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Managing a business in Mugabe’s shadow

This was the title of a cable dispatched by United States ambassador to Zimbabwe Christopher Dell on 28 September 2004. But though he had talked to seven prominent Zimbabwean businessmen, the cable did not say much about how they were doing business except that they were pressing for balance of payment support.

Dell met with the president of the Confederation of Zimbabwe Industries and the chief executive officers of manufacturer PG Industries, retailer OK, the Meikles Hotel, Barclays Bank, cotton-merchant Cottco, and Murray & Roberts Construction.

The CEOs urged the US to recognise central bank governor Gideon Gono’s achievements and not write off the business sector. They argued that without balance of payments support Gono’s reform efforts would not go anywhere.

The Cottco CEO took issue with his colleagues by posing a hypothetical question: If the CEOs suddenly came into US$1 million outside Zimbabwe, would they invest the funds abroad or transfer them into the country?

Only the PG Industries CEO suggested he would invest part of the US$1 million in Zimbabwe, underscoring – in the Cottco CEO’s view – that Zimbabwe was uncompetitive as a foreign investment destination.

 

Full cable:

 

Viewing cable 04HARARE1620, MANAGING A BUSINESS IN MUGABE’S SHADOW

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Reference ID

Created

Released

Classification

Origin

04HARARE1620

2004-09-28 07:34

2011-08-30 01:44

UNCLASSIFIED//FOR OFFICIAL USE ONLY

Embassy Harare

This record is a partial extract of the original cable. The full text of the original cable is not available.

 

280734Z Sep 04

UNCLAS HARARE 001620

 

SIPDIS

 

STATE FOR AF/S

USDOC FOR AMANDA HILLIGAS

TREASURY FOR OREN WYCHE-SHAW

PASS USTR FLORIZELLE LISER

STATE PASS USAID FOR MARJORIE COPSON

 

SENSITIVE

 

E. O. 12958: N/A

TAGS: ECON EAGR ETRD EINV PGOV ZI

SUBJECT: MANAGING A BUSINESS IN MUGABE’S SHADOW

 

 

Sensitive but unclassified. Not for Internet posting.

 

Summary and Firms Represented

—————————–

1. (SBU) Seven prominent business leaders we recently

assembled want the international community to provide

Zimbabwe with balance-of-payments support. However, they

differ in assessments of the country’s progress at

reforming its economy and attracting foreign investment.

 

2. (SBU) The Ambassador convened his first business

roundtable Sept 22 with the new Confederation of Zimbabwe

Industries (CZI) President and the local CEOs of six

companies: manufacturer PG Industries, retailer OK, the

Meikles Hotel, Barclays Bank, cotton-merchant Cottco,

Murray & Roberts Construction.

 

CEOs Agree Zimbabwe Needs Capital Infusion

——————————————

3. (SBU) The CZI and PG Industries representatives argued

for the U.S. to reengage with Zimbabwe, which they define

primarily as extending balance-of-payments (BOP) support.

They urged the U.S. to recognize Reserve Bank (RBZ)

Governor Gideon Gono’s achievements to date and not

“write off” Zimbabwe’s business community. Without both

BOP support and foreign investment, they speculated that

Gono’s reform efforts will progress only so far.

 

4. (SBU) The Cottco CEO took issue with his colleauges by

posing a hypothetical question: If roundtable

participants suddenly came into US$ 1 million outside

Zimbabwe, would they invest the funds abroad or transfer

them into the country? Only the PG Industries CEO

suggested he would invest part of the US$ 1 million in

Zimbabwe, underscoring – in the Cottco CEO’s view – that

Zimbabwe is uncompetitive as a foreign investment

destination. The Cottco rep, a net exporter, complained

that Zimbabwe has shot itself in the foot, enacting rigid

foreign exchange controls and disregarding property

rights. He and others argued for broad devaluation.

 

As Usual, Discussion Turns to Politics

————————————–

5. (SBU) The Barclays CEO opined that the international

community cares more about political than economic reform

in Zimbabwe. It is impossible for Gono to impress the

world with economic management, she argued, unless the

country also becomes less repressive and more democratic.

At this, the PG Industries CEO joked that he and other

businessmen were cowards for steering clear of politics.

The Murray & Roberts CEO wondered how much progress on

democracy and civil liberties it would take to placate a

skeptical international community. “What if next March’s

parliamentary elections were free and fair?,” he asked

rhetorically. The PG Industries CEO expressed hope that

the International Monetary Fund (IMF) could extend to

Zimbabwe a token loan next January, when the lending body

will vote on the country’s expulsion, in exchange for

certain demands, such as a partial devaluation or float

of the zimdollar.

 

Comment

——-

6. (SBU) We believe the sentiments of our roundtable

participants are representative of Zimbabwe’s business

community. They want a freer, more democratic Zimbabwe

but are unwilling to put themselves or their firms at

risk in order to fight for it. Rather, they struggle to

keep afloat businesses that support thousands of workers

and the remnants of this once-highflying economy. In

sum, they hope for more flexibility from both the GOZ and

the international community, but are largely bystanders

to the process.

 

Dell

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