(Last Updated on December 21, 2012 by Editor)
Zimbabwe-Zimbabwean Indigenization Minister Saviour Kasukuwere’s assertion that a sovereign wealth fund created from stakes ceded by foreign-owned companies is worth $4 billion was questioned by economists, who said the announcement may be aimed at securing votes ahead of elections.
The fund was created after the government compelled foreign-owned companies to sell 51 percent stakes to Zimbabweans under its indigenization program, Kasukuwere said in an interview on Dec. 18. The size of the fund may increase to $5 billion by mid-2013, after the state forces foreign-owned banks to hand over their controlling shareholdings, he said.
John Robertson, an independent economist, said Kasukuwere’s announcement was “a collection of claims that may never materialize” and was aimed at “impressing” voters ahead of elections scheduled to take place in March.
Zimbabwe, which has the world’s second-biggest platinum and chrome reserves, began implementing a law in 2010 compelling foreign and white-owned companies to cede or sell 51 percent of their shares to black nationals or state-approved agencies. The country, which was under white rule until 1980, this year ordered banks to transfer their stakes to black Zimbabweans by July 2013.
“We are happy with the progress we have made to empower our people,” Kasukuwere said. He said the sovereign wealth fund comprises shares
allocated to communities and workers under share-ownership programs, as well stakes ceded to the National Indigenisation and Economic Empowerment Fund. The $4 billion was calculated by valuing the stakes that have been ceded by foreign-owned companies, he said.
“A lot of what he says is aimed at persuading people they consider to be not very articulate that they will be massively enriched by getting shares of the great wealth being generated by the indigenization process,” Robertson said in a phone interview yesterday. “It is incredibly dishonest, but I don’t think many people have been actually fooled into believing it.”
Kasukuwere is a member of Zimbabwe’s ruling Zimbabwe African Nation Union-Patriotic Front party headed by President Robert Mugabe, who has ruled the southern African nation since independence. Three years ago, Zanu-PF signed a power-sharing accord with the opposition Movement for Democratic Change to end violence that erupted following disputed 2008 elections.
The MDC has opposed the indigenization program that has been led by Kasukuwere and last month unveiled an economic plan that it said would reverse the effects of the law. The Jobs, Upliftment, Investment, Capital, and Environment plan, known as JUICE, targets economic growth of 8 percent a year and the creation of 1 million new jobs by 2018.
The MDC also rejects constitutional changes proposed by Zanu-PF that include giving the president executive powers to dissolve parliament, appoint judges without interview and confer presidential immunity.
The announcement of the fund may be an attempt by Zanu-PF to “sabotage” Finance Minister Tendai Biti by showing it’s raising an amount that is about half the size of the country’s $9.9 billion economy, said Chris Mugaga, a senior economist at EcoMeter Global Capital in Harare. Biti is also an MDC member.
“This just buttresses the fact that there are two governments in Zimbabwe,” he said. “Biti is now being relegated to being an MDC minister.”
Kasukuwere said most “major foreign-owned mines” have complied with the indigenization law. Last week, Aquarius Platinum Ltd. (AQP) said it will sell 51% of its Zimbabwe mining venture for $550 million. Other mining companies in Zimbabwe include Rio Tinto Group (RIO), Sinosteel Corp., Metallon Corp Ltd. and Impala Platinum Holdings Ltd. (IMP)’s Zimplats Ltd. unit.
An agreement with Zimplats will be completed after officials have addressed “a few numbers which we are finalizing,” Kasukuwere said, without giving further details.
Other companies that have complied with the directive include British American Tobacco Zimbabwe Holdings Ltd. (BAT) and South Africa’s Pretoria Portland Cement Ltd. (PPC), according to the Indigenization Ministry.
Foreign-owned banks are currently in talks with the government over when they would comply with the ownership laws, Kasukuwere said, without naming them.
Foreign banks that operate units in the southern African nation include the U.K.’s Barclays Plc (BARC), Old Mutual Plc (OML) and Standard Chartered Plc (STAN), Togo’s Ecobank Transnational Inc. (ETI) as well as South Africa’s Standard Bank Group Ltd. (SBK) and Nedbank Group Ltd. (NED) Barclays Bank of Zimbabwe Ltd. is the largest lender on the Zimbabwe Stock Exchange, with a market capitalization of $56 million.
Kasukuwere has yet to deliver a report to the country’s Cabinet about the fund, said Economic Planning Minister Tapiwa Mashakada, who is an MDC member. “We as Cabinet don’t know about that money, it has yet to be presented to us,” Mashakada said in an interview on Dec. 19. “Maybe it’s just a Zanu-PF thing. They know better about that money than the rest of Cabinet.”
To contact the reporter on this story:
Godfrey Marawanyika in Harare via Nairobi at
To contact the editor responsible for this story:
Paul Richardson at