US embassy cable - 04HARARE278

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