HARARE - President Robert Mugabe’s threat to seize the assets of British companies operating in Zimbabwe is likely to deal a fatal blow to the country’s economy, economists warned yesterday.
Condemning comments by the 89-year-old president, economists described Mugabe’s threat to nationalise foreign-owned firms as “dangerous posturing”, which would only discourage foreign investors Zimbabwe desperately needs.
Threats to take punitive measures against British firms if Western powers refuse to lift sanctions will suffocate foreign direct investment (FDI) and damage the economy, analysts warned yesterday.
Mugabe told mourners at the burial of former National Railways of Zimbabwe boss Mike Karakadzai at the National Heroes Acre on Sunday that “enough and enough of passive attitude towards the West”.
“There are so many British companies operating in this country, we haven’t done anything to put any sanctions on them, but soon we will hit back at them,” warned the re-elected Zanu PF leader who is starting a seventh five-year term.
“Time will come when we shall say tit-for-tat, you hit me and I hit you as well. You impose this on me and I will also impose that on you,” Mugabe added.
Analysts said this cannot help Zimbabwe create jobs, wealth and opportunities. Zimbabwe is currently suffering from a crippling economic meltdown and these threats, if carried out, would risk bankrupting the country.
While efforts to get comment from Deborah Bronnert, the British Ambassador to Zimbabwe late yesterday were futile, embassy officials however are keeping their criticism muted.
“We don’t want to make a bad situation worse,” said one diplomat.
Last week, Britain said Mugabe’s re-election could not be deemed credible without an independent investigation into allegations of voting irregularities.
British foreign secretary William Hague said: “I am extremely concerned that the MDC had to withdraw its legal challenge due to concerns over the independence of the Judiciary.
“I strongly believe that an independent investigation of any allegations of election irregularities would be required for the election result to be deemed credible.”
As Mugabe threatened to hit back against sanctions, economists joined a chorus of condemnation of his threats.
Analysts said “the utterances are not sustainable and not in anyone’s interests.”
“These threats will not serve anyone’s interests. It is their governments that have imposed sanctions on Zimbabwe not the firms,” independent economist John Robertson told the Daily News, adding that “these firms have been behaving well and victimising them will only stifle FDI.”
Zimbabwe is currently struggling to attract meaningful FDI due to several factors, particularly political uncertainty and the indigenisation policy — compelling foreign firms to cede 51 percent shareholding to black locals.
The country’s FDI marginally increased last year to $400 million from $387 million in 2011 according to statistics from the United Nations Conference on Trade and Development.
Robertson said Mugabe’s threats “only painted an unattractive picture to investors who already have adopted a wait-and-see attitude towards Zimbabwe.”
Takura Mugaga, another economic analyst said “the battle between foreign companies and the president is becoming more of a personal than national battle.”
“The president’s tit-for-tat attitude might actually be evidence of how much he could have lost through asset freezing after sanctions were implemented.
“Obviously the economy won’t benefit, I think he is aware that he has to have a trade-off between growing the economy and losing his hold on power and to him it’s obvious the convenient option is to throw the fight into the ring,” Mugaga said.
Economists said Mugabe’s comment, especially about the economy, are extraordinary for a president with 33 years’ experience.
“They are a real blow to our chances of attracting foreign investment.”
Mugabe’s particular target appeared to be dozens of British companies and some of them in the mining sector.
Even though South African investment was growing, Britain remained of “critical importance to Zimbabwe’s economy”.
The British have played a dynamic role in the economy of Zimbabwe, with Rio Tinto subsidiaries, Dunlop, and Chloride chemicals as some of the major players.
Other British companies operating in Zimbabwe include banking groups Standard Chartered Plc and Barclays Plc.
The financial institutions are already under pressure to comply with the controversial empowerment policy.
Mugabe’s comments drew disbelief from the mining industry, which generates 30 percent of export earnings, making it second only to agriculture as a foreign currency earner.
A mining consultant in Harare said: “If he treats the mining industry in the same way as he has the land, it would be the end.”
Mugabe and members of his inner circle are subject to financial and travel sanctions imposed by the United States and European Union.
The sanctions were imposed by Washington and Brussels over alleged electoral fraud and human rights abuses, among other concerns.
Mugaga said: “Obviously these utterances are potentially fatal. It goes without saying that these threats are going to suffocate FDI.”
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