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Mugabe tries to forge ties with business
Norman Chitapi, Institute for War and Peace Reporting (IWPR)
May 18, 2007

http://iwpr.net/?p=acr&s=f&o=335558&apc_state=henh

It has been a long time since Zimbabwean president Robert Mugabe sounded as conciliatory towards the business sector as he did when he officially opened the showcase Zimbabwe International Trade Fair in Bulawayo in late April.

Mugabe seems to have recognised that the state of the economy is now his political weak point, and to be seeking allies to mitigate the worst effects of the crisis. Unfortunately for the president, analysts interviewed by IWPR suggest he will have a lot of work to do to win businessmen over to his cause.

At the opening of the April 24-25 trade fair, Mugabe called for a "strong and genuine partnership" between government and business. In conciliatory mood, he told his audience that everyone needed to "subordinate narrow sectarian interests to the broader national good".

Political analysts in the capital Harare said Mugabe was reaching out to the business community because the deepening economic crisis had gone beyond the point where government policies and controls could reverse it. Annual inflation is now put at 2,200 per cent, unemployment is estimated at 85 per cent, and there are persistent shortages of even basic commodities.

The trade fair itself, which in the past brought together companies from across the world, has shrunk to a localised affair at which most of the exhibitors are government departments.

"The chickens are coming home to roost," said the manager at a commercial bank, who did not want to be named. "It is becoming clear to Mugabe that his [ZANU-PF] party and government alone cannot solve the country's myriad problems.

"These have indeed become the greatest threat to his hold on power - hence his appeal to the private sector to help."

The banker noted that government policy had changed to become more accommodating to both the business sector and the trade unions in the past few weeks.

In January, for example, a number of business executives were arrested for increasing the prices of basic foodstuffs. They were accused of colluding with the opposition by using the price hikes to provoke anti-government sentiment. More recently, however, the government simply turned a blind eye when the price of bread rose.

Trade unions, too, have found the government more tolerant of their activities. Even the combative Zimbabwe Congress of Trade Unions, ZCTU, was allowed to hold a May Day rally unhindered, contrasting with demonstrations held earlier this year and last year which were broken up by police. Significantly, the May Day event was allowed to go ahead even though it took place in the poor Harare suburb of Highfield, the same area where police used brute force to prevent opposition leaders and supporters from attending a mass prayer meeting in March.

The bank manager said Mugabe must have realised that his government needs to engage the support of both labour and business.

In January, Reserve Bank governor Gideon Gono called for negotiations to draw up a "social contract", where business, labour and government would work together as partners in resolving the country's problems. So far nothing has happened.

"Gono must have told Mugabe that there is no movement towards a social contract," said the banker. "He must have been told that the hostile rhetoric by government was being met with equal, if silent, hostility and resentment."

Another analyst said it would be difficult for business leaders to take up Mugabe's offer of an olive branch, given that they felt they had been treated badly in the past. Trade unions, too, nurse many grievances since many of their leaders have been beaten up for demanding better conditions for their members.

"There is a lot of mutual mistrust between government and the other would-be social partners," concluded the analyst.

"Business blames government for undermining its viability by controlling the prices of commodities without reference to cost structures. They cannot get foreign currency on the official market [and] are forced to charge sub-economic prices."

The Zimbabwean government, through the central bank, has held the official exchange rate steady at 250 Zimbabwean dollars, ZWD, to one US dollar. But because this rate massively overvalues the Zimbabwean currency, access to foreign currency purchases been severely restricted.

Those with good contacts in the regime can buy foreign currency and either sell it on, or use it to buy scarce goods which they can sell at a mark-up. But most importers and other firms are disadvantaged by having to buy currency on the black market at the going rate of 25,000 ZWD to the dollar.

In April, the Reserve Bank announced a more realistic rate of 15,000 ZWD to the dollar, which would seem likely to open up access to foreign currency purchases and create a more level playing field. But this rate comes with the caveat that it is accessible only to exporters that themselves generate foreign currency - for example the mining sector, farms and tour operators.

The government has always been suspicious of both labour and business, regarding them as supporters of the opposition Movement for Democratic Change, MDC.

But it is not the case that the business sector, represented by the Employers' Confederation of Zimbabwe, and unionists affiliated with the ZCTU represent a common front.

Addressing members on May Day last week, ZCTU president Lovemore Matombo accused business of "profiteering", saying that while most workers lived below the poverty line, business leaders continued to live well.

Matombo said the ZCTU would lead street protests against business in the near future if workers' salaries were not raised substantially, or at least enough to come up to the poverty line.

Most workers in Zimbabwe earn between 300,000 and 600,000 ZWD a month, hardly enough to purchase a month's supply of groceries for the average family, let alone pay for transport, clothing and school fees.

Another Zimbabwe-based analyst said Mugabe's attempt to re-engage with business and the trade unions would be severely hampered by the legacy of mistrust.

"Mugabe might be genuine in his desire for a change of course, but we all know there is no love lost between him and the ZCTU because of its close links to the MDC."

"Business will also want to . . . test his commitment to their welfare. So long as there is this tug-of-war and lack of trust, the crisis will persist. Unfortunately, the ordinary Zimbabwean is always the biggest victim of the political impasse and the economic meltdown."

*Norman Chitapi is the pseudonym of a journalist in Zimbabwe.

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