Zimbabwe President Robert Mugabe announced three new bills designed to tighten government control over the country’s crumbling economy when he opened a new session of parliament on Tuesday.
The new laws will force private companies to sell up to 51 per cent of their shares to black Zimbabweans, allowing the government to take control of mining properties and companies and establish a National Incomes and Pricing Commission to set prices and wages for all sectors of the economy. All three are scheduled to become law before the end of the year.
In his speech, Mr Mugabe gave no new details of the proposed Indigenisation and Economic Empowerment Bill – which includes the 51 per cent stake measure – which raised fears that the government might move to take over foreign-owned companies.
In theory, the bill is aimed at empowering “disadvantaged” – black – Zimbabweans, but it appears that this legislation could also be used to punish what the government last week called “economic saboteurs” – the companies that have been accused of profiteering out of the economic collapse in Zimbabwe.
They have been the primary targets of the government’s price cuts policy, which was introduced earlier this month and was designed to halve consumer prices.
Mr Mugabe thanked African and non-aligned countries for their continuing support for his administration, citing the election of Zimbabwe to head the UN’s Sustainable Development Commission and the thwarting of British and western attempts to have Zimbabwe discussed by the Security Council. He repeated his government’s accusations that Britain and its allies had fostered civil unrest in the country in a vain effort to show that the situation in the country was a threat to peace and stability.
As Mr Mugabe spoke, the Reserve Bank of Zimbabwe published fresh monetary data demonstrating the extent to which the authorities had lost control of the economy. The RBZ’s figures show money supply growth trebling from 1,400 per cent at the end of last year to 4,212 per cent in April at which time inflation was 3,700 per cent. The central bank revealed also that Zimbabwe’s domestic debt spiralled 290-fold between March and July while official loans to banks increased 40-fold over the same period.
Economists say the numbers confirm that inflation, currently estimated at around 6,000 per cent on the official index suppressed by the government, is being driven by the central bank’s “quasi-fiscal” operations – that is, credit creation to finance government spending.
In a second report illustrating Zimbabwe’s rapidly worsening crisis, the US-based Fewsnet, which provides food security information for 17 African countries, estimates that Zimbabwe will need to import at least 1m tonnes of grain over the next nine months. The government has so far announced plans to import only 400,000 tonnes of maize, mostly from Malawi. By last month, 70 000 tonnes had been imported according to Fewsnet, which says that “most households” have not been able to meet their minimum food requirements because of rampant food inflation and food shortages.
The UN World Food Programme has estimated that a third of the population – about 4m people – will need food aid in the first quarter of 2008.
Mr Mugabe also announced a constitutional amendment bill that provides for the enlargement of parliament from 150 to 210 seats and the Senate or upper house to 84 seats from 66.
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