Zimbabwe pensions pullout not that simple

For the national pension fund to simply withdraw from Zimbabwe would only harm its people, writes Bill Corcoran.

A DECISION by the investment director of the National Pension Reserve Fund to divest from Zimbabwe-based multinationals who know they are being used by the ruling regime to oppress its people, but refuse to pull out, is likely to be applauded by most people.

The call to do so was made recently by Emmet Bergin of development organisation Progressio. He was at a Government committee meeting at which TDs were told that 14 of the firms in which the reserve fund invested were operating in the troubled southern African country.

Although the fund's investment director John Corrigan assured the committee the companies had been approached to raise these concerns, Mr Bergin maintained this was not enough, saying those with "proven links to the Mugabe regime" were providing a "lifeline for the regime".

The answer, however, to the question of whether these international companies - which include banks, mining and oil companies - should withdraw is not as clear cut as it might seem, according to Vic van Vuuren of Business Unity South Africa, especially if the local people's welfare is the overriding concern.

Van Vuuren, who is Business Unity's chief operations officer - the organisation represents business on high-level issues relating to a country's economy, development and transformation - believes that getting companies to pull out now could do more damage than good.

Dozens of South African companies still operate in Zimbabwe and van Vuuren says many are significant employers, despite making no money. Rather, they are waiting for the tide to turn and trying to keep a foot in the door in the meantime. "The pressure to make companies pull out should have come years ago when the threat of a mass withdrawal might have had some positive affect. Getting companies to pull out when the country is on the cusp of talks, and the economy is in free fall, is like closing the gate after the horse has bolted," van Vuuren says.

"The calls are made by people who do not know the situation in depth. For instance, the current talks in Pretoria between the Movement for Democratic Change and Zanu-PF are about setting up a power-sharing government. If they are successful, then you will have a situation where the ruling regime will still be in government, albeit one of national unity. So what happens then? The perpetrators of violence will still be in power, and business will have to have links if the economy is to revive.

"And is it not better to have the companies, who know Zimbabwe, in place to help revive the economy if a deal is done? Also, what about the jobs that would be lost if these companies pull out? There is 80 per cent unemployment as it is."

However, it is true that the ruling Zanu-PF regime's ruthless oppression of its own people since the disputed general election of last March has been aided to some degree by the presence of international companies.

A prime example of this was reported in the Zimbabwe Independent last February. The paper warned that a massive fuel shortage was looming following revelations that the ruling regime had started stock-piling diesel and petrol to use in its election campaign.

Under a new law introduced in July last year, both national and international fuel companies involved in wholesale, retail and distribution were forced to use Noczim, the National Oil Company of Zimbabwe, to import fuel into the country on their behalf.

The companies paid Noczim for the fuel in much-needed foreign currency up front and then had their product withheld so the ruling regime could quite literally fuel its political campaign into the rural areas.

"Sources said the National Oil Company of Zimbabwe, the sole importer of fuel in the country, has been directed to hold on to the fuel that they have imported on behalf of private fuel companies," the publication reported on February 28th.

Whether British Petroleum, one of the companies on the pension fund's investment portfolio, was involved in this is unclear, but the incident does show how companies can be taken advantage of inadvertently, and appear to have links to the ruling regime.

Since then Shell Oil has decided to sell its 50 per cent stake in Zimbabwean retail outlets to a third party, its rivals Egen. The other 50 per cent is owned by BP.

Egen chief executive Rashid Yusof told the media this month that the oil company was buying Shell's stake, which amounted to about 200 retail outlets, with a view to investing when the country's political crisis is resolved.

Van Vuuren told The Irish Times that such a move was bound to happen and that whoever pulls out now will quickly be replaced by another firm looking to position itself well for the economic turnaround.

"If western and South African companies leave, they will be replaced by Chinese and Russian firms. Already China is active and has entered into partnerships with the Zimbabwean government in manufacturing and mining businesses.

"Their [the Chinese] record on worker and human rights in general leaves a lot to be desired, so where is the benefit to the local people from us leaving? There has to be a better way for companies to apply pressure for regime change," he concludes.

The Government's decision to examine the pension reserve fund's Zimbabwe-based investments is the right thing to do, if for no other reason than to fulfil the public's right to know where and how its money is being invested. However, if the welfare of Zimbabwe's people is at the heart of any action, then it appears that a far more considered tactic than getting companies to withdraw needs to be employed.