APRIL 1981 - VOLUME 2 - NUMBER 4
How an Elected Marxist Government Is Winning Business Confidence
by Jim Khatami
In the one year since its independence, Zimbabwe has achieved a remarkable record of economic recovery and political stability. The refugees fostered by the war have largely been resettled, a record maize harvest of' more than two million tons prevented food shortages and losses of foreign exchange to food imports, and the overall economic growth rate for 1980 was about 10 percent. Zimbabwe's economic good news was topped off by the Mugabe government's surprisingly successful effort to raise money from international donors to finance the country's reconstruction and development effort.
At the week-long donors conference in March attended by more than 60 nations and international organizations, Zimbabwe raised about $1.8 billion in aid pledges. Of the aid pledged at the Salisbury conference, the largest sum was $459 million in soft-term loans from the World Bank. The United States pledged $75 million for each of the next three years, while Britain pledged $55 million in aid in addition the the $252 million it had already promised Zimbabwe. Other major donors included the European Common Market, France, West Germany, Sweden, Canada, the African Development Bank, Kuwait and Saudi Arabia.
Zimbabwe's successful effort to raise money to finance its recovery was especially good news because the donors' conference followed several months of growing uncertainty about the direction of the Reagan Administration's policy to Zimbabwe and to southern Africa in general. While the Carter Administration had boasted of the
Zimbabwe settlement as one of its major foreign policy accomplishments, Republican leaders had generally been unhappy with the overwhelming election victory of Robert Mugabe. "We just talked Rhodesia into the garbage dump. That country's gone," complained North Carolina senator Jesse Helms on hearing of Mugabe's win at the polls.
But the dire predictions in the West and in South Africa of white flight, civil war, economic chaos and rampant tribalism failed to materialize. In fact, after several years of negative growth rates, Zimbabwe's economy boomed in 1980 and is expected to grow by a similar amount in 1981. Robert Mugabe has pursued a conciliatory policy toward Zimbabwe's whites, winning praise from all sides. About 1000 whites per month continue to leave the country, but the great majority of key personnel in the civil service, in manufacturing and in commercial farming have remained behind as Zimbabweans loyal to the new government. In the meantime, the Mugabe government is also pursuing a careful program of promoting well-trained black Zimbabweans into responsible positions in the country's civil service.
All along, Mugabe's government has maintained good relations with the Western transnational corporations which dominate every sector of Zimbabwe's economy. A brief policy statement issued shortly before the donors' conference by Bernard Chidzero, Zimbabwe's Minister of Economic Planning and Development, made it clear that there will be no major restructuring of Zimbabwe's economy, although the desire to move toward socialism was reiterated. The document emphasized that Zimbabwe will welcome foreign investment and has no plans to nationalize private farms, mines or manufacturing enterprises.
The "socialist" component of Zimbabwe's economic policy will be a significant effort by the government to upgrade the standard of living of Zimbabwe's African population, particularly in the traditionally-neglected rural areas. Chidzero's economic policy statement, which was intended as an introduction to a three-year economic plan to be released in July, also cited plans to develop cooperatives and state farms in the rural areas. However, government officials in Salisbury stress that all cooperatives will be established voluntarily. Only a handful have been set up to date.
Another document released at the donors' conference outlined Zimbabwe's economic policy more specifically. The country's three-year plan will focus on four areas: post-war recovery programs, land settlement and rural development, training and technical assistance, and lastly, infrastructure and energy development. International assistance will provide about half the funds for the first three areas, while the government hopes to raise the rest of the estimated $6.4 billion required from public and private sources.
A good part of Zimbabwe's most immediate post-war recovery needs have been met. Approximately 250,000 external refugees have returned to their homes from Botswana, Zambia, and Mozambique. Most of the estimated one million people forced into protected villages or otherwise displaced from their homes inside Zimbabwe have also received help in returning to their homes. An emergency food distribution program to about 600,000 people, administered by the United Nations High Commission on Refugees, is scheduled to be phased out this month when food from Zimbabwe's record maize harvest starts to become available. Another program to feed 150,000 malnourished children in the tribal trust lands (TTLs) has already significantly ameliorated some of the worst problems that accompanied food shortages brought on by the war.
Much of the reconstruction effort, however, remains to be completed. During the war, approximately 2,000 of the 2,500 primary schools in the TTLs were either damaged or totally destroyed. Many of these schools have yet to be reopened. The war also resulted in the loss of thousands of cattle, the destruction of rural roads, water holes, cattle dips, government buildings and vehicles, and hospitals and clinics.
The bulk of the money raised at the donors' conference-about $1.25 billion-will be invested in the land settlement and rural development program. This was the central issue at the conference. In fact, the conference was an outgrowth of British and American pledges during the negotiations that led to Zimbabwe elections to mobilize money for Zimbabwe to implement a land reform program.
Land is a particularly emotional issue in Zimbabwe because the vastly unequal distribution of land on racial lines was the central feature of Zimbabwe's colonial past and a major issue motivating the Patriotic Front during the war for Zimbabwe's independence.
Under the colonial system, Zimbabwe's land was divided in half. The best areas, with good soil and easy access to roads, railroads, and urban markets, were handed over to about 6,000 white farmers (now reduced to 4,500). Some 4 million of Zimbabwe's 7.5 million blacks were herded into TTLs which functioned as labor reserves for the country's mines, commercial farms, and industries. The land set aside for the TTLs was generally in hilly terrain with poor soil and inadequate access to markets.
While the Mugabe government's settlement and rural development plan calls for considerable government and private investment in the TTLs, it would leave Zimbabwe's historic land ownership pattern largely intact. Under the government plan, about 15,000 families are being resettled on about 900,000 acres of abandoned or underutilized farmland in the previously whites-only, commercial farming sector. By the end of the war, about 40 percent of the commercial farm area, which comprises some 35 million acres, was completely abandoned. According to government officials, another 20 percent is underutilized.
Government officials emphasize that they will take steps to ensure that the new farms are economically competitive with other commercial farms. Thus, much of the cost of the resettlement program is for follow-through costs, including social expenditures, beyond the initial land purchase price. Although a few model collective farms have been established, the ongoing government program is based on individual arable allocations with communal grazing rights on non-arable land.
The limited nature of the Mugabe government's land resettlement scheme results from the desire to maintain the high level of productivity of the commercial farming sector. These "white" farms produced about 75 percent of Zimbabwe's agricultural output in 1979 and accounted for about 95 percent of crop and stock sales in the same year. However, there is a profound difference in ownership patterns between black and white-owned farms in the commercial farming sector.
By the late seventies, 7 percent of the European farms accounted for 50 percent of the total farm area. In other words, a large part of the commercial farm output is now produced by a relatively small number of huge farms, many of which are owned by transnational corporations. The hold of the transnationals over the commercial farming sector accelerated during the closing years of the war as increasing numbers of small farmers abandoned their farms and left the country.
The Anglo-American Corporation and the British conglomerate Lonrho have almost total control over sugar production and large citrus estates. Anglo-American owns several vast sugar estates at Hippo Valley as well as the million acre Triangle Estates which alone employs over 8,000 workers. Lonrho has cattle ranches of over one million acres, is the largest coffee producer in Zimbabwe and holds extensive interests in forestry and tea production.
So while many of the white farmers with small properties, who traditionally were a key part of former tan Smith's constituency, are facing an uncertain future, transnational corporations appear to be extending their hold over Zimbabwe's commercial farm sector.
In Zimbabwe's rich and diversified mining the hold of transnational corporations is even more pronounced. The mineral industry is of critical importance to Zimbabwe because it accounts for over one-half of Zimbabwe's export earnings, and that proportion is likely to increase with rising mineral prices. While actual mining production has increased little since Zimbabwe's independence, mining industry earnings have shown a dramatic rise, largely as the result of the increase in international gold prices. The value of Zimbabwe's gold production in 1980, for example, is estimated at over $250 million, more than double the earnings from 1979.
Meanwhile, the county's largest mining corporations - Anglo-American, Lonrho, and Rio Tinto Zinc - have all recently announced plans to expand their investments in Zimbabwe. In February, Anglo-American announced the largest private project to expand its coal mining complex and thermal power station at Wankie. Lonrho, Zimbabwe's largest gold producer, has reopened a number of dormant gold mines, and Union Carbide plans to invest $20 million to expand its chrome ore and ferro-chrome output.
Yet, despite apparently good relations at present, a number of issues may jeopardize the prevailing goodwill between the Mugabe government and the mining transnationals. Government officials often express dissatisfaction with the slow pace of the mining companies' efforts to train blacks for higher-level positions. At the same time, there is widespread suspicion among Zimbabweans that the transnationals are using transfer pricing - selling cheaply at their overseas affiliates while buying expensively - to hide the true extent of their profits.
In order to get a true picture of the mining industry, the government has announced that it intends to create a minerals marketing board to oversee the sale of all minerals-a proposal that is strongly opposed by corporate mining officials (see interviews with the Minister of Mines elsewhere in this issue).
Another problem which may arise between Zimbabwe and the mining companies concerns the relationship between the companies and South Africa. Anglo-American is the largest corporation in South Africa: Similarly, Rio Tinto Zinc has extensive holdings in South Africa and a recent United Nations conference condemned Rio Tinto for mining uranium in Namibia in defiance of United Nations sanctions.
The problem of relations with South Africa is perhaps even more severe in Zimbabwe's manufacturing and banking sectors. Under Ian Smith's rule, the manufacturing output tripled in dollar terms from 16 percent to 25 percent of the gross domestic product. Foreign firms with regional headquarters in South Africa dominated a large part of this industrial sector, about 70 percent, according to Anne Seidman, acting chair of the Economics Department at the University of Zimbabwe. Moreover, much of the industry was geared toward the production of luxury and semi-luxury goods for the country's white minority, and was dependent on imported machinery and equipment from South Africa.
Zimbabwe's banking industry is dominated by four major banks: Barclays and Standard, both British banks with extensive South African links; National Grindlays, whose British parent corporation is 49 percent owned by Citicorp; and Rhobank, which until its recent purchase by the Mugabe government was 70 percent owned by the South African banking conglomerate, Nedsual. These banks have been unenthusiastic about making long-term loans to finance Zimbabwe's reconstruction or the development of industry geared toward a wide national market. Instead, the banks have been far more willing to finance expansion of Zimbabwe's export-oriented minerals enclave.
There is now concern in Zimbabwe about the growing links between the country's political leadership and the transnationals. Some Zimbabweans fear that their country may already be on the read to a "Kenya model," with increasing numbers of educated Zimbabweans taking well-salaried posts and directorships in transnational corporate affiliates as well as in domestically-based companies.
Zimbabwe's struggle for independence and control over its own destiny might well be only half over. While there is no great pressure on the government to nationalize foreign holdings in Zimbabwe at present, Robert Mugabe and Zimbabwe's political leadership will have to exercise extreme care and persistence to break out of the nation's historic pattern of dependence on South Africa - and the forces behind South Africa in Britain and the United States.
Jim Khatami writes for Interpress News Service in New York, and recently returned from a trip to Zimbabwe.