State Department supported business forum in Harare

The United States State Department supported a day-long business forum that was held at the Celebration Centre in Harare and was attended by about 300 business executives.

The conference was organised by the American Business Association of Zimbabwe with funding from the State Department’s Business Facilitation and Incentive Fund.

The day-long economic forum under the theme “Just Business” was designed to be the first step in initiating a national-level private-sector led discussion about the key economic policy reforms needed to right Zimbabwe’s course.

Although government officials were invited no one except central bank governor Gideon Gono attended.

Former Finance Minister Simba Makoni also attended but in his personal capacity as a businessman.

Full cable:

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UNCLAS SECTION 01 OF 04 HARARE 001317

SIPDIS

SENSITIVE

SIPDIS

AF/S FOR S.HILL

NSC FOR SENIOR AFRICA DIRECTOR B. PITTMAN

STATE PASS TO USAID FOR M. COPSON AND E.LOKEN

TREASURY FOR J. RALYEA AND T. RAND

COMMERCE FOR BECKY ERKUL

E.O. 12958: N/A

TAGS: ECON EFIN ETRD PGOV ZI

SUBJECT: BFIF FUNDING CATALYZES PRIVATE SECTOR DISCUSSIONS

ON TURNAROUND

REF: HARARE 00057

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Summary

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¶1. (SBU) On October 5, the newly-energized American

Business Association of Zimbabwe (ABAZ), generously supported

by the Business Facilitation and Incentive Fund (BFIF), held

a high-profile day-long economic forum under the theme “Just

Business” to identify and deliberate over the key economic

policy reforms needed to right Zimbabwe,s course. The event

also received major support from over a dozen private

companies. It was attended by more than 300 business people.

However, despite the efforts of forum organizers, only a few

government officials were present. The forum featured a

series of keynote presentations by speakers from countries

that have undergone political and economic recovery, as well

as presentations by local private sector leaders and

academics. Looking ahead, ABAZ is planning to take key

messages from the forum directly to government officials and

parliamentarians in workshops chaired by member company

executives. End Summary

——————————————-

BFIF Support Spurs Business Group to Action

——————————————-

¶2. (U) On October 5, the American Business Association of

Zimbabwe, supported generously by the State Department’s

Business Facilitation and Incentive Fund (BFIF) and fourteen

leading companies including PricewaterhouseCoopers and

British Airways, held a high-profile day-long economic forum

under the theme “Just Business” at Harare’s premier

convention facility, the Celebration Center. The forum was

designed to be the first step in initiating a national-level

private-sector led discussion about the key economic policy

reforms needed to right Zimbabwe’s course. The organizing

committee drew together speakers from Brazil, South Africa

and Malawi, as well as local private sector leaders and a

prominent U.S. academic to engage in constructive discussion

of the way forward for the Zimbabwean economy.

¶3. (U) Over 300 delegates, including several dozen CEOs,

managing directors and finance directors of major Zimbabwean

companies and financial institutions, attended the

proceedings and a gala closing cocktail reception hosted by

Stanbic Bank at the Ambassador,s residence. However,

although ABAZ organizers invited GOZ officials, only a few,

including Reserve Bank of Zimbabwe (RBZ) Deputy Governor

Nicolas Ncube, were in attendance. Former Finance Minister

Simba Makoni, who is a ZANU-PF Politburo member as well as a

businessman and farmer, attended in his private capacity.

——————————————— —–

An International Perspective from Keynote Speakers

——————————————— —–

¶4. (U) Keynote speaker and best-selling South African

author Chantell Ilbury opened the forum by showing delegates

how to use scenario planning to assess “The Game” that

HARARE 00001317 002 OF 004

Zimbabwe was in. She walked delegates through Zimbabwe,s

strengths and advantages, the country,s “playing field,” and

the “Rules of the Game” that apply to all: rule of law,

stability of government, respect for property rights, freedom

of speech; and the “aspirational rules” for a winning game:

maintaining a high standard of education, a strong work

ethic, an economy made up of large and small enterprises, the

ability of entrepreneurs to mobilize capital, social harmony,

and the ambition to look outward and be a global player.

Cautioning against “winner-take-all thinking,” she stressed

the need for compromise and “win-win” via second-choice

strategies for all stakeholders, including government.

¶5. (U) The forum’s second keynote speaker, prize-winning

Brazilian economist Dr. Caio Megale, reviewed Brazil’s long

and eventually successful battle with hyperinflation, and

drew universal lessons, including the need for strong

political will to enact tough reforms. Dr. Megale described

how Brazil,s anti-inflation technocrats had weathered the

political storm surrounding reforms in what he called a

political “bunker” created by Brazil’s leaders. Harare’s

Independent newspaper published an in-depth interview with

Megale on October 12.

¶6. (U) World Bank consultant and civil engineer Robert

Geddes graphically described Zimbabwe’s deteriorating

infrastructure and stressed that the longer the economic

decline, the longer it will take to rebuild Zimbabwe’s

infrastructure, once Africa’s finest. Geddes was joined on

the podium by education expert Jameson Timba, who focused on

how to revive Zimbabwe’s excellence in education.

——————————————— ————

Property Rights and Resuscitating the Agricultural Sector

——————————————— ————

¶7. (U) A further highlight of the forum was visual evidence

presented by Salem College Professor of Economics Craig

Richardson on the cost of destroying property rights in the

agricultural sector. Using satellite photos of abutting

commercial and communal properties, he demonstrated that

those who owned their own land had greater incentives to

maintain and enhance that land. Richardson argued that all

citizens should hold secure property rights to prevent land

degradation and provide collateral for land improvements.

Joining Richardson in the session, business consultant and

former Eisenhower Fellow Kenias Mafukidze described the dire

effects of a collapsed agricultural sector on Zimbabwe’s

manufacturing industry.

——————————————— ——-

Macroeconomic Stabilization, The Equity Market, Good

Governance

——————————————— ——-

¶8. (SBU) Dr. Matthews Chikaonda, former Finance Minister

and Reserve Bank Governor of Malawi and now CEO of Press

Corporation, said Malawi had looked to Zimbabwe as a model

for economic reform in the mid 1990s. He explained how the

government of his day had managed the political fallout of

the economic austerity measures that eventually stabilized

HARARE 00001317 003 OF 004

the economy by exercising political will, political courage

and by defending reserve bank independence. With Makoni and

Ncube sitting in the front row, he reminded the delegates

that a country could not print its way out of an “economic

mess” – it had to address the fundamental causes of the

problem.

¶9. (U) Turning to interest rate risk, Finhold’s principal

economist and former International Visitor Best Doroh

emphasized the need for more predictable, credible and

sustainable interest rate management, the phasing out of

subsidized lending schemes, and the creation of a vibrant

secondary market with a variety of money market instruments.

Imara Asset Management CEO John Legat described the huge

potential of the region,s equity markets, and the Zimbabwe

Stock Exchange’s (ZSE) role as an inflation hedge thanks to

its large institutional investor base. He noted that return

on equity on the ZSE had been 127 percent in US dollar terms

in the past year to September 2006. The presentations ended

with recommendations by Judge Thabani Jali and Anton Van Wyk

of PriceWaterhouseCoopers South Africa for ensuring good

public and corporate governance.

¶10. (U) Closing the forum, Richardson reviewed the main

economic challenges facing Zimbabwe. He concluded that

Zimbabwe was not terminally ill; each and every one of the

“fixes” discussed during the forum could be implemented, and

many could be introduced fairly quickly.

———-

Next steps

———-

¶11. (SBU) ABAZ has received extremely positive feedback

from delegates, who are asking “what next?” As a first step,

ABAZ plans to circulate the proceedings widely to delegates

and interested parties and seek press coverage of excerpts of

the presentations. In fact, they are preparing a packet of

information on the conference, including the presentations

for President Mugabe at the request of his office. The

packages will also include longer papers – thought pieces –

that speakers were encouraged to provide along with their

presentations.

¶12. (SBU) In the medium-term, ABAZ has begun to synthesize

key forum messages for direct presentation to government

officials. They plan to hold a series of workshops led by

member company executives for parliamentary portfolio

committees, various GOZ economic task forces, government

officials, and other policy making or policy influencing

bodies. Longer-term, the ABAZ executive committee has

expressed interest in institutionalizing the “Just Business”

private sector economic forum as an annual business event in

Zimbabwe that would serve to reinforce the private sector

message to the GOZ on the need for reform.

——-

Comment

——-

¶13. (SBU) The forum was an important step forward for ABAZ,

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which found its voice and established itself as a potential

catalyst in convincing the Zimbabwean business community to

bring pro-reform pressure to bear on the GOZ. In that

regard, it was disappointing but not unexpected that so few

high-level GOZ officials attended the forum. However, we

believe ABAZ is on the right track in its plans to engage the

government at the parliamentary and task force levels. The

presentations by prominent international speakers stimulated

discussion in the business community and also drew press

attention. Although the forum did not present novel economic

ideas, it began a process * to include follow-on workshops

* that will put Zimbabwe-specific solutions on the table for

the day when the “political will and the political courage to

reform” – to borrow from Dr. Chikaonda,s prescription for

turnaround – emerge. As such, it plays a useful role as an

additional vehicle for talking – and planting ideas ) about

the shape of the post-Mugabe future in Zimbabwe.

DELL

(91 VIEWS)