Business leaders push envelope-gently

Zimbabwe’s business leaders made a small breakthrough when they persuaded the government to devalue the local currency but they had to appease the government by calling it an export support mechanism.

The business leaders who were a who is who in industry were treading on soft ground because they said even moderate government officials had a very steep learning curve when it came to economic matters.

The business leaders who met United States ambassador Joseph Sullivan at a roundtable discussion included Dairiboard’s Anthony Mandiwanza, Cottco’s Silvester Nguni, International Capital Corporation’s Bernard Chidzero, Intermarket’s Nicholas Vingirai and PG Industries’ Gerald Mujaji.

They said government now seemed to be entertaining their input but they had to be extra careful with the ultra-sensitive government ministers.

The businesses were more accustomed to getting their way through quiet, tactical bribes.

Full cable:

Viewing cable 03HARARE615, Business Leaders Push Envelope – Gently

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This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 HARARE 000615 

SIPDIS 

SENSITIVE 

STATE FOR AF/S 

NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 

USDOC FOR 2037 DIEMOND 

PASS USTR ROSA WHITAKER 

TREASURY FOR ED BARBER AND C WILKINSON 

STATE PASS USAID FOR MARJORIE COPSON 

¶E. O. 12958: N/A 

TAGS: ECON EINV ETRD ZI

SUBJECT: Business Leaders Push Envelope - Gently 

Ref: Harare 531 

¶1. (SBU) Summary: Zimbabwean business leaders told us 

they are increasingly willing to assert themselves with 

GOZ ministers. Still, they acknowledge that their 

outspokenness has its limits and carries some risks. End 

summary. 

Modest Break-Through? 

--------------------- 

¶2. (SBU) Ambassador Sullivan hosted a roundtable 

discussion on March 25 for five prominent company chiefs: 

Dairiboard's Anthony Mandiwanza, Cottco's Sylvester 

Nguni, International Capital Corporation's Bernard 

Chidzero, Intermarket's Nicholas Vingirai and PG 

Industries' Gerald Mujaji. The businessmen feel the GOZ 

has finally begun to entertain their input, citing recent 

talks with the Confederation of Zimbabwe Industries 

(CZI), which Mandiwanza heads, as well as the 

government/industry/labor Tripartite Negotiating Forum 

(TNF). These negotiations helped bring about devaluation 

and could lead to a relaxation in price controls. 

¶3. (SBU) Nonetheless, dialogue with the GOZ still has its 

challenges. Mandiwanza agreed the GOZ should scrap price 

controls, but could not make that case in blunt terms to 

the ultra-sensitive government ministers. Instead, he 

redefined controls as "managed" prices, satisfying the 

government's interventionist zeal and the private 

sector's need for higher prices. Mandiwanza employed the 

same strategy in gaining a devaluation, labeling it an 

"export support mechanism." He was less successful in 

arguing for liberalized fuel prices and import licenses, 

as inflation fears cut the proposed price increase by two- 

thirds. In these and any other matters of economic 

policy, roundtable participants agreed that even moderate 

government officials have a very steep learning curve. 

Businesses are more accustomed to getting their way 

through quiet, tactical bribes. Conversely, our 

interlocutors still fear for themselves and their 

families if they stick their necks out too far, ensuring 

the government/business relationship remains uneasy. 

Comment 

------- 

¶4. (SBU) As we have reported (ref), the GOZ has 

successfully implemented devaluation and higher fuel 

prices. These are arguably the first positive 

macroeconomic developments in over a year, and ones that 

several roundtable participants had a hand in. If the 

GOZ wants to turn around this economy, however, it's 

still just in the first inning. Further reforms will fan 

popular discontent, possibly triggering an escalation in 

GOZ repression. 

¶5. (SBU) The businessmen want desperately to approach 

economics in isolation from politics, maintaining the 

kind of neutral, nonpartisan posture that a corporation 

might in the U.S. Most businesses bent over backwards to 

avoid any appearance of supporting the opposition's 

stayaway on March 19-20, although most avoided opposing 

it either. At a time when the public-private sector 

dialogue is advancing, neutrality has both appeal and 

merit. Ultimately, though, we do not believe anyone here 

in government, business or civil society can disentangle 

economic growth and stability from political legitimacy, 

human rights and rule-of-law -- economic-political 

linkage that both the African Growth and Opportunity Act 

(AGOA) and New Partnership for Africa's Development 

(NEPAD) underscore. Participants at the lunch -- the 

elite of indigenous businessmen -- are increasingly 

cognizant of the linkages and the need for Zimbabwe to 

reengage internationally with its traditional economic 

partners. PG's Mujaji said his participation at this 

moment in an American Embassy lunch was intended and will 

be read as a signal by the GOZ. 

¶6. (SBU) At the lunch, we underlined problems with GOZ 

governance and lack of respect for human and civil 

rights. We praised the businessmen for their success in 

achieving several positive economic steps, but observed 

that the economic crisis could not solved without also 

addressing Zimbabwe's political crisis, in which at least 

half the population is alienated from the Government. 

Sullivan

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