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Mugabe brings Zimbabwe industry to standstill
Sebastien Berger, The Telegraph (UK)
August 11, 2007

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/08/11/wzim111.xml

There should be 63 workers in the factory in Bulawayo. But instead the managing director stands alone in a deserted production room.

Under President Robert Mugabe's price control programme, his customers cannot cover the cost of their goods, so they have stopped placing orders.

"They simply can't sell, otherwise they are going to make a massive loss," said the businessman, a British-born naturalised Zimbabwean who cannot be identified for fear of reprisals.

"Every millilitre we would produce we would produce at a huge loss."

The factory, on an industrial estate in Zimbabwe's second city, is a stark demonstration of what happens when economics are ignored.

It is a basic principle of markets that price is determined by supply and demand. If an outside agency, such as the ideologically Marxist Zanu-PF government, instead sets the price too low, suppliers will not produce - hence the empty shelves in Zimbabwe's supermarkets. Price inspectors have descended on shops across the country to enforce the government's order cutting prices to June 18 levels, forcing them to sell their stock cheap to the queues of people who line up to take advantage of the opportunity.

"It's literally looting that's taking place," said the factory owner.

"Of course when those raids take place they have informed all their friends.

"We don't have any stock for those people to pillage. We have no raw materials in store, we have no packaging. Then of course there is the next level of threat. They now say 'if you don't open to trade we will withdraw your trading licence and take over your business'.

"This is building fear and fear is their weapon, their one and only weapon these days. You have a bunch of geriatrics who have thrived on ego, power and greed.

"The government is like a rabid jackal, snapping in a corner. It doesn't care who it infects with rabies, it knows it is going to die."

For now his workers are still being paid from the firm's reserves, but the situation is untenable in the longer term.

"We have a three-month contingency plan where we can sustain our workers and staff, keep them fed and housed," he said. "Beyond that there is no plan."

Already most Zimbabweans are unemployed and the interconnected nature of business means the impact of the price controls ripples far beyond each affected firm. For example, no tinned food can be processed as the country's only can manufacturer cannot afford to import an essential compound.

Industrial production, estimated at 20 per cent of capacity before the chaos began, has fallen by two fifths.

Businesses will be taken over, handed out to cronies of the government and asset stripped, the entrepreneur believes, in the same way as white-owned commercial farms were, with similar consequences for Zimbabwe's economy.

It is not idle speculation. Obert Mpofu, the architect of the price control programme, this week told the state-controlled Chronicle newspaper that hyperinflation was due to profiteering companies. By the end of the year his task force will have "completely wiped out corrupt individuals and firms" in the economy, he said.

So far around 7,500 retailers and managers have been arrested for failing to heed the price directive. Most have been fined or released after short periods in custody, and the businessman keeps a prison bag in the corner of his office in case he is detained.

"We have an authority that really isn't interested in the welfare of its citizens or the country as a whole," he said.

"The crew have maintained the officers, now the officers are going to get their throats cut and they are on the bridge, just running the ship on to the rocks. They don't care.

"They are destroying everything so when the new government comes there will be nothing left."

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