HomeBusiness DigestMawere speaks on ties with Mnangagwa

Mawere speaks on ties with Mnangagwa

THERE has been speculation regarding the relationship between business mogul Mutumwa Mawere and Emmerson Mnangagwa. Here Mawere explains the relationship:

I appre

ciate the interest expressed by many people about my relationship with (Speaker of Parliament) Emmerson Mnangagwa and its alleged implications on my business success.

I think that if my businesses had failed the alleged relationship with Mnangagwa would not have been material but in the true African tradition, success would not have any meaning if there are no underlying forces or reasons.

A number of questions naturally come up with respect to my business success and to what extent such success was related to my associations with certain people including Mnangagwa.

It is important for us to understand the nature of the businesses that I was involved in and how they were acquired before dealing with personal relationships.

Mnangagwa is a politician whose history is known to all and he belongs to a party whose ideology is left wing, given the historical legacy of the country. There have been allegations that I am related to Mnangagwa. The truth is that I am not related to Mnangagwa. I only knew Mnangagwa in 1994 when I was still working for the International Finance Corporation (IFC). At the time, he was the acting Minister of Finance, when the late minister (Bernard) Chidzero was sick.

As background, people may be aware that the pressure to indigenise the economy started in the early nineties and IFC was also under pressure to respond with financing instruments that would facilitate black participation in the national economy. To this end, a new initiative was established – Africa Enterprise Fund – that was targeted at black entrepreneurs.

The observation at the time was that Africa was lagging behind other continents in enterprise development. The first beneficiaries of our assistance were Retrofit, a company that was set up by Strive Masiyiwa, and Mattools, a company set up by former (Home Affairs) minister Dumiso Dabengwa.

Following a restructuring at IFC, I was transferred to the mining division with responsibilities for financing private sector projects globally. In the context of Zimbabwe, I was involved in structuring the first management buy-out of a state-owned mining company – Sabi Gold Mine.

The project was approved by the IFC board but the government of Zimbabwe at the last minute decided to sell the mine to a Canadian company without any experience in mining.

This was a major setback to IFC because we had gone out of our way to respond to the call by the indigenous pressure groups to assist black entrepreneurs with financial assistance.

However, it was apparent at the time that the government did not have any coherent programme for black economic empowerment. The decision to sell to a foreign entity was made by the Minister of Mines at the time without the consent of cabinet. I was then asked to consult with the Ministry of Finance to ascertain whether they were serious about black economic empowerment.

That led me to contact Minister Mnangagwa to brief him on the project and the implications of the decision made by the government on future assistance to the black empowerment process.

The Canadian transaction was later cancelled by the government but it was too late for IFC assistance. At the same time, South Africa was going through a transition from apartheid to a democratic dispensation. I was involved in developing a strategy of black economic empowerment in South Africa, particularly in the mining sector where the established businesses were scared of the possibility of the new government nationalising their assets.

In that context, we managed to come up with a strategic framework that then provided a mechanism for blacks to be accommodated in the mining sector. Pursuant to this, I was approached by Investec Bank Ltd to set up a joint venture management company to mobilise domestic and international capital to assist black mining entrepreneurs. I then relocated to South Africa in November 1995.

However, prior to my relocation to South Africa, I bumped into Mnangagwa at the Meikles Hotel in Harare during my business visit while still working for the IFC.

He briefed me on the decision that the cabinet had made regarding the Sabi Mine privatisation. He also expressed an interest in learning more about empowerment and how Zimbabwe could respond to the quest for a more equitable economic dispensation.

He then invited me to (his constituency) Kwekwe to meet with his colleagues as well as business people who were attending a celebration party. They wanted to learn more about the experiences of other countries on the question of empowerment. I briefed them on the South African processes and the need for a policy framework to support domestic capital formation.

When I relocated to South Africa I continued to work on the SMM acquisition. The deal was a private sector transaction involving two offshore companies.

The purchase price was US$60 million and it was to be paid from future cashflows. There was no government involvement in the deal as confirmed by the sellers in a letter (available on request).

Following the acquisition, there was considerable interest in Zimbabwe on the transaction and how it was structured. You may recall that a new term was introduced in Zimbabwe regarding financial engineering. However, a number of politicians including the current governor of Midlands province, Cephas Msipa, complained to the president why I was allowed to buy the mine alone without including employees and the local communities.

The complaints also emanated from the indigenous business groups who felt that the government should have blocked the transaction to reserve it for them.

They did not understand why a person based in South Africa could end up buying such a big company, leaving them behind. In addition, they felt that they should get all the credit and black economic empowerment deals since it was through their collective pressure that a foreign company had agreed to sell. These pressures were all falling on me and at no time did Mnangagwa come to my rescue as would have been required if he had an interest.

In addition to structure, negotiation and finance – an offshore deal required risk capital and Mnangagwa had no access to foreign currency to pay the various service providers to ARL.

In response to the pressure, I then offered my assistance to the indigenisation process. To the em-powerment groups, I hosted a number of conferences in South Africa for them to gain a better understanding on how to structure deals rather than making a lot of noise. To the government, I agreed to offer technical advice to a national empowerment initiative.

The president then appointed Mnangagwa as the chairman of a committee to look into the question of empowerment and benefit from my experience to ensure that indigenous groups would pay a better price that I had negotiated in empowerment transactions.

I then assisted the committee to negotiate with Anglo American Corporation for the disposal of their interest in Bindura Nickel Corporation (BNC) to an empowerment company – National Investment and Economic Empowerment Corporation.

The company was chaired by James Mushore.

Godfrey Gomwe who was the CEO of ARL in Zimbabwe, was then appointed a non-executive director of Amzim. Gideon Gono was appointed director of BNC while Elias Ngugama became the first black non-executive chairman of Amzim.

To my knowledge, NIEC still holds an interest in BNC. I also assisted in the negotiations with Zimasco, Southampton Life Assurance, and Lonrho Mines.

However, the initiative was scuttled by infighting in Zanu PF. The government could not come up with a coherent strategy on the economic empowerment question and the allegation that the Mnangagwa committee was tribally-based took root.

In response, the committee was enlarged to include ministers Dabengwa, (Sydney) Sekeramayi and (Oppah) Muchinguri. A board of professionals was appointed by the committee and I was not on it.

After the appointment of the board, all the issues were left to Mnangagwa and his board. You may also recall that I was the pioneer of the drive to open an investment window for non-resident Zimbabweans to invest in Zimbabwe.

However, many Zimbabweans were concerned about the security of their investments in Zimbabwe as well as the consistency of economic policies.

To this end, I invited Mnangagwa to some of the meetings with non-resident Zimbabweans so that he could shed more light on government’s thinking regarding their potential investments. Because the meetings were captured in the media, a perception was created that Mnangagwa was my business Godfather.

I do appreciate that there has been confusion about this history and Mnangagwa’s political enemies obviously took advantage of the situation to locate him in the party’s succession wars and then implicate my name in the mess. I have never been a member of the party but I felt that it was important that I contribute to the nation-building process by ensuring that the empowerment process was better structured and intelligent than accusing whites of causing black poverty even in the face of a black government that has been in power for 25 years without addressing the institutional and capacity issues that hinder black participation.

You may not be aware that even (former Chinhoyi legislator) Phillip Chiyangwa set up his investment vehicle in opposition to mine and named it Native Africa Investment Ltd to demonstrate that my holding company, Africa Resources Ltd, was not indigenous.

Some politicians naturally felt that they had been left out and daggers were out for me. I wish I could share with you my experiences so that you can understand that I faced more roadblocks from the government than from whites. It is ironic that the market has a different impression. Just imagine that I inherited a product that was sick (asbestos) and converted it into a conglomerate that is now defined as an empire.

The party that has given Mnangagwa a political home did not trust any African to run its own businesses since Independence. The businesses were run by two Indian brothers. If I was a trusted proxy for Mnangagwa, would he have not put the party businesses under my control?

Would I not have been appointed to parastatal boards and participate in the gravy train? Would I have been based in South Africa when my principal would have needed a friend to fight his succession battle? Would I not have won government contracts? Would the NDA television programme have been banned by the government if Mnangagwa was behind me?

Would I have been arrested in South Africa and lost my businesses and the government leave Mnangagwa alone? Would Mnangagwa’s relatives like (Edwin) Manikai and (Arafas) Gwaradzimba have been involved in assisting the government to expropriate my assets if I was his proxy?

It is important that we continue to interrogate the relationships in the interests of better understanding of our history. It is cheap to suggest that a mere association of a businessperson with a politician necessarily results in business success.

We need to establish concrete steps that Mnangagwa took to assist my businesses to succeed. If we apply the same logic, all state-controlled institutions would be success stories. In addition, Zanu PF-linked businesses would have all been success stories.

Finally, we need to question whether Zanu PF is a market-friendly party or a party that believes that all businessmen are crooks and criminals.

I am prepared to continue dialogue on these issues because I think they are beneficial to the future of Zimbabwe.

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