Mugabe seeks native stake in business

WORLD DIGEST

June 27, 2007|By New York Times News Service.

JOHANNESBURG, South Africa -- Zimbabwe's president, Robert G. Mugabe, has moved to require that virtually all public companies cede controlling interests to "indigenous citizens," a plan the government calls black empowerment and Mugabe's critics label a bid to shore up his crumbling political support.

The proposal, issued in draft legislation published Monday, would transfer a 51 percent stake in the companies to Zimbabweans who were "disadvantaged by unfair discrimination on the grounds of his or her race" before April 1980, when the nation won independence from white rule.

The proposal would establish a government fund to help citizens finance stock purchases and would allow the government to reject any corporate mergers, acquisitions, investments and other transactions in which Zimbabweans did not hold a 51 percent stake.

It was unclear how Zimbabwe's bankrupt government, beset by hyperinflation and a currency crisis, would finance the transfers. Nor was it apparent how the new owners of the companies would be chosen.

Mugabe's critics called the proposal another scheme to loot what remains of the economy for the benefit of regime insiders.

The legislation evoked the specter of Zimbabwe'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 Mugabe's government and his ruling party, the Zimbabwe African National Union-Patriotic Front.

But the new legislation sets out a more gradual transfer of ownership. One analyst quoted by the Associated Press yesterday said that it potentially could allow mixed-race citizens and even some whites to acquire stakes in companies.

The proposal came as the government started a failed effort to rein in Zimbabwe's hyperinflation, officially about 4,500 percent but said by private economists to approach 20,000 percent. A Cabinet-level panel on price controls ordered factories and sellers to roll back the prices of goods and services by as much as 50 percent - that is, to levels that existed roughly one week ago.

Mugabe's minister of industry and international trade, Obert Mpofu, said the price increases were unjustified and 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, said several Zimbabweans interviewed yesterday by telephone.

The plummeting currency, now trading on the black market at about 130,000 to one U.S. dollar, collapsed last week to as low as 400,000 a dollar before recovering a little.

Inflation is so steep that Zimbabwe's currency is virtually worthless. Prices change daily, if not hourly; one report said last week that golfers at a Harare country club paid for their 19th-hole drinks before teeing off after learning that prices would rise while they were on the course.

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