ZANU PF Minister Poised To Destroy Investment Deal
BP Shell in Zimbabwe (pictured above), who had concluded a deal to sell their assets and company in Zimbabwe to a South African and Kenyan Oil consortium are now likely to see the deal scuppered by a Zimbabwean minister who actually has a personal interest in the oil business.
Harare, Zimbabwe, 02 October 2009
At a time when Zimbabwe is looking for foreign direct investment (FDI), a ZANU PF minister in this so-called Inclusive Government is poised to scupper one of the largest investment deals in Zimbabwe since 1999.
Saviour Kasukuwere, the ZANU PF minister in charge of the Youth Development and Indigenisation ministry has confirmed that he is likely to stop the takeover of BP Shell assests in Zimbabwe by a South African company, Engen, which has got together with a West African Oil company to buy up the assets and the company.
BP Shell has more than 75 Service Stations (Gas Stations) in the country and it one of the largest oil companies operating in Zimbabwe.
Kasukuwere says he will stop the deal, due to have been finalised by November 5, because the investors have not "respected local laws and policies."
One of these laws and policies is the discredited investment law that requires foreign investors to hold a minority interest only in any company in Zimbabwe, with black Zimbabweans holding 51% shareholding.
Prime Minister Morgan Tsvangirai said as recently as last month that this 51% requirement is retrogressive and he is right.
What should be of concern to progressive Zimbabweans is the fact that the minister who now says he wants to enforce this policy, Minister Kasukuwere, is also a businessman in his own right, with interests in oil companies.
It raises the question of whether this enforcement is in the national interest or is designed to protect the minister's own investments. Is he not trying to get rid of competition before it even starts?
It appears this is exactly what he is doing.
Of course, he says that employees of BP and Shell have indicated that they are willing to buy the company "as a going concern", but this also poses a problem.
The employees do not have the funds to purchase the assets of BP Shell. Banks in Zimbabwe do not have the capacity to finance such a deal and foreign funding is hard to come by.
The fact that BP Shell is selling to a foreign investor means that the locals have failed to raise the required capital.
The fear now is that, in the destructive tradition of ZANU PF, the minister may be trying to force this investor (BP Shell) to just give away their assets and company for nothing simply because there is a ZANU PF law that says locals should 51% of the company.
It is a move designed to destroy investor confidence, especially as it becomes clear that the Minister has a conflict of interest in the matter.
This is not a government initiative at all, as evidenced by the fact the Permanent Secretary in the Ministry is even too afraid to comment on the matter, telling the media that the issue is being "handled by the Minister personally."
If it was a matter of government policy, then the right person to be dealing with this would be the Permanent Secretary who refuses to comment.
Kasukuwere, together with Mugabe's nephew, Philip Chiyangwa, has been at the forefront of fighting for "local ownership" or "indigenisation" as it is called in Zimbabwe. They have built fortunes and empires on the back of political patronage using a group they founded called the Affirmative Action Group.
In years gone by, even banks were forced to give uncompetitive loans to some of the members of this organisation because of their political connections.
But, let us be clear about this:
The objection is not to local ownership, but to the lack of transparency and apparent conflicts of interest. If this was all transparent, the Minister would be giving his Permanent Secretary the mandate to deal with this as government business.
But he has already personalised this case to the extent that his PermSec is too afraid to get involved and to even comment to the media on a matter of "government policy"?
If Engen pulls out of this deal, the locals will not have the capacity to buy the 51% that the Minister wants them to have. Perhaps, because of his political connections, the Minister himself will be the only one with the resources to buy up the assets.
Which immediately raises the question of his motivation and interest in the matter.
This is the reason why Zimbabwe is not likely to attract FDI in significant quantities. It is the reason why even Zimbabwe's so-called "all-weather friends", like China, Venezuela, Malaysia and other Eastern Tigers are failing to help their "friend" in Zimbabwe.
The Chinese and Malaysians are also businessmen who will not tolerate undue risk when they invest in Zimbabwe. They would rather not come in when the policies on the ground put their investments at risk from the outset.
Already, State media has been briefed to start writing that the BP Shell/Engen deal is "unlikely to go ahead".
Until this group of politicians is kicked out on its ear, recovery in Zimbabwe is impossible. This case demonstrates more than anything else why it is correct to say that ZANU PF (and now the Inclusive Government) stand as impediments to the recovery of Zimbabwe.