Africa
Mugabe Threatens to Seize Foreign Firms
By Cris Chinaka, Reuters 20/7/08
Jul 21, 2008 - 9:53:27 AM

The southern African state is struggling with an economic crisis many blame on Mugabe's policies, which has left it with an inflation rate of over 2.2 million percent and chronic shortages of food and other basic needs.

Mugabe's government blames the crisis on sabotage by enemies angry over his seizures of white-owned farms for blacks, and has followed up that policy with another controversial law seeking to transfer majority ownership of foreign-owned firms to locals.

The Sunday Mail said Zimbabwe had begun auditing the ownership of Western firms in the country as part of a black empowerment drive "and to counter the possible withdrawal of investment under sanctions imposed and proposed by Britain and the U.S."

Mugabe -- fighting to retain power after a winning a runoff poll boycotted by his rival -- says Zimbabwe's severe economic crisis is due to sabotage by former colonial master Britain, its European Union allies and the United States.

The Sunday Mail paper said preliminary results of Zimbabwe's audit of foreign investments showed that 499 companies enjoyed British investments. Of these, 309 had majority shareholders in Britain and 97 were wholly owned by Britons.

The audit also found 353 firms with shareholders from other European countries, the weekly said in a story largely attributed to unnamed government sources.

"A high-ranking government source told the Sunday Mail that these companies would be targeted for takeover by local investors and companies from friendly countries, particularly those in the Far East, should they heed calls by the U.S. and European governments for them to disinvest from Zimbabwe," it said.

"FRIENDLY" INVESTORS TO TAKE OVER

Most of the Western investments in Zimbabwe are in tourism, agriculture, manufacturing and food processing industries.

The newspaper quoted its source as saying: "In the context of growing hostility, the government is planning to invite companies from friendly countries to move in and take over companies that will close down."

The move to line up local and Far East investors for the takeover was also aimed at boosting low industrial capacity which has led to chronic shortages on the market, it said.

Although some British investors had so far rebuffed a call by London to pull out of Zimbabwe, Mugabe was taking no chances, the newspaper said.

"It would have been foolhardy for the government to adopt a 'business-as-usual' approach when the UK and the U.S. are dishing out threats," one source said. "We had to take action and this is the beginning."

Mugabe has previously warned that he will target and nationalise companies he accuses of supporting what he calls a "racist and imperialist" plot to topple his ZANU-PF government.

Mugabe's spokesman George Charamba confirmed the government's drive against Western firms, telling the Sunday Mail: "The government is not sleeping."

"It is hard at work and the spotlight is on the corporate sector. We are anxious to understand the behaviour of corporate bodies and whether this (shortages and price hikes) owes to market imperatives or political obligation of the foreign investors," Charamba said.

Industry leaders say Zimbabwe's economy has been hurt by Mugabe's policies, and its future lies in a negotiated political settlement between the ruling ZANU-PF and the opposition MDC.

The MDC has refused to recognise Mugabe's overwhelming victory in a June 27 vote held after its leader Morgan Tsvangirai pulled out, citing violence by ruling party militia.

Source: Ocnus.net 2008