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Cablegate: Delta Corporation: Financing Its Own Interests

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

UNCLAS HARARE 002122

SIPDIS

NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
LONDON FOR CGURNEY
PARIS FOR CNEARY
NAIROBI FOR PFLAUMER

E.O. 12958: N/A
TAGS: EAGR EFIN PGOV ZI
SUBJECT: DELTA CORPORATION: FINANCING ITS OWN INTERESTS
WHILE APPEARING BENEVOLENT


1. Summary. In a new development, local powerhouse Delta
Corporation (which, coincidentally, owns several breweries)
has reportedly announced a Zim $10 billion initiative
(approximately US $14.5 million at the parallel rate) whereby
it will loan inputs for the production of maize, sorghum and
malting barley to selected farmers. However, while the
publicity has cast Delta as a solid corporate citizen doing
its part to uphold the GOZ's programs, Delta's self-interests
are driving the deal. End summary.

2. According to published reports, Delta Corporation has
announced a joint venture with the GOZ whereby Delta will
loan the equivalent of Zim $10 billion over two growing
seasons to farmers in the form of agricultural inputs. These
inputs will reportedly support the production of 70,000
tonnes of maize, 60,000 tonnes of malting barley, and 20,000
tonnes of sorghum annually. While this has been met with
great fanfare by Minister of Lands, Agriculture and
Resettlement Joseph Made, as well as Minister for Information
and Publicity Jonathan Moyo, as evidence of Delta's support
of agrarian reforms, the details of the transaction give a
different gloss.

3. Delta subsidiaries include United Bottlers (Coca-Cola),
National Breweries, and Chibuku, which produces the local
opaque beer known as "shake-shake." According to published
accounts of the deal, the inputs and support provided by
Delta "will be treated as loans to be netted off against
final prices." Delta further reserves the rights to manage
the program and select which farmers will receive the loans.
Additionally, while the farmers will forward all maize
produced to the Grain Marketing Board (GMB), which by law
controls all movements, sales and purchases of maize within
the country, Delta has requested an "undertaking and
guarantee" that for as long as maize remains a specified
commodity under the control of the GMB, Delta will be
guaranteed its quota -- with only the surplus to be
distributed to other buyers. If this deal takes place as
agreed, Delta will thus have provided loans to selected
farmers (with their loan repaid by skimming off the first cut
from the produce) who will grow the agro inputs required for
the operations of Delta's subsidiaries.

4. Comment. One local economist notes that this is actually
an expansion of a previous program which Delta has been
operating for the past 12-15 years. Historically, Delta has
preferred to grant malting barley, hops, and grain inputs to
"captive farmers," who then provide inputs for Delta's
various breweries. According to this economist, the dollar
value of the program has increased, but this has much more to
do with inflation than with increased hectarage.
Additionally, he believes that Delta is taking the
opportunity to "make a virtue out of a necessity" by publicly
announcing the program in this fashion. While it is true
that the increase of maize inputs is a new initiative,
Delta's motivations are based much less on altruism and more
on protecting its bottom line. End comment.
SULLIVAN

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