The Economy of Zimbabwe and the British Government

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The Economy of Zimbabwe and the British Government

The Foreign Secretary, David Miliband, was asked last week whether British monopoly companies should continue to invest in Zimbabwe, given the government’s support for economic sanctions against that country. Asked specifically whether British monopolies such as Anglo American should be investing in Zimbabwe, the Foreign Secretary replied that the government was not asking for a complete economic boycott, not because this might damage the profits of the monopolies and their stranglehold on Zimbabwe’s economy but rather because apparently, in his words, “the people of Zimbabwe have suffered enough”. Earlier media reports had suggested that the Foreign Office had told British monopolies to remain in Zimbabwe, while the Prime Minister and other government ministers made public statements to the effect that they should reconsider their positions.

            The Prime Minister’s comments were made after it was revealed that Anglo American, the world’s fourth largest mining monopoly, was investing £200m in order to construct a platinum mine in Zimbabwe, which has the world’s second largest deposits of platinum. This amount is reported to be equivalent to the entire direct foreign investment the country received in 1998 before sanctions and other attacks were launched on its economy.  It is worth noting that Anglo American also owns 45% of De Beers, the diamond monopoly founded by Cecil Rhodes, the imperialist who led the invasion and conquest of Rhodesia, the colony named after him, on behalf of the British monopolies and financiers at the end of the 19th century.  Other big British monopolies in Zimbabwe include Rio Tinto, British American Tobacco, Barclays Bank, Standard Chartered, Unilever, SABMiller, BP and Shell. Zimbabwe’s mining, transport and manufacturing sectors are still largely foreign owned, as is the fuel retail sector. Indeed Zimbabwe’s economy is still dominated by British and other foreign monopolies.  It is in these circumstances that Robert Mugabe, the president of Zimbabwe, was reported to have welcomed the threat of an exit by British monopolies adding, “the sooner the better”.

            Indeed in recent years the government of Zimbabwe has taken measures to transfer ownership of different sectors of the economy to citizens of Zimbabwe, the most recent example being the Indigenisation and Economic Empowerment Act, which was passed by Zimbabwe’s parliament last year and formally approved by President Mugabe in March this year. This Act requires that every company operating in the country must have 51% of its shares owned by Zimbabweans. Under this new law, which has not yet been implemented, foreign monopolies such as Anglo American and Rio Tinto would be forced to find local partners. The British government claimed that this law was a cynical act to enable political patronage and corruption and that it would harm foreign investment in Zimbabwe. In fact, the government of Zimbabwe has not yet implemented it, while foreign investment appears to be thriving. Soon after the Act was passed it was reported that Lonrho, infamous for “sanctions-busting” in Rhodesia and subsequently the largest employer in Zimbabwe, was launching a new investment company LonZim Plc, which has announced that it is positioning itself for the imminent recovery and normalisation of Zimbabwe’s economy. Several other foreign-owned businesses have taken a similar view, while at the same time expressing concern that any precipitous pull-out from Zimbabwe would harm investments and future profits and could lead to nationalisation by the government of Zimbabwe. In general, it is reported that there has been an investment boom this year in Zimbabwe, a country that is still seen as potentially one of Africa’s most profitable economies.

            The British government has already announced that once regime change has been accomplished in Zimbabwe, it too will assist the recovery of Zimbabwe’s economy. Although it presents this as an act of philanthropy, for the good of the people of Zimbabwe, it is clear that the main beneficiaries will be the big foreign monopolies which still dominate large sectors of Zimbabwe’s economy after nearly 30 years of formal independence and which at present increasing their investments in the country, so as to strengthen their grip and maximise their profits in the future.