speaking into our situation in defence of those principles. They remain silent, and by implication, they silently give Mugabe legitimacy and acceptance of activities that are undermining everything they stood for during the years of struggle. If this does not change, NEPAD is dead in the water, before it begins.