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Cablegate: Industry Wants New Tripartite Dialogue

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

170813Z Feb 04

UNCLAS SECTION 01 OF 02 HARARE 000278

SIPDIS

STATE FOR AF/S
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
USDOC FOR AMANDA HILLIGAS
TREASURY FOR OREN WYCHE-SHAW
PASS USTR FLORIZELLE LISER
STATE PASS USAID FOR MARJORIE COPSON

E. O. 12958: N/A
TAGS: ECON EINV ETRD ELAB PGOV ZI
SUBJECT: Industry Wants New Tripartite Dialogue


1. Summary: Confederation of Zimbabwe Industries (CZI)
President Anthony Mandiwanza told us he is lobbying the
GOZ to restart the Tripartite Negotiating Forum (TNF)
between government, industry and labor. Mandiwanza
acknowledged that CZI is unlikely to oppose macroeconomic
distortions flowing from unrealistic exchange and
interest rates since importing firms belonging to the
organization are enjoying cheap access to forex and
credit. More encouragingly, CZI will continue to push
for more rational fiscal policy and an end to the GOZ's
25 withholding on export proceeds. End Summary.

2. CZI President Mandiwanza and acting CEO Farai Zizhou
called on Amb Sullivan on Feb 12 to exchange ideas about
Zimbabwe's sinking economy. Mandiwanza expressed
interest in the African Growth and Opportunity Act
(AGOA), Millennium Challenge Account (MCA) and U.S.
policies in the World Trade Organization (WTO). (Note:
Although Zimbabwe does not qualify for AGOA, there is
growing industry interest in the policy. Post plans to
address this with a series of seminars about AGOA in
March.)

3. Turning to Zimbabwean policy, Mandiwanza made the
following points:

- CZI wants to reengage government and the Zimbabwe
Congress of Trade Unions (ZCTU) in a new round of
Tripartite talks. They broke down early last year after
the exit of ZCTU, which believed negotiations were
failing to address workers' diminishing buying power.

- CZI continues to support Reserve Bank (RBZ) Governor
Gideon Gono's more innovative monetary policy. However,
Mandiwanza says he is lobbying government to address
fiscal policy as well. The ever-optimistic Mandiwanza
believes the "environment has never been more positive or
more open to change." CZI will continue to press the GOZ
to forsake its withholding of 25 percent of export
proceeds.

- Mandiwanza conceded that Gono's policies are opening a
new set of macroeconomic distortions. However, he said
CZI could not oppose sub-market exchange and lending
rates since many member firms benefit from these
initiatives. Mandiwanza praised the RBZ's support for
banks' dispersing of Z$878 billion (US$231 million)
through low interest loans to the private sector. Yet
since these loans carry low 30 percent interest rates
(versus 100-200 percent at market rates), the CZI chief
admitted that the "temptation for speculation is
extremely high." On the other hand, he recognized that
pension funds - the source for many loans - are depleting
assets of their participants.

- Mandiwanza agreed that farmers resettled under the
GOZ's fast-track land reform will have to be granted some
form of title-deed or land tenure. He considers it a
positive signal that the recent cabinet reshuffle appears
to transfer responsibility for land reform from hardline
Agriculture Minister Joseph Made to John Nkomo.

Comment
-------
4. Mandiwanza is a dynamic, persuasive face for
Zimbabwean industry. He is the CEO of Zimbabwe's most,
almost only, successful parastatal, Dairiboard. At the
same time, he is hardly an independent player, since he
has deep sentimental and financial ties to the ruling
ZANU-PF. He has partnered with Mashonaland East Party
Chairman Ray Kaukonde, State Security Minister Nicolas
Goche, Minister Without Portfolio Eliot Manyika and
businessman Kenneth Musonhi to form Takepart Industries,
a consortium that has gained a stake in many businesses.
(Acting CEO Zizhou, who accompanied Mandiwanza and
oversees the day-to-day operations of CZI, is a large
beneficiary of land reform.) Thus we do not expect
Mandiwanza and CZI to attack the GOZ's counterintuitive
economic policies as fervently as a truly independent
industry rep. Our hope is that a significant number of
ZANU-PF heavyweights like Gono and Mandiwanza are,
through their own business experience, developing a taste
for a more rational commercial environment.


Sullivan

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