U-Turn Opens Way to Foreign Investors : Zimbabwe Shifts Away From Socialism

Zimbabwe has made a U-turn on the road to socialism set out by President Robert Mugabe and is opening the way to foreign investors, a Cabinet official said.

“Even dreaming of socialism is a non-starter,” Hebert Ushewokunze, the minister of political affairs, told businessmen assembled here recently. “We won’t see true socialism here. Nor will our children.”

Mugabe came to power after independence from Britain in 1980 vowing to lead the former colony of Rhodesia on a Marxist-Leninist path, and his government introduced sweeping social and economic changes.

Those changes included cheap schooling, free health care, price controls on a broad range of commodities and stringent, protective labor laws that critics said promoted inefficiency.

Mixed Economy

But Mugabe had inherited a mixed capitalist-style economy that has remained largely in the hands of a 100,000-member white minority that favors the free enterprise system.

For years, government and the business community coexisted uneasily. All the while, the economy stagnated and unemployment increased.

Next year, experts say, about 300,000 students will leave school and enter an economy that is producing only 7,000 new jobs a year. Unemployed voters will outnumber employed voters 3 to 1 in the 1990 parliamentary election.

So in May, after months of speculation that something of the sort was coming, Mugabe announced a new investment code.

It was expounded by Ushewokunze to the businessmen in Bulawayo, Zimbabwe’s second largest city after Harare, the capital formerly called Salisbury.

“We have lifted the lid by inviting external investors,” he said. “I don’t see this investment atmosphere as conducive to the goals of a socialist state.”

The investment code, Zimbabwe’s first, has brought a mixed reaction. Many businessmen say it is too little, too late, while radical students and others have condemned it as a sell-out.

Professor Detained

On June 9, Kempton Makamure, a university professor and an outspoken Marxist ideologue, was detained by police for questioning after criticizing the code on state radio as a violation of socialist principles. Two journalists involved in the broadcast were suspended.

While Makamure and his disciples think the code strays too far from socialist philosophy, a great many businessmen believe it doesn’t go far enough.

“We have been given a bone, but there’s not enough meat on it,” said Arthur Chapman, a business executive in Harare.

A black entrepreneur, who requested anonymity, said the state’s ideological dilemma created an investment policy that “was not dramatic enough to attract the high rollers we really need.”

The code allows foreigners to hold 25% of the share value of new investments, up from 15%. It also permits them to send 25% to 100% of their profits to home offices in hard currencies, depending on the type and priority of the investment.

Mugabe also pledged less state interference in business affairs and set up a “one-stop center” to approve investment applications within a maximum of 90 days. He also proposed lifting most price controls, scrapping fixed wages in favor of collective bargaining and liberalizing labor laws.

In the past, an employer had to have Labor Department approval to fire any worker, and most such applications were turned down.

“We are not neocolonialists looking for vast hard currency returns,” said one Western investment expert, speaking on condition of anonymity.

“What we want is a strong economy we can do business with. Zimbabwe has not made the quantum leap, but they’ve made a start.”