ZIMBABWE: Mining between a rock and a hard place

Photo: IRIN

President Robert Mugabe - business as usual?

JOHANNESBURG, 30 June 2008 (IRIN) - International condemnation of Robert Mugabe's controversial re-election as president of Zimbabwe has now turned to criticism of foreign businesses operating in the country, which are seen as helping to prop up the regime.

Despite the meltdown of the economy, a number of multinational corporations have continued operations in the Southern African country and some have even proposed expansion. Last week mining giant Anglo American announced it would go ahead with a US$400 million plan to open a new platinum mine.

The move sparked international outrage and other large foreign businesses, like UK-based Barclays Bank, were questioned on their commitment to corporate social responsibility.

In response to the furore, Anglo released a statement saying: "Anglo American has been an investor in Zimbabwe for 60 years [and] is deeply concerned about the current political situation, and condemns the violence and human rights abuses that are taking place."

The company said the mining project had been in development since 2003, and "is a long-term investment in a mine which is yet to start production and will not generate revenues for some years."

It's not an issue of investing or not investing in Zimbabwe, but we are concerned about the human rights implications

Critics complain that doing business in Zimbabwe is tantamount to propping up Mugabe's regime, but according to John Robertson, an independent economist based in Harare, the capital, "that is a very misleading interpretation."

Robertson said most companies were more supportive of ordinary Zimbabweans and creating jobs and wages, than they were of the political elite.

The long haul

Many foreign firms had contributed substantially to development in the country, building "whole towns" and developing infrastructure, but were now too often seen as "ripe plums ready for picking", he said, referring to the Zimbabwean government's recent approval of the Indigenisation and Economic Empowerment Bill.

In terms of this legislation, every firm must have at least 51 percent of their shares owned by black Zimbabweans. Critics see foreign companies, particularly the billion-dollar mining sector, being forced to hand over large stakes of their Zimbabwean subsidiaries to 'indigenous investors' - essentially a huge asset transfer to the ruling ZANU-PF government, or those who support it.

Robertson added that the mining industry was particularly capital intensive and that investments tended to be very long-term. In its statement Anglo said: "It has been made clear to Anglo American that if it ceases to develop this project, the government of Zimbabwe will assume control." The company added that hundreds of jobs were also at stake.

The modern concept of corporate social responsibility, and international campaigns such as 'Publish what you pay' and the 'Extractive industries transparency initiative', are increasingly calling for transparency and accountability by governments and businesses.

"It's not an issue of investing or not investing in Zimbabwe, but we are concerned about the human rights implications," Carina Tertsakian, Lead Campaigner at Global Witness, told IRIN. The international lobby group has raised the issue with Anglo American and are awaiting a response.

Robertson said targeting business would be missing the mark: "This is a political and legal problem, not a problem with economic processes."

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