FOREIGN delegates and investors coming into the country this week for the high level mining investment conference were greeted with the news of the specification of Kingdom Meikles Africa Limited and its subsidiaries.
The conglomerate has also been suspended from the Zimbabwe Stock Exchange in a move that has very negative effects not just on the frontline protagonists in the business, Nigel Chanakira and the already specified John Moxon, but also on thousands of ordinary people who hold stock in the now frozen entity.
Only last week, there were press reports that state-owned steel manufacturer Zisco was on its knees and had resorted to selling scrap metal to keep going. This is despite government having poured in huge amounts of money to capitalise the state enterprise.
Industry and Commerce minister Welshman Ncube revealed last week: “Government organised loans for Ziscosteel before the formation of the inclusive government. Every time money was pumped in, it went into a bottomless pit.” But there are criminals reaping a grim harvest somewhere in the bottomless pit. Who are they and why has government not told us about them?
The rape of Ziscosteel and other parastatals like the Cold Storage Company are treated as normal business practices as there is no haste to specify persons or order a state investigation as is the case with private sector companies. It is shameful that our government is quick to specify private sector players yet ministries cannot even order state enterprises under their control to produce audit reports.
Would-be investors at Zisco — those wanting to get into bed or should I say into the furnace — with the government should understand the history of mismanagement, looting and unprofessional political meddling which have made Zisco what it is today.
The same dirty hands are quick to pounce on the private sector. The specification of KMAL has therefore all the hallmarks of unjustifiable and overzealous political intervention in the running of private sector entities.
It is all too easy to put a company under investigation but the process of coming out of specification is cumbersome and lengthy, which has serious ramifications on shareholders and investors. Not only that, subsidiaries of the group, critical to the well-being of this economy now find themselves hamstrung by the specification. Meikles Hotel for example will find it difficult to court partners to revamp operations or borrow large sums of money to refurbish. This is at a time when our rulers are harping about the country’s preparedness to capitalise on next year’s soccer World Cup.
Co-Home Affairs ministers Kembo Mohadi and Giles Mutsekwa, I am sure are aware of what the specification will do to Kingdom Financial Holdings’ quest to raise money to shore up its balance sheet ahead of the Reserve Bank deadline for banks to comply with set capital adequacy ratio benchmarks. Tanganda Tea Company will find it difficult to expand estates and service new markets.
Put simply, specification of companies in this country has not served a real purpose other than dispossession and looting of private property. The specification of businessman Mutumwa Mawere’s empire in 2004 is a case in point. I want to contend that specification as it is administered at the moment is a major assault on property rights and a disincentive for would-be investors in this economy.
For a country struggling to attract direct foreign investment in key sectors of the economy, the issue of protection of capital should be dealt with carefully. Zimbabwe has already gained enough notoriety on this front and should be working on improving the image of the country through fair play in business. That is absolutely critical.
Opening the mining conference on Wednesday President Mugabe said government “respected the sanctity of property rights and the rule of law” in all aspects. This is not convincing at all. Zimbabwe provides a compelling case study of the perils of ignoring the rule of law and property rights. That is well documented.
No investor believes Mugabe no matter how sincere he might want to sound. His government has to demonstrate willingness to change its policies and strategy before investors start digging for minerals. In April a South African business delegation led by mining magnate Patrice Motsepe reminded Mugabe of the issue of property rights.
“The critical thing is that the rules of investment should remain in place,” Motsepe said. “The concern is that there should be no shifting of goalposts a few years down the line.”
The problem with our rulers is that they appear unable to hold on to that trust. Only last week Mugabe removed a large chunk of that trust investors require. He said this about removing farmers from the land: “Once people have offer letters and they are valid, that’s it. The farm is not yours any more. Please don’t resist. I am saying please, please but that will stop.
“If we hear about any resistance, we will stop pleading. I will just send the police to drive them away. If they thought they would be saved by the inclusive government, kunyeperwa ikoko! (That’s a lie).”
At a meeting with investors on Wednesday Mugabe was asked what government was doing to ensure the removal of economic sanctions. His response: “We are pleading for sanctions to go. Ours is a mere prayer. We cannot do more than that.” Really?
I do not agree. The government should tell investors what is being done to open up media space, fight corruption, depoliticise the police force and reviewing security laws and so on. That’s what a country seeking investment does.