INDEPENDENT NEWS

Cablegate: Managing a Business in Mugabe's Shadow

Published: Tue 28 Sep 2004 07:34 AM
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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