It will cost the state

STATUTORY Instrument 159A of 2007, issued by Presidential Decree last week, is an astonishing piece of legislation.


It clearly reveals the full intentions behind the price control operation and the indigenisation exercise.


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* The state is systematically bankrupting all independent business. They are doing so by denying them the right to produce and market their products at a profit;


* They are fully anticipating wholesale company closures and collapse across the country. No distinction is made for local and foreign controlled companies;


* As soon as a company folds they will move in through the IDC and the State Trading Corporation to take control. Resources will be made available to fund the operations and then price controls will be relaxed and the companies allowed to resume production;


* A process of transferring control to local Zanu PF individuals and companies will then ensue in a similar fashion to the Olivine take over. This was effected by a payment of US$6,8 million by Cottco working with the IDC. The company will warehouse the shares until it is decided who will get this plum;


* The great danger of this process is the same as was the case in respect of the farm invasions. The loss of skills and experience that takes place during the transition might actually render the enterprise unmanageable. The loss of skills will be permanent because most will leave the country. The scale and audacity of this exercise is mind boggling. They are clearly in a hurry to do this — I call it the Neutron Bomb exercise — you kill the enterprise without destroying the infrastructure which you then take over.


* The private sector are not fools — they know what is going on and many are now asset stripping their operations — the financial cost of this operation will place a huge new burden on the State (Reserve Bank
printers) and will drastically reduce all form of State revenues. We can therefore anticipate that this will further exacerbate inflation.


Nearly all the companies known to me are vunerable to this operation — no matter how large.


It’s side effect wil be to drive at least two million Zimbabweans out of the country into South Africa, the only destination that is close enough and large enough to absorb this number of people in a short period of time (three to six months).



Mike Rook,


Harare.

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