Harare
THE ZIMBABWE GOVERNMENT is offering formerly white-owned farms for free to Chinese state-owned firms in a desperate bid to revive the key agricultural sector, say well-placed sources in Zimbabwe. Details of the planned land-for-investment scheme are still uncertain, but with President Robert Mugabe vigorously pursuing a “Look-East” policy after falling out with the West (because of his government’s poor human rights record), the president was looking for new deals to capture foreign currency. Unfortunately it appears that Western firms, including a Virginian tobacco company, are being drawn into schemes with the Chinese government, which has been supplying arms to Zimbabwe.
Reports had been multiplying recently that Mugabe was inviting former white landowners back to farm in Zimbabwe, but this appears to be a fiction to cover up for his plan to bring Chinese farmers in to grow tobacco and other crops.
Mugabe has appointed Didymus Mutasa, the head of the country’s secret police, the Central Intelligence Organization, to oversee the latest version of Zimbabwe’s land redistribution program. The government is now targeting unproductive land previously owned by white farmers, now occupied by blacks–apparently because there is no longer enough land in white hands, after close to 90 percent of the former white commercial farmers were stripped of land under the government’s chaotic and often violent land reforms
According to Wilf Mbanga of the Zimbabwean newspaper, the new farmers could soon find themselves at the center of international legal disputes as lawyers for the original landowners seek compensation. Like many commercial farmers who were displaced while their tobacco crops were still in the field, Joe Whaley had his farm taken over by one of Mugabe’s relatives, Chester Mhende. “Mhende walked on to Whaley’s farm two years ago, as the tobacco crop was about to be reaped. With the help of the Zanu PF heavies and the police, he prevented Whaley from taking anything off the farm. The tobacco crop was reaped and sold,” said a report in the Zimbabwean. In addition to having reaped the crop, Mhende has been using the equipment on the farm and has never paid a cent to Whaley–who has now secured a high court injunction confirming that he is the rightful owner of the farm and that Mhende has to leave. The police, however, have refused to act. The police may also have inside knowledge about Mugabe’s push to nationalize all land (giving much to Chinese farmers), which will nullify all land claims anyway.
Whaley alleged that the crop was bought by Zimbabwe Leaf Tobacco. When asked to comment on this allegation, ZLT Director, Gary Wallace told the Zimbabwean, “ZLT might have bought Mhende’s crop through the auction floors–we don’t know.”
ZLT is the wholly owned subsidiary of Universal (Zimbabwe) Leaf Tobacco, a U.S. subsidiary of Universal Corporation, a $3 billion a year, 30,000 employee corporation, based in Richmond, Virginia. Universal Leaf Tobacco’s senior vice president, James H. Starkey, III said, “All kinds of deals going on down there to pay bills. . . . finding a working mechanism is not easy. . . . I don’t like the situation but we have a factory in Harare to run and our work force has gone from 6,000 to only 1,500 in the past few years.”
Some of the “deals” that have to be entertained are extremely convoluted and easy to misinterpret. For example, the new tobacco farmers, located mainly in the central Mashonaland provinces, signed contracts with the Zimbabwean Electricity Supply Authority (ZESA), which pays them for their crops in local currency. ZLT then pays ZESA’s account with the China Aerospace Times Electronics Corporation (CATEC), a Chinese state-owned engineering firm, in U.S. dollars, and ZLT–the company owned by Universal–receives the tobacco and exports it. Starkey confirmed this arrangement to me saying that CATEC was supplying electrical generating equipment.
CATEC is mainly engaged in the research, development, production, and sales of the technologies and products in the fields of aerospace electronics, with at least 6,400 highly trained technicians. It could be providing other technological advice with military applications to Mugabe’s government.
Given that stolen farms are at stake, money is fungible, and one Chinese state firm can be linked with any other state-owned firm, some, including the Zimbabwean, have been alleging that the funds provided by ZLT to CATEC might have been used to purchase arms, notably the Chinese K8 jets the Mugabe regime recently acquired. There is no evidence for this (and CATEC is not the producer of the K8), but the convoluted payment methods made necessary by the Mugabe regime drag U.S. firms, trying to salvage their Zimbabwean assets ($53 million worth in Universal’s case) into a bad spot. “We have to bring U.S. dollars into the country [to pay for tobacco], so we have to work with the Reserve Bank and do as the government requires,” says Starkey.
Like so many businesses operating in inhospitable locations, Universal takes a significant risk to its capital and revenue stream. Universal is backing Zimbabwean white farmers with $30 million in loans to establish themselves in Northern Zambia, and the company plans to offer $12 million to black Zambian farmers wanting to join the industry.
Meanwhile Chinese state firms have no compunctions about property-rights abuses or dealing with despotic regimes such as Mugabe’s. Indeed Chinese investment is increasing in Zimbabwe. Officials of state-owned agro-firm, China State Farms Agribusiness Corporation are expected in Harare to conclude a farm deal shortly. As one source said to me, “China is now easily the largest investor in Zimbabwe, the geo-political context of southern Africa is changing.”
Roger Bate is a Resident Fellow of the American Enterprise Institute.
