6 August 2013

Zimbabwe: Return to Empty Shops Feared As Economy Stumbles

Photo: SADC
Hawkers in Harare

Fear of returning to the days of food shortages and empty supermarket shelves has gripped Zimbabweans again, following another disputed election that saw the stock market take a nose dive Monday.

Voters were still reeling from the shock ZANU PF victory in last week's election, as the headlines said there was an 11% drop in stock prices. Experts say this is the result of uncertainty over Zimbabwe's future under Robert Mugabe.

According to the official Zimbabwe Stock Exchange, share prices for some top companies dropped by up to 20 percent on Monday, which was the first full day of trading following ZANU PF's disputed landslide win against the MDC-T.

Comments by ZANU PF top officials that they would now more fiercely pursue their party's indigenization and empowerment policies have done nothing to reassure potential investors.

On Tuesday the Indigenization Minister Saviour Kasukuwere told reporters that government plans to take foreign owned mining companies without compensation. But he said banks would be compensated if government took their companies. Large international banks, including Barclays, have been identified as targets.

"When it comes to natural resources, Zimbabwe will not pay for her resources," Kasukuwere is quoted as saying, adding: "If they don't want to follow the law that's their problem."

Kasukuwere went further to say that a new stock exchange will open within 100 days of the new ZANU PF government taking office. He added that this new Harare Stock Exchange will only be open to black Zimbabweans and will trade the black-owned shares in the seized companies.

Harare based economist John Robertson rubbished the idea, describing it as "taking absurdities to new limits. He said: "I think he is re-introducing a form of apartheid for which he should be pilloried, I believe, by the markets and by international observers. The claim that such a thing should even exist is out of place in the 21st century and was even out place in the last century."

Regarding the seizure of mining firms without compensation, Robertson explained that Kasukuwere claims that minerals under the ground are the contribution made by Zimbabwe to the enterprise of mining. But they have no value until machines have been put a place and people hired to extract them.

"So the claim that they don't have to pay compensation to mining companies is outrageously unjust. And the sheer absurdity of that claim is the one that has got to be challenged," Robertson said. He added that he hopes the legality of these seizures will be challenged by those countries that have Bilateral Investment Protection Agreements (BIPPA) with Zimbabwe.

Robertson confirmed that the price of fuel has already gone up due to expectations of a return to the Zimbabwean currency, which he said would not last for more than a week, because no-one would accept it as payment for goods. People are also reported to be withdrawing their money from the banks.

By law, foreign companies in Zimbabwe are required to give up 51% of their shares to locals. But observers and critics say this has benefitted only those in Mugabe's close circle.

ZANU PF's track record in this regard is a catalogue of mismanagement, corruption and large-scale looting. Little is growing on most of the commercial farms illegally taken over from white farmers. And profits from the sale of diamonds have not made it to the national coffers.

With ZANU-PF and Mugabe now fully in control of the economy, it is feared the country will slide back to the record breaking inflation of years past. A news report from 2nd December 2008 said the monthly inflation rate in Zimbabwe was running at 13.2 billion per cent, and was set to reach an all-time world record within weeks. These figures put Zimbabwe's annual inflation rate at 516 quintillion per cent. That's 516 followed by 18 zeros.

This galloping inflation was only controlled when the MDC-T came into the power sharing government, and Zimbabweans remember this very well.

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