Thursday, June 28, 2007

NYTimes notices mugabe's takeover of business

Empowerment programs that transfer corporate stakes to black shareholders are not unusual. South Africa’s government sponsors a highly successful, but much criticized, program that has transferred large blocks of corporate stock to workers and managers, and has helped make multimillionaires of a handful of well-connected businessmen.

Mr. Mugabe’s critics, however, say the proposal is a scheme to loot the remainder of Zimbabwe’s economy for the benefit of political insiders and backers of the president. To them, the legislation evokes the specter of Mr. Mugabe’s seizure of thousands of white-owned farms early this decade, mostly without compensation, in what was then called a redistribution of land to poor blacks. Instead, many of the best farms were awarded to leading figures in Mr. Mugabe’s government and his ruling party, the Zimbabwe African National Union-Patriotic Front.

Rather than confiscating stakes in companies, however, the legislation envisions a more gradual, potentially compensated transfer of ownership.

At the same time, the government began an effort to rein in Zimbabwe’s hyperinflation, officially about 4,500 percent, but described by private economists as approaching 20,000 percent. A cabinet-level task force on price controls ordered factories and sellers to cut the prices of certain basic goods and services by as much as 50 percent — to levels that existed roughly one week ago.

Mr. Mugabe’s minister of industry and international trade, Obert Mpofu, said that increased prices were unjustified and that they were “a political ploy engineered by our detractors to effect an illegal regime change against the ruling party.”

Shopkeepers throughout the country ignored the decree, according to several Zimbabweans interviewed by telephone on Tuesday. “No one is even thinking about freezing prices,” said one member of the ruling party, on condition of anonymity because of a fear of retribution.

That person and others interviewed Tuesday suggested that both the price decree and the ownership legislation reflected an increasingly frantic effort by Zimbabwe’s rulers to contain the damage from an economy that has moved in recent weeks from steep decline to outright free fall....

Mr. Mugabe’s critics and a Harare economist said Tuesday that the “indigenization” legislation would almost certainly make Zimbabwe’s economic havoc even more severe by driving away the few foreigners still willing to invest in the country. The flight of foreign capital has been a crucial element in Zimbabwe’s economic decline, and until the draft legislation was published, the government had been courting Chinese investors and other outsiders, albeit with little success.

“The investment environment here is very fragile, and this is the kind of stuff that, even if it were warming up, would kill it,” said the economist, who declined to be named for fear of retaliation by the government. “Obviously, it’s going to scare even more people away.”.....\

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