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Zimbabwean state capture

06 Aug 2020 at 22:59hrs | Views
In my weekly political review show on the Gambakwe media platform two Sunday ago, we discussed about the planned demonstration on the 31st     of July 2020. During the interview I invoked in passing three Zimbabwean business personalities that have been major background players in the political and economic climate of the country over the past years. These three business leaders I invoked were Strive Masiyiwa, Billy Rautenbach and Kudakwashe Tagwirei.

This week I will demonstrate how these three captains of industry in the telecommunications, banking, mining and petroleum sectors have literally gained monopolistic control over them. In building their vast business empires they have also along the way captured the political and economic systems of country for the benefit of a select few.

In all my previous shows I always start by giving historic background with valuable context to all subject matters up for debate.

Historically, the first recorded business personalities to capture a democratic political system were similar American captains of industry in John D Rockefeller who controlled the American petroleum industry, Andrew Carnegie steel and J P Morgan financial sector. These American business leaders provided the ‘state capture blueprint' for they secretly met for the purposes of insuring that their preferred presidential candidate in William McKinley gets elected as the 25th president of America following the 1896 election.

These business leaders provided financial support to the McKinley campaign; with that they also threatened the future employment of the many employees working under their cooperation's if McKinley was to lose the 1896 election. The business leaders also influenced media houses to publish stories against McKinley's opponent William Jennings Bryan who was very much against big business.

Following the election victory these American captains of industry went on running their business empires with little scrutiny and regulation from the McKinley administration. President McKinley's administration was more sympathetic towards big business and the monopolistic concept.

This meant that these captains continued on; applying predatory pricing structure driving out competition, subjecting their workforce to long harsh working conditions with that rewarding them with depressed wage rates. The captains also easily gained access to perform government projects and contracts. Favorable pieces of legislation to their industries were also passed through the American congress and signed by President McKinley during this period.

Back to Zimbabwe, I will now demonstrate how our own business leaders have drawn from this ‘state capture blueprint' and thus influenced the political climate from the background to aid themselves in building and maintaining their vast business empires.      
I will start with Strive Masiyiwa who is the founder and Chairperson of Econet Wireless a multinational company dominate in the telecommunications, banking and mobile banking industries of Zimbabwe. Currently the company possesses above 90% market share for both the telecommunications and mobile banking industries thus meeting the monopoly definition.

The company is said to be the second largest employer in the country in terms of direct and indirect employment. Various downstream support sector organizations and media houses rely on Econet's financial muscle expressed through its spending power and advertising revenues.
The company also projects a visible corporate responsibility stance through its High Life Foundation charitable works which is the philanthropical arm of the business empire.
In light of all these great achievements credited to the company's founder and visible projection to the welfare of the underprivileged in the country, Econet Wireless is also significantly linked and implicated in the collapse of the Zimbabwean Dollar in 2008. In recent years Econet has also been referenced by the country's monetary authorities' as a great hindrance to their abilities towards effectively re-introducing the Zimbabwean Dollar back into the ailing economy.

In the period preceding the total collapse of the Zimbabwean Dollar that culminated itself in 2008 it was interesting to note that as all other productive industries the banks, manufacturing operations and retail shops crumbled as a result of the hyper-inflationary environment Econet Wireless thrived. Econet Wireless thrived due to their broadband and wireless cellphone lines that also became the standard of value in the country at that time.

The Econet broadband and wireless mobile phone lines became the standard of value as these were directly tradeable for hard currency with the average price ranging between 50 USD to 150 USD per line. The most valued being the ‘0772' line that chased the highest price. This was at a time where in other jurisdictions in Southern Africa the average price for the same mobile broadband and wireless lines were between 1USD to 2USD per line.

To guard the value of these products Econet carefully monitored the supply of these mobile lines desisting from flooding the market. The company also started paying its employees using these same mobile lines as it became the most stable, valuable and tradeable commodity in the country.
This situation also created the first form of informal dealer trading market in the country. Those who had access to the distribution of these wireless and broadband lines could easily have made a living trading them for hard currency. This situation led to greater and unamenable hyper-inflation and total collapse of the Zimbabwean Dollar as Econet Wireless thrived.

On the political involvement front, recently revealed information through Jonathan Moyo traces the genesis of Masiyiwa's underhand meddling in Zimbabwean politics back to the bloody and notorious short sleeve or long sleeve 2008 runoff presidential election campaign.

Jonathan Moyo is a former senior Zanu PF insider who belonged to a different Zanu PF faction to the current Zimbabwean leaders. Moyo revealed this hidden hand in a twitter thread in response to Masiyiwa's comments on the sincerity of President Mnangagwa his rival. Moyo published in a series of 24 tweets how Strive had helped bankroll the bloody 2008 Zanu PF run-off election campaign to the tune of USD45 Million to cover a damning CIO report that had focused on his company's shady dealings. The tweets also highlight that his political underhand dealings and support did not end there but had been consistent for each and every Zimbabwean election held in the past decade.  

Fast forward beyond the multicurrency era and to the recent years between 2016 to the current period were the Zimbabwean government through its monetary authorities have been at task trying to implement policies aimed at re-introducing the Zimbabwean Dollar. Once again Econet Wireless through its subsidiary Cassava Smartech has another modern valuable and tradeable solution expressed in their Ecocash mobile money transfer platform.

The platform presents similar and unregulated challenges to the economy to those experienced when the company rolled out their mobile lines in that balances possessed in this platform can be tradeable for hard currency. The ecocash platform has also been the preferred mode of domestic payments over the years.

Like in the periods leading to the collapse of the Zimbabwean Dollar in 2008 again informal traders are back on the streets of our country being involved in the trade of this Ecocash product in exchange for hard currency through facilities like the agent and merchant lines.
Some of these special trading lines have been alleged to be involved in the creation of credit through overdraft facilities available on them that add to the broad money supply of the country. This situation has led to the continued hyperinflationary environment being experienced in the country and the failed monetary policy. This product has also been traded in exchange of the new Zimbabwean Dollar and Bond notes for a significant premium over the past years.

To fully investigate the operations of Econet Wireless will be a tall order due to a lack of regulatory framework for the industry, governance structure that place the decision making, law making and prosecuting powers in the hands of a few select officials. In the past many of these select officials became vulnerable to capture and intimidation as a result of their corrupt political history. I will explain further on how as a country we have weak laws and institutions when I deal with the other business personalities and how they have also captured the political systems.

The second character is Kudakwashe Tagwirei the owner of Sakunda Holdings. Kuda has a greater, direct and visible influence on governmental decisions and programs than the other two business personalities. Kuda effectively controls the fuel industry by technically controlling the Feruka-Harare pipeline in partnership with a Swiss company Trafigura.

Although this pipeline belongs to the government of Zimbabwe the basis of Tagwirei's control is as a result of periodic investments in refurbishing this link. These periodic repair investments started in 2014 with another recent and notable investment valued USD 11 million in 2019. For him to thus control the supply of fuel on this link the government will be technically saying that he will be recuperating those outlaid investments.

Unsuccessful attempts have been made since 2012 to admit new entries into the industry and thus break this monopoly. A proposal to construct a similar pipeline of greater capacity on the same route Mozambique to Harare with an additional link to Botswana by a South African Company ‘Mining Oil and Gas Services' (MOGS) have been blocked for various political and technical reasons.

The outstanding reason for the denied (MOGS) deals was that the project had been backed by the main opposition political party MDC during the unity government years. The Zanu PF governments' suspicions were that if the project was to be completed it would have helped bankroll the opposition to government as it was a brainchild of Tendai Biti, Elton Magoma and Eddie Cross.
The highly charged and divided political climate in Zimbabwe became the genesis of Tagwirei's involvement in political matters from the background since 2014 when he refurbished the pipeline. This climate has also helped him to deter new competition into the industry. Tagwirei uses what I would term as the divide to succeed strategy more than any other business personality.

He has benefited more from the chaotic and polarized political climate that has existed over the years and as I will demonstrate, Tagwirei is responsible for the factional fights in all our major political parties.

After his entrance on the political spotlight in 2014 Kuda Tagwirei has not only managed to control the fuel industry but many other government programs winning contracts to construct, import or supply products on behalf of the government. Most notable programs include Command Agriculture, constructing the controversially awarded to him diesel-fueled Dema Emergency Power Plant and the recent contract to supply ZUPCO buses. The biggest question is how does he get all these contracts and at the end escape scrutiny.

Tagwirei is a master at firstly identifying the different factions in political organizations be it Zanu PF or the MDC and then playing them all. The biggest sign of his influence on the government was seen when a cabinet meeting had to be postpended as all members of our executive attended the burial of Kuda's father in May 2018.

Kuda's business interests are all heavily reliant on the supply of foreign currency as they are mainly import based. This has always warranted him to continuously want to influence the foreign currency allocation policy at the Reserve Bank.

To effectively influence and escape scrutiny these business personalities especially Kuda tactically sows seeds of division in the political system playing all factions and all political parties at the same time. This tactic entails the intimidation or capturing of key and strategic government and political officials that are directly tasked with regulatory oversight over these industries using past corruption records due to the corrupt matter of most of our political and government officials.

He has also applied this divide to succeed strategy on the main opposition political party to thus render parliament ineffectiveness towards its mandate of enacting laws that effectively regulate industries involved and scrutinizing programs he funds.

In Zanu PF, Kuda found out that the political party has the command faction mainly constituted by ex-military members who are now in cabinet that comprise Vice President Constatino Chiwenga, Late Minister of Agriculture Perence Shiri and many other military aligned allies who currently run the command agriculture program he funds. The other faction is aligned to President Emmerson Mnangagwa who early on in his administration pointed to his desire to break monopolistic domination in key sectors of the economy.

For a long time, these Zanu PF factions have made indirect attacks on each other. The most notable early attacks being Ace Lumumba's ‘Queen B' utterances regarding foreign currency allocations and the black-market trade and the command agriculture parliamentary hearings that exposed the other faction to corruption.

The response from the opposite faction was done in the recently published Alex T Magaisa's list of Beneficiaries to the RBZ Farm Mechanization Scheme of 2007 and 2008. This list strategically exposes senior government and Zanu PF officials who are in Pres Mnangagwa's faction that hold key strategic and regulatory positions in regulating industries that Masiyiwa, Tagwirei and Rautenbach are involved.

Some of the individuals on the Magaisa list have over the years raised economic sabotage claims against all these three captains of industry.

The key individuals that are exposed include Christopher Mustvangwa, Fortune Chasi the energy minister, Pupurai Togarepi the former youth leader who had Matutu and Tsenengamu working under him suspended from Zanu PF for naming and shaming Kuda and Billy as being behind the black-market trade and economic sabotage.

The names of government officials and politicians that are also not included on the initial Magaisa list also tells us a story as to the source and the political choices that these three business leaders have made and are now pushing for leadership in secret to thus help protect their business empires going forward.

The choice of the faction to support that Masiyiwa, Tagwirei and Rautenbach have made is in response to the increased scrutiny clouding their business empires.

In recent months the Econet Wireless Ecocash platform has been under a series of investigations and suspensions. Green Fuels' mandatory blending monopoly and fixed price of Ethanol blend of USD1.1 per liter was exposed attracting public outcry for excessively raising the fuel pump prices.

Kuda Tagwirei's preferential foreign currency allocation treatment is at treat from the publicly traded and transparent foreign exchange auction system at a time, were the government has simultaneous clamped-down on the ecocash platform that these business leaders have also used in the past.

The ecocash platform, forex preferential treatment system, fixed mandatory blending and pricing levels and lack of regulatory laws have led to these three Zimbabwean business leaders amusing super profits with the rest of the nation bearing the consequences of hyper-inflation.
Kuda Tagwirei has also been implicated in the internal divisions of the MDC political party. These allegations surfaced when Khaliphani Phugeni alleged that Kuda had bought Nelson Chamisa the party's former leader a land cruiser vehicle, to which the former leader then had to deny in public in a press conference.

Months after this issue new allegations surfaced that Kuda Tagwirei was paying members of the Zimbabwean judiciary to rule in favor of Dr Khupe and thus give her control of the MDC. Surely this happened in March this year when we saw a supreme court judgment reinstating Dr Khupe as acting president of the party pending congress.

When the political environment is polarized in this way these three business leaders have always found the going so easy. The focus for our ‘parliamentarian' those who are tasked with the responsibility of enacting regulatory laws for these vital industries on behalf of the greater public will remain absorbed in political party control battles. This situation has resulted in many significant industries lacking the proper regulatory frameworks and government programs that these business leaders would have performed on behalf of the state will also escape scrutiny and oversight from parliamentary work.

Reasons Why these business leaders have gone for long without being subjected to scrutiny and proper oversight.      

Entanglement between the executive and the legislative arms of government
The constitution of Zimbabwe states that for one to be member of the executive one must also be a member of parliament except for five other appointees of the president. Technically this means that those who possess executive power also significantly have great power to determine laws. This is dangerous for most laws that are passed in our parliament are sponsored by the executive through a line minister. As a result, a great number of laws that regulate key industries also place key and regular decision-making responsibilities within the same line ministers that would have advocated for their enactment.

For example;
a)    For the petroleum industry that uses the Petroleum Act (Chapter 13:22), section 45 of the act allows for the creation of a Fuel Price Stabilization fund. The management of this fund is solely vested in the line minister. This situation is very risky opening these same line ministers to influence and capture from business predators who have monopolistic control.

b)    Under section 46 of the same act, line ministers by themselves have the authority to set levels of bounties or subsidies for the local production of energy which at the moment the current blend ethanol price per liter is fixed at USD1.1 with mandatory blending at 20%.

Lack of vital laws to regulate industries  
Since the inception of the mobile banking platforms in 2011, the industry has not had any specific act of parliament governing its operations in protecting depositors and other regulations that would ensure accountability and transparency. This was despite various calls from the public for parliament to enact clear laws governing mobile banking operations. The only piece of legislation the government has for investigating Ecocash's operations is a statutory instrument in SI 2020-080 pronounced in March this year.

This goes on to prove what I had suggested earlier on how these business leaders have consistently sown divisions in our political landscape for it to be preoccupied with power struggles.

As a result, we might technically know that Econet Wireless manipulated its Ecocash platform through credit creation but the government has limited laws to conduct a proper and extensive investigation. This is the reality of many other operations and practices in various industries were malpractices are going unregulated.

Political system with too much power vested in top leaders of political parties
On this issue I will not spend much time as I have covered this in previous programs on the Gambakwe Media Channel when I talk about Section 129 (K) the recall provision and how it is dangerous for governance. These provisions have been used by these business leaders through top political leaders to prevent scrutiny in political parties and the political system at large. We see this in suspension of Lewis Matutu and Godfrey Tsenengamu from Zanu PF.

Politically dormant Zimbabwean Population that engages in wishful thinking
Most Zimbabweans are believed to think that their political rights are limited to only two rights which are electoral right exercised every fifth year and the right to demonstrations and petition the government evoking section 59 of the constitution. "What a stupid way of interpreting and viewing the meaning of political rights." For this you will have to read my books.

Believing that we subject our politicians to scrutiny only every fifth-year is so stupid ladies and gentleman. No wonder why our politicians end up disagreeing on every other matter with the exception of matters regarding diplomatic passports, pronouncing themselves as having duty free statuses, fuel allocations, vehicle range and type and cancellation of debts they previously held.

I will end with the parting words from the Zimbabwean founding President the Late Robert Mugabe whose final official words as President of Zimbabwe were;
"Iwe neni tinebasa, Asante Sana"

Stay Blessed

Terence. T. Simbi
Author: The Next Zimbabwe (2016), Zimbabwe Installing A True Democratic State (2020)                  

Source - Terence. T. Simbi
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