Zimbabwe government policy finds businessmen reluctant to invest
Concern is growing here at the development of a "wait and see" attitude toward investment decisions that is now prevalent in the newly independent state of Zimbabwe (formerly Rhodesia).
Businessmen are nearly unanimous in blaming what they describe as "extremist" elements within Robert Mugabe's ZANU-PF governing party for the apparent reluctance of the business community, at home or abroad, to take the plunge and invest.
The story is frequently told of the recent visit to Zimbabwe by a US trade delegation representing the United States Chamber of Commerce. Hardly had the delegation concluded a news conference giving favorable impressions of investment opportunities in Zimbabwe when Zimbabwe television screened a documentary film on Cuba with a locally written and spoken commentary. This lauded the Castro government's economic and social achievements and was larded with hostile references to US capitalism.
The American visitors were dismayed at this and unable to reconcile the radio and television newscasts and commentaries with the pragmatic and moderate attitude of Prime Minister Mugabe himself.
But it is not only the visiting businessmen who are confused by the contrast between what Mr. Mugabe says -- and does -- and what is being put out by other members of his party and government.
Addressing the annual congress of the Confederation of Zimbabwean Industries recently, the retiring president, John Hills, referred to the daily contradictions between Mr. Mugabe's attitude of reconciliation and consultation and what he called the "disconcerting and contentious" public statements from other quarters that were creating antagonism and resentment among groups of workers and among the races.
Mr. Hills warned that unless there was close consultation between government and the business sectors about proposed legislation, there was a real danger that experienced whites would leave the country "in far greater numbers than is the case at present." He believed the "wait and see" attitude being adopted by investors could be explained by the contradictory government statements.
The retiring president of the Zimbabwe Tobacco Association, which represents some 1,750 white tobacco growers, also spoke out in a most forthright manner, contrasting what he called Mr, Mugabe's "sound statements" with those from other ministers and in the news media which had frequently contradicted the prime minister's views.
"This gives no confidence to investors," said Don Bulloch recently in addressing the tobacco group's annual congress. "These other statements, plus an escalating use of the various media for propaganda purposes aimed at the economic sector, have seriously undermined morale and are leading to an increasing exodus of whites," Mr. Bulloch said. "However much such statements may upset you or lower your morale, to talk yourself out of this is pure folly," he added.
As spokesman for the country's flue-cured tobacco producers, he is concerned over far more than conflicting statements by politicians. Even after the lifting of economic sanctions, the tobacco industry is going through a desperately difficult period because of lack of international buying support for tobacco and the resulting depressed prices on the auction floors.
He warned that unless prices improve, many farmers will go out of business this year and there will be widespread unemployment, as tobacco is a major employer of unskilled labor.
The views expressed by the leaders of two of the country's major business sectors follow closely on the earlier warning by former Prime Minister Ian Smith , who claimed that the state-owned broadcasting media were currently in the hands of "a bunch of extremists" who believed in "hurling insults at the white community." If this continued, he said, there was a grave danger that more whites would emigrate and that Zimbabwe would emulate other black-ruled countries, slipping into "chaos and anarchy."
At present there is evidence to suggest that the rate of white emigration, which has been averaging some 1,000 a month, is starting to rise again, having fallen sharply in the second half of last year and the first quarter of 1980. One estimate by Prof. Marshall Murphree, a leading Zimbabwean sociologist, is that by the end of next year the white population will have tumbled from 225,000 at present to only 150,000.
Businessmen believe that a high rate of white emigration will further deter investment, because there will be a short- age of skills to manage new investment projects and the cost of such projects will escalate. Since the elections, private- sector investment commitments have been disappointingly low. The British Rio Tinto Zinc group has promised to invest $11 million (US) in gold and platinum projects in Zimbabwe. Earlier this month it was announced that Zimbabwe will borrow $180 million in the form of syndicated bank loans and supplier credits from Western Europe to develop further the Wankie thermal power station complex, which is already under way.
The loans will come from two major suppliers of equipment for Wankie -- MAN of Augsburg in west Germany and Alsthon Atlantique of France, at an interest rate for 10-year credits of 8.25 percent. The balance will be supplied in bank loans at rates still to be finally agreed on, but which will be more expensive.
Zimbabwean businessmen are disappointed not only at the level of economic aid that has been promised. It remains well below the magic $1 billion figure suggested by former Secretary of State Henry Kissinger in 1976. Also, much of the aid is in the form of technical assistance rather than the hard cash the country urgently needs for its development program.
Businessmen believe that investment confidence both at home and abroad will depend somewhat on the new budget, to be presented to Parliament July 24. Businessmen are eager to have a full statement of the new finance minister's attitude toward corporate tax levels. The budget will afford this opportunity and should clarify economic policy.