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Why big business is a threat to Zim’s revival

ZIMBABWE has entered a new frightening phase, a phase of unbridled capital that has become a State in itself in pursuit of profit and nothing else.

Guest column: Paidamoyo Muzulu

ZIMBABWE has entered a new frightening phase, a phase of unbridled capital that has become a State in itself in pursuit of profit and nothing else.

This has been compounded by a weak government that is not sure of itself and very wary of upsetting capital as it tries to rebuild Zimbabwe into an upper-middle class nation by 2030 in figures and not qualitatively for its majority population.

The past week has seen a scared government and central bank implement unpopular policies and reversing them immediately at the mere challenge that big capital was going to sue and sue big.

Zimbabwean businesses have been pegging their prices using the parallel foreign exchange rate of the local dollar to the greenback.

This is unheard of the world over that prices change at the drop of a hat or the yoyo on the stock exchange.

However, Zimbabwe has been different. Any exchange rate slide is immediately followed by a round of price increases even for those things where no foreign inputs are involved.

A close look at the situation in Zimbabwe and a fairer assessment of the big capital can be seen by the behaviour of Cassava Smartech, Puma/Sakunda Holdings and Croco Motors as examples.

Cassava, through its EcoCash platform, controls 90% of all mobile money transactions. Actually, its impact on the financial services is bigger than that of the central bank.

The unpopular 2% intermediated money transfer tax imposed by Finance minister Mthuli Ncube since November 2018 has only been a success due to its reliance on Econet’s EcoCash platform.

Econet did not need to fully exercise its power over the State, but a mere threat to challenge the ban on cash-in and cash-out pushed the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya to back down and reverse his order which had not been fully implemented.

Econet, in its court papers, had threatened to totally pull down its EcoCash platform, a move that would have seen the whole financial services sector crumbling or worse threatened the existence of the regime as certainly a public outcry would have ensued.

Let me go to the Puma/Sakunda case. The RBZ froze its accounts on the basis that the fuel behemoth that controls in excess of 35% of the market and controls the Beira-Feruka-Harare pipeline was fuelling the runaway parallel market exchange rate.

Sakunda is controlled by mogul Kudakwashe Tagwirei, who is also a member of the Presidential Advisory Council, and has been the backer of Command Agriculture that each year has been using US$3 billion, however, with very little to show for it each season as the country continues to import grain.

The RBZ and Treasury have been at pains in Parliament to explain the payments to Sakunda and the returns from it, except that the State is deeper in debt.

Croco Motors for the past five years or so has been enjoying the monopoly of supplying Parliament and government luxury vehicles.

This is big business that goes well beyond US$25 million. What is shocking is why MPs and ministers in a poor country want to drive in such opulence.

In short, the three companies have a symbiotic relationship with the State and any action against them would also hurt the government big time.

Consequently, the Executive becomes hesitant to act on them. They are, in other words, a State within a State.

For example, Econet has grown so big that each of the citizens interact with it on a daily basis.

The company controls nearly over 70% of the telecommunications sector if you combine all its companies: Econet Wireless, internet providers ZOL and Liquid.

On the financial services front, it controls EcoCash that has 90% of all the mobile money transactions and the entry level bank, Steward that revolutionarised banking, using Econet Wireless as its backbone.

The company is now into energy generation through its DPA, which is installing solar mini-grids.

It has also interests in transport and logistics through VAYA and has effectively joined the agriculture sector, where it hires out tractors and other farming implements.

It also has its claws in the health sector after it acquired an ambulance services group.

It also has significant market in the motor insurance sector through Moovah and funeral assurance through Ecosure.

This list is not exhaustive, but it shows how one cannot avoid it in their everyday lives.

It had just escaped me that it has established also a media presence through Econet Media.

Econet, through Sasai, its platform for chatting, banking and gaming, would be a game-changer in data mining, the fad in technological sector.

In other words, it can be bigger than the State on intelligence gathering, able to predict voting and lifestyle patterns.

Shoshana Zuboff, author of The Age of Surveillance Capitalism, captures this in a way never done before. And the scary part; Zimbabwe has no Data Protection Act.

President Emmerson Mnangagwa has a big task if his envisaged economic reforms have to start in earnest.

How does he tame big capital that not only threatens the existence of his government, but also the State itself?

Can he censure and regulate these companies without losing face on his “Zimbabwe is open for business” mantra?

Mnangagwa may have started on the wrong path of giving capital a carte blanche, but he can redeem himself if he is willing to make the unpopular, but practical decisions for the majority and make the State bigger than capital.

For now, big business has won enough concessions, be it in removing labour hurdles or banks making obscene profits while people cannot withdraw their savings or earn interest on them. And big capital continues to win with the austerity measure favoured by Ncube, now businesses pay 10% of labour costs in real terms, compared to a year ago.

Paidamoyo Muzulu is a journalist and writes here in his personal capacity. He can be contacted on [email protected]