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Tongaat Hulett, Zimbabwe and Alice in Wonderland

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By Tim Cohen
23 Jan 2022 2

Tim Cohen is editor of Business Maverick. He is a business and political journalist and commentator of more years than he likes to admit. His freelance work has included contributions to the Wall Street Journal and the Financial Times, but he spent most of his life working for Business Day. After a mid-life crisis that didn't include the traditional fast car, Cohen now lives in the middle of nowhere in the Karoo.

What is the most unseen, unmentioned, unspoken-about tragedy of the past 20 years? Well, there are lots of them, but surely the sorry tale of Zimbabwe has to be up there.

All of this has been brought home to me recently by the Tongaat Hulett drama. My guess is that South Africans don’t want to think about Zimbabwe because its history constitutes the possible trajectory of SA.

The peculiar thing about Zimbabwe is that if you read the Zimbabwean press, you would think people are living in heaven. The lead story in The Zimbabwe Mail on 20 January was about Zanu-PF “hitting back at the US Embassy” for “poking its nose in the country’s democratic and electoral processes”. That’s Zanu-PF for you: belligerent, arrogant; a confused set of double standards and self-justifications all wrapped up in an Alice in Wonderland version of self-righteousness. Hello Lindiwe Sisulu.

Another story claims Zimbabwe’s economic reforms are getting “global recognition” but a short statistical economic comparison puts paid to that pretty quickly.

Zimbabwe’s GDP is currently, according to the IMF figures, about $28-billion.

Per capita GDP is now $1,760, which means that the average annual earnings of the average Zimbabwean are roughly the same as two iPhones.

Just compare it with Botswana. Botswana is now just a little smaller economically than Zimbabwe at a $19-billion GDP, even though it has a quarter of the population. But its GDP per capita is on average $7,700, roughly 600% more than it was in 1980, and four times higher than the average Zimbabwean.

You could throw Namibia into the mix too, and the figures are roughly comparable. But the point is that these are all countries which have exactly the same historical and economic legacies as Zimbabwe; they are also small countries far from large markets; but their performance has been stellar, handily outperforming some “Asian Tigers”.

The reason for Zimbabwe’s failure is obvious: economic mismanagement on a gargantuan scale. The blame lies squarely with Zanu-PF, which used the oldest trick in the book – blaming all of its self-inflicted wounds on a racial minority. Of course, there was a difficult colonial legacy to deal with, but destroying the only internationally economically competitive portion of the economy is such an obvious stupidity, you have to wonder about their sanity.

Let’s say, for argument’s sake, you agreed with the seizure of the land of white farmers in Zimbabwe as necessary to right historical injustice. You would still have to explain why the Zimbabwean economy continues to be a stuttering jalopy long after that problem was “fixed”. What has happened between the settlement of the land issue and now?

What has happened is that Zanu-PF has had to trim its sails to the wind a bit. There were vague promises of returning some land to white farmers or at least compensating them for their buildings. But it remains a commandist, retrogressive administration whose arrogance in the face of its cataclysmic failure as a government is bewildering.

A key to all of this is the Zimbabwe dollar. Why was it reintroduced when dollarisation was transparently working in keeping inflation down? The answer is control. By controlling access to foreign currency, the government retains something of its writ on businesspeople of all stripes, doling out foreign currency conditionally to party favourites. The result has been the creation of an oligarcal state with a set of government favoured business people along the lines of Russia.

Or, there is another option: set up a money-laundering operation, by sneaking Zimbabwean gold into the UAE, buying, say, cigarettes and selling the cigarettes in SA.

Which brings us to Tongaat Hulett. Under huge pressure from Standard Bank, which didn’t want to report huge write-offs to its shareholders, Tongaat was forced to rush out and find a big investor. Enter the Rudland family, they of Gold Leaf Tobacco fame, who have managed to effect an audacious takeover of a century-old South African company which employs around 30000 people at a fabulous discount this past week with the assistance of Standard Bank, PSG Asset Management, Rothschild, auditors PwC and, unsurprisingly, that steady guardian of public trust, the Public Investment Corporation.

Sometimes you think you have seen it all in SA, but actually you haven’t. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.

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  • So it seems that Standard Bank is the main villain in the impoverishment of the minority shareholders aided and abetted by PSG, Rothschild and others. This is a really shameful deal. It goes to show how little one can trust banks and financial services organisations. Gives one food for thought.

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