Unpacking the ENG-RBZ saga three years on

by Mutumwa Mawere
On 31 December 2003, ENG Capital (Private) Limited, a company that commenced operations in 2001 having been established by three young black professionals led by Mr. Gilbert Muponda, whose name has been scandalised and villified in the Zimbabwean media as part of a political strategy spearheaded by Dr. G. Gono, the Governor of the Reserve Bank of Zimbabwe, whose first mission after appointment by President Mugabe was to selectively target black owned and controlled institutions to create an impression that Zimbabwean’s debilitating economic problems were a creation of economic and political saboteurs and their imperialist sponsors.

In 1980, Zimbabwe gained independence following a protracted liberation struggle against an exclusively race-based colonial construction that not only politically disenfranchised the majority of the population but economically excluded the majority from harvesting the fruits of economic progress. The post colonial dispensation was naturally going to be characterised by white fear and black hope given the history of the country and the context and content of the struggle for independence.
Blacks after the successful conclusion of the Lancaster House negotiations naively thought that their defining moment to shape their own destiny had arrived and their elected representatives and political elites would proceed to make good on the promise of independence.

The legacy of the colonial era had to be addressed and change was the order of the day. As we all reflect now, we can look back at missed opportunities and anyone who deeply cares about Zimbabwe, my country of birth, as I do, cannot afford to allow their heritage to be undermined and destroyed by a few who believe that God has annointed them to exclusively shape the destiny of the country.
As we begin this historic year in Zimbabwe’s story, we cannot remain indifferent to what the world sees as wrong in Zimbabwe. Zimbabweans and all its domestic and external friends are enjoined to come together for a common purpose and help restore hope again that the future can be as bright as it was in our minds and hearts in 1980.

Yes Zimbabweans have been abused both during the colonial era and, indeed, during the last 28 years. Although the colonial abuse generated with it an organised group of Zimbabweans who believed in change and that they had a part to play in it, independence brought with it its own dynamics and inertia and a sense that the future was someone else’s business.

During the last 18 months, I have taken a conscious decision to participate through my writings in the conversations about not only Zimbabwe but the rest of the continent in the firm belief that those who purport to love Africa must invest in the change they want to see and believe in. We have no choice but to tear the barriers of ignorance that divide us. We need to give Zimbabweans reasons why they should stand up and help lift the country from its current morass while politicians debate about new constitutions and threatening to boycott elections.

There can be no doubt that Zimbabwe’s moment for change has come and any idiot can smell it. Time has come for anyone who loves Zimbabwe to speak up and not allow the Idi Amin like characters to define who Zimababweans are. The future of the country cannot be owned by a few but belongs to citizens who today feel like they are prisoners in what should be their own home.

The future of Zimbabwe now appears to belong to the minority who believe that economic challenges are a vehicle for scaring citizens from owning their own future. We have to be honest about the choices that face Zimbabwe in this year of change and be allert to the challenges that confront the country. The time for dictators has to come to an end and the Zimbabwe brand has to be repositioned. Zimbabwe can only be changed by those who believe that it’s their business to shape tomorrow by today’s actions and a powerful message that change is coming has to be sent now.

The government of Zimbabwe is a collective project that must be owned by citizens and this cannot be said to be the case today. The need to take back the government and place it where it should belong cannot be overstated.

I have written about Gono and his antics since his appointment in December 2003 not because I dislike him personally but because the same reasons that spurred me to become a pioneer black big business player and focus my attention on deepening and broadening the empowerment process in Zimbabwe while seeking to demonstrate that blacks can rise to the occasion are the very reasons that have led me to voice my concerns about the direction or lack of it that he is taking the country. We have to ask ourselves whether Zimbabwe, a country that was already in the intensive care when Gono was appointed, has improved under his stewardship or the decay has been accelerated.

Gono has his admirers and supporters who passionately believe in him and the direction that he has taken. It is important that a conversation be pursued on Gono’s role in advancing the interests of the country. We all may not agree and that is fine with me but to accept to sit on the sidelines when we know that something better awaits Zimbabwe if only we can reach out for it and fight for it will be irresponsible.

It is for this reason that I have decided to review a number of the cases that have been used to demonstrate that Gono’s intervention has been good for Zimbabwe. One such case involves the ENG saga. A lot has been written about the so-called scandal but we really have not heard from the other side and I was pleasantly surprised to receive an email from Mr. Gilbert Muponda, who was the founder of the group of companies that operated under the ENG banner.

He wanted his story to be known following the outburst of Mr. Charamba after the recent escape of Mr. Butau about the alleged role of the West in undermining Zimbabwe’s legitimate interests to intimidate and victimise its targeted individuals whereever they may be. This was what was reported in the Herald about ENG: “In 2004, ENG Asset Management director Gilbert Muponda, who was facing charges of defrauding investors of $61 billion, fled to the United States. His fellow director Nyasha Watyoka, however, chose to remain behind and face the music.”

Any rational reader who read the above would be entitled to draw the conclusion that Mr. Muponda defrauded investors of Z$61 billion and ran away making him a fugitive. However, in any functioning democracy one would be entitled to ask why the injured investors would choose to remain silent and the state steps into their shoes purporting to be the injured party.

Surely, the laws in Zimbabwe are sufficient to protect a genuine investor without any assistance of the police particularly where allegations of fraud are involved. Furthermore, if the injury was caused by ENG, the juristic person, then why target individual agents of the real beneficiary of the alleged fraud. A director of a company can only be sued in his representative capacity and ordinarily investors would have taken action against ENG and then, in the event, of fraud it would be up to ENG to take action against the directors.

In the case of ENG, it is interesting that the complainant was the state acting on its own without the consent of the investors who in the first place had voluntarily placed their funds under the control and management of ENG.

At face value it would appear as if investors reported this matter to the police and then the police acting on behalf of the affected investors proceeded to apprehend the accused. However, the facts that Muponda provided to me confirmed my worst fears about the state of affairs in Zimbabwe and why any investor should be worried about the security of not only their properties but their own freedom.
What is amazing about the ENG story is that it was the first victim of Gono who only after seven days in office descended on the institution. The media was then deployed to create the perception of criminality and national security injury. Muponda was transformed from an unknown quantity to a celebrated villain.

At all material times, the investors were missing in action. At the time of Gono’s appointment, the RBZ had no oversight over asset management companies and a lot of activity was taking place outside the control of the RBZ mainly because the role of an asset management company in any functioning democracy is to provide services and solutions to its principals. The assets belong to the principals and an asset management company is only entitled to a fee.

One must point out that Gono was the CEO of the Commercial Bank of Zimbabwe (CBZ) and was not a significant shareholder of the insitution and, therefore, as a person who rates himself highly he must not have been happy to know that people like Muponda, whose names were not familiar to the President, were shaking the market without any principal or godfather behind them. It was natural that Gono had to stop the leveraging that was taking place in the asset ownership business of Zimbabwe whereby indigenous people who would otherwise have no access to acquisition capital now had a new vehicle to access capital for the kind of transformation that has eluded the post colonial government of President Mugabe notwithstanding the posturing on empowerment and indigenisation issues.

It is also important to state that the government of Zimbabwe has never really come to grips with the empowerment challenges that the country confronts and the version of entrepreneurship that has been accepted by the political elites is the Gono type whose humble background and profile impresses many traditional politicians.

In fact, President Mugabe was on record at the Masvingo Congress of 2003 castigating the new breed of entrepreneurs who to a large extent had banking experience. Accordingly, when Gono was appointed his first target had to be the asset management industry. ENG was the most aggressive at the time with principals who were fairly young and independent. According to the ZANU-PF way of thinking, companies like ENG should have been nipped in the bud because their way of doing things, their age, their capacity to mobilise capital defied what is generally accepted as the liberation way of doing things.

In fact, the thinking is that if President Mugabe does not know of something then it must be wrong. Equally, if Gono has not seen it and experienced it then it must be criminal. It is commoncause that the President does not trust the market and also people who work in the private sector. He genuinely believes that if a person is smart then he should be under his control afterall he can boast that even the likes of Jonathan Moyo, Simba Makoni, and others have been his proteges and there are many more that would die to be considered as cabinet ministers. The President is old fashioned to the extent that he easily takes pride in having a team that lies to him day-in day-out about what is going on.

Having been a personal banker to President Mugabe, Gono is one person who should know how he thinks about not only issues but about people in general. They often say that if you make the President believe that there are enemies out there, you will get the best of him.

Naturally, it must be the case that when the President was informed about ENG and the asset base they controlled, he must have been furious giving Gono the ammunition to go after them and prove the point that change is not good for Zimbabwe as long as it is being executed by people who have not been screened by the ZANU-PFpolitical process.

Given the above, it is important that we highlight the profile of ENG and its promoters. As stated above, the company was set up in 2001 by three young professionals who had a combined experience of 15 years in the financial services industry. The firm was set up to serve a niche market in provision of advisory services, asset management, corporate finance and private equity. It started as a greenfield operation financed by the founders.

The team was led by Muponda who holds a B. Com degree as well as diplomas in Structured and Corporate Finance. He began his career at National Merchant Bank (NMB), the first indigenous investment bank, and rose through the ranks to the position of Senior Manager – Corporate Finance. He then joined TN Financial Services, another indigenous institution, as Director of Private Equity before setting up ENG.

His co-founder was Mr. Nyasha Watyoka who holds a B. Com degree. Prior to setting up ENG, he worked for FlemingMartinEdwards, NDH and Interfin in the stock broking and research areas.
The third founding member of ENG was Elton Chitondo who holds a Business Accountancy degree and various certificates in accounting and Treasury Management. Prior to joining ENG, he was the head of Treasury at Astra Holdings.

It is evident that the three believed in the Zimbabwean promise and their stories would be a source of inspiration to any progressive nation. They were challenged to raise the bar and believed that through hard work, Zimbabwe would deliver to their expectation of leaving a heritage that future generations would look back on but this was to be shortlived.

Within days of the Masvingo congress and Gono’s appointment as RBZ Governor, Mr. Muponda said that teams of Reserve bank inspectors were deployed in the financial sector. He alleges that the members of the teams were drawn from various state security agents and had no banking experience whatsoever.

Their mission was to execute the mandate of the government to send a clear message that indigenisation was never meant to be democratic in as much as politics was meant to be exclusive. Mr. Muponda says that he went through hell while the interrogations were taking place. He specifically mentioned the name, Chiremba, as the leader of the team. Chiremba’s name has been mentioned in many court cases and he appears to be the right hand man of Gono.

Notwithstanding the fact that the RBZ had no jurisdiction at the time over asset management companies, it became evident that the real mission of Chiremba and his political masters was to close ENG and parcel out its portfolio of assets to designated persons. The grilling ensued and the inevitable chaos visited the industry.

At the time, ENG was the controlling shareholder of Century Bank and a team was also deployed to the bank. A combination of negative media coverage and the deliberate spin from the RBZ led to a run on the bank and investor panic.

The installation of the RTGS system allowed RBZ to control the movement of money by simply delaying money transfers and pretending to be scrutinising what the payments were for. These delays plus the fear and rumours induced by the State security officers lead to widespread panic in the market. And rumours started to circulate that so and so has now been arrested for parrellel market dealings. Whilst there were no actual arrest executives including ENG directors were being detained for long periods under the guise of investigations by RBZ officers (who according to Muponda were in fact were state security officers). And obviously the market heard these rumours and investors panicked and started widespread flight of deposits from most black owned financial institutions.

I set out below the structure of the ENG group of companies just to highlight the progress that Muponda had made in giving meaning to what Zimbabwe was meant to provide to its citizens if only its leaders understood the true meaning of change.

ENG HOLDINGS GROUP STRUCTURE
- SUBSIDIARIES
- ENG CAPITAL INVESTMENTS PVT LTD
- ENG ASSET MANAGEMENT PVT LTD
- ENG REAL ESTATE
- ENG NOMINEES PVT LTD
- ENG PRIVATE EQUITY (PVT) LTD
- ENG CAPITAL ADVISORY SERVICES
- ENG STRUCTURED FINANCE
ADDITIONAL MAJOR ASSETS OWNED
- Century Bank Holdings ( now CFX bank)
- Leasing Company of Zimbabwe,Century Asset Managers)
- Century Discount House
- Hybri Micro-Finance Institution
- Care Insurance PVT LTD
- RestCel Insurance PVT LTB
- Amalgamated Health Services – (Harare West Hospital )
- About 10% of OK Zimbabwe Limited
- 15% of Zimplow Holdings Limited
- 20% Medtech Holdings Limited
- 15 % Clan Holdings Limited
- Allied Conveyor Belts PVT LTD
- Real Estate including ( Belgravia House,Thaine Building)
- Various Listed ZSE Listed shares
- Treasury Bills
- GMB Bills

We all know that Muponda, like Makamba, Butau, Makoni, Vingirayi, Nyemba, Manyanga, Zimuto, Chekeche, Mudekunye, Kamushinda, and others could not defend themselves against the machinery of the state that was deployed against them and chose to leave their beloved country fully knowing like the late Joshua Nkomo that only Europe can guarantee security. We all know that Joshua Nkomo had no choice but to flee to England when the state was used in the quest for a one party state and leader construction. Dumiso Dabengwa and others were pioneers in the long list of post colonial injustice and the only difference is that they chose to unite with ZANU-PF presumably for personal benefit.

Given this background, one can understand why competent and highly skilled Zimbabweans chose to leave their beloved country. President Mugabe’s views that are captured on video about justice and why the British system of justice cannot be trusted in the case of Zimbabwe where the security agents are presumed to be only source of reliable intelligence should scare anyone person who cherishes freedom and justice. He is on record saying that he does not trust the courts and would rather have the accused rot in prison why the police are trying to investigate the case.

In the case of ENG, we now know that after three years there has been no conviction and no investors is on record having lost any money from the ENG saga. It makes it important as Zimbabweans approach the elections to reflect on the real motives underlying Gono’s onslaught against black institutions and individuals.

I have been reminded by Mr. Muponda to quote what the judge said after the placement of Watyoka on remand for more than two years without a trial date so that people can make their own judgments about what Gono represents: "As much as this court appreciates that the charges against the accused are very serious, a remand of two years in my view, is unreasonable. This court has given the State three chances to furnish the accused person (Watyoka) with his trial date, but obviously, the State has failed. The State has now failed to bring the accused person to trial within a reasonable time. I am of the view that the interest of justice will not suffer any prejudice if the accused is removed from remand. The State has failed to serve him in the two years. It was Watyoka who actually suffered the prejudice due to the State's failure to set his matter down for trial. His (Watyoka's) preparation of the defence may have improved and the delay may have led to disproportionate delay and mental torture. Further remand is therefore refused. State to proceed by way of summons for prosecution if more evidence arises."

The most improbable things are now expected and predictable in Zimbabwe. History will not judge our generation correctly if we refuse to fully appreciate the depth of the Zimbabwean crisis and the role that people like Gono are playing in making the country sink deeper into hopelessness. After speaking to Muponda, I began to realise that the change that has been promised over the last 8 years that ignores the plight of people like him is not the change that I can believe in. I cannot understand why eminent lawyers like Biti and Ncube would sit and negotiate with Chinamasa and forget to mention the externalisation of the very points of light like Muponda that Zimbabwe needs to lift itself from the humanly created quagmire.

If Muponda and his team could manage in barely three years to build an empire of the size and magnitude shown above, I cannot understand why Zimbabweans are comfortable doing less to change their circumstances and complain that they lack leaders when reservior of leadership is obviously large. For too long Zimbabweans have been trusting the wrong messengers of hope when change will only come if the truth is told without fear or prejudice.

The ENG Link

From online publication www.thezimbabwemail.com
http://www.thezimbabwemail.com/Opinion/876.html
http://zim2day.com/index.php?option=com_content&task=view&id=1413&Itemid=77
http://afrikalink.com/index.php?option=com_content&task=view&id=967&Itemid=9
http://southafrica2day.com/index.php?option=com_content&task=view&id=116&Itemid=77

I just had to respond

I am a founder and former director of ENG Capital PVT LTD (ENG). My company was the first casualty of the so-called Anti-Graft war launched by RBZ Governor Gideon Gono in December 2003. I have had to field questions about the nature of ENG’s problems and what led to its closure and current status .I had to respond .I will try to limit response to the immediate business case of the Group the politics of the matter will be subject of another writing .It should be noted ENG Capital Group was placed into liquidation at the request of the Directors as a way to secure the firm’s creditors and investors. ENG has fully repaid all claims against it. All the creditors and investors have been fully repaid .This can be confirmed with the Liquidators at CAMELSA .Based on independent valuations and estimates ENG had assets of Z$ 180 billion against liabilities of $ Z 85 billion. ENG was a solid business model and had a strong asset position and this point has been proven beyond any doubt given that All creditors have been fully repaid despite ENG assets being looted and deliberately undervalued.


The direct role of the RBZ led by Dr Gono was in creating a smoke screen and an atmosphere that paved the way for the elimination and externalization of all persons deemed to be undesirable by the government of Zimbabwe in the quest to silence all existing and potential pockets of resistance to bad policies which Gono was about to implement. Dr Gono was appointed with a specific political mandate to deal with the financial services industry that was perceived at the time to undermine the regime and hitherto the government had no specific strategy to intimidate the private sector into compliance with bad policy formulation strategies. The belief then and now was that the financial sector should be a tool for the ruling party and any participant un-affiliated with the ruling party has to be closed down or cowed into submission.


There is need to understand ENG Capital’s ability to mobilize Zimbabwe dollars. At its peak ENG was peerless and unrivalled in the Zimbabwean financial market in its ability to raise and access Zimbabwe dollars. The ENG Capital Group treasury was made up of the following individual units Century Bank, Century Asset Management, Century Discount House, Leasing Company of Zimbabwe, ENG Asset Management and Hybri Micro-Finance Institution. ENG Capital group had a market capitalization of US$ 175 million, just before the RBZ descended on the Institution. This made ENG one of the single biggest combined treasury units in the Zimbabwe Financial market.
Below is a brief ENG Group Structure

ENG HOLDINGS GROUP STRUCTURE
- SUBSIDIARIES
- ENG CAPITAL INVESTMENTS PVT LTD
- ENG ASSET MANAGEMENT PVT LTD
- ENG REAL ESTATE
- ENG NOMINEES PVT LTD
- ENG PRIVATE EQUITY (PVT) LTD
- ENG CAPITAL ADVISORY SERVICES
- ENG STRUCTURED FINANCE
ADDITIONAL MAJOR ASSETS OWNED
- Century Bank Holdings (now CFX bank)
- Leasing Company of Zimbabwe, Century Asset Managers)
- Century Discount House
- Hybri Micro-Finance Institution
- Care Insurance PVT LTD
- RestCel Insurance PVT LTD
- Amalgamated Health Services – (Harare West Hospital )
- 15% of OK Zimbabwe Limited
- 15% of Zimplow Holdings Limited
- 20% Medtech Holdings Limited
- Hornet Re-Insurance PVT LTD
- Pearl Pension Fund Management
- 25 % Clan Holdings Limited
- 15 % Zimpapers
- Allied Conveyor Belts PVT LTD
- Real Estate including (Anastasia Court, Belgravia House, Thaine Building)
- Various Listed ZSE Listed shares
- Treasury Bills
- GMB Bills
- Cargill Commercial Paper
- $ 4 billion - Alliance Capital Debenture (representing 123 million First Mutual Life shares)
- 23 Million First Mutual Life shares


The installation of RTGS immediately allowed the Authorities to trace which Institutions were the biggest movers of money and the money market. The authorities were alarmed to learn that ENG (an unknown firm to them) and which didn’t have a political “Godfather” was allowed to control such resources. A further study was made to trace the political inclination of the shareholders and directors. ENG was not well represented in the political ladders. The belief was that any independent financial resources could be used and was being used to clandestinely support the opposition or politicians deemed undesirable. In addition business owners were supposed to show gratitude by donating and financing the political set up. Any meaningful business group was supposed to be well known and its owners be vetted by the authorities’ political process. Any business which didn’t fit that bill had to be either closed, nationalized or shareholding restructured. (By any means necessary).


Through extra-judicial and judicial measures pressure was brought to bear on selected individuals and institutions by the state machinery with the sole objective of punishing the designated persons. The allegations were that ENG Asset Management (PVT) LTD and not the directors had failed to pay Z$61 billion allegedly owed to investors. Clearly if such amount was due and payable to creditors or investors, there were other legal remedies available to such investors but in the interests of political expediency, the state arrogated to itself the role of custodian investor with no legal foundation and proceeded to attempt to assert purported rights of private sector investors. The ENG matter was extensively covered in the media and careers were destroyed as thriving institutions controlled and managed by indigenous business people were systematically targeted. The same media has failed to follow up and highlight that in fact ENG has managed to repay creditors and investors despite assets being looted .



Banks and Asset management companies because of huge profits were generally reported to be the source of the problems in the financial services industry and causing economic meltdown facing the nation. Against this background, there was a need to identify and punish the alleged culprits and ENG provided a convenient scapegoat, visible and the high profile victim needed to capture the imagination of the general public that Zimbabwe had a new no-nonsense boss in RBZ Governor Dr Gono. Dr Gono blamed Financial Institutions for fueling inflation and currency depreciation Dr.Gono closed down or nationalized the following institutions ; Trust Bank, Royal Bank, Barbican Bank, Rapid Financial Holdings, Sagit, ENG Capital,Intermarket and many others.


Dr Gono promised the nation that economic recovery was now certain and failure was not an option. Inflation was then at 200% and now its at least 13,4 billion %.Zimbabwe dollar was exchanging at Z$6000 = US$ 1,and now its Z$ 4,000,000,000,000 for each US$. Shops are empty. Banks have no cash. Parliament has no running water .Harare has no water .No electricity. This is despite all the fanfare that came with the anti-graft crusade that all will be perfect and well if we get rid of profiteering Banks and Financial Institutions. This just proves scapegoat mentality does not solve national problems. What is required is a national vision that taps into all Zimbabweans’ best talent and ability rather than some party or patronage based allocation of responsibilities not matched by ability to deliver .


In 2002, ENG Capital applied for a banking license. The application was quickly dismissed .Due to this failure, in April 2003 ENG acquired Century Discount house as a strategy to enter the Banking sector. A cash consideration was paid. ENG then applied to the Registrar of Banks for the approval of change of shareholding structure. The approval was denied .On further enquiring about the approval denial the Registrar‘s officers mentioned that the approval will not be for the coming mainly because of ENG Directors age and unknown political background and views. They advised us to restructure our shareholding to accommodate politically acceptable individuals in addition to start being active in funding political activities that would maintain the status quo. This situation spelled a disaster for ENG as I was of the view that we should not be part of any arrangement that could compromise our reputation, image and market perceptions.


In the meantime the seller (Century Holdings) of Century Discount House was not in a position to refund ENG Capital of the purchase price paid. This forced ENG Capital to acquire a controlling stake in Century Holdings, which was listed on the Zimbabwe Sock Exchange. This at least limited the potential loss since the purchase of Century Discount House was now an inter-company transaction. Obviously the refusal to restructure the shareholding to accommodate those politically correct and the refusal to being active in funding political activity didn’t please those who felt it was their God given right to receive support from any and all companies operating in the country. This independence was viewed as being lack of gratitude.


On 31 December 2003 at the instigation of the RBZ (using military and security officers), ENG Capital was placed under voluntary liquidation to secure and repay investors and creditors. Although the creditors and investors, whose rights the government sought to assert without their consent, have now been fully repaid the media has not covered this aspect of the story .Covering the full repayment exposes the hypocrisy of the RBZ and the unwarranted and draconian actions that against private individuals in a manner that violates their constitutional rights. On July 31 2006 more than two and half years after the arrest my co-accused who remained in Zimbabwe was removed from remand and the clerk of court ordered to return his $ 150 million bail and $ 700 million surety.

The media including but not limited to the state media ran grossly inaccurate and biased attack articles on my character and reputation. Articles without any back up of facts were printed deliberately understating ENG assets simultaneously magnifying liabilities . Many articles misrepresented ENG financial position and activities .Most newspapers refused to publish a rebuttals or give them equal exposure as their initial, false and malicious articles .

This is the kind of hostile environment that faces a normal business in the current Zimbabwe. How can foreign investors come if the local ones are routinely victimized as a matter of policy? Given the above facts and order of events it is small wonder that the country has been experiencing unprecedented levels of capital flight and brain drain. Considering the wide media publicity the ENG Capital matter received one would think the same media would have followed up and highlighted the fact that ENG Capital managed to repay all creditors and investors. The lack of such reporting only serves to show how far Zimbabwe has to go in terms of creating level business playing field and fair media coverage of critical events affecting the nation .

Gilbert Muponda is a Zimbabwe born Entrepreneur; he can be reached at gilbert@gilbertmuponda.com

Zimbabwe economic recovery and Ministry of Home Affairs

By Gilbert Muponda
There is a causal link between Zimbabwe's economic melt-down and the
breakdown of the rule of law .The Ministry of Home Affairs has to be under untainted hands if the economy is to attract investors and increase production. ZANU-PF maintains that the real cause of the economic meltdown is the sanctions regime under which the country has been left with no choice but to resort to unorthodox economic and political methods.

It is my contention that a link clearly exist between economic performance and
the respect of the rule of law. The imposition of the will of the former ruling
party on the country has taken many forms including the passage of laws that
promote and entrench partisanship and the use of state power to interfere
with the bill of rights enshrined in the constitution of the country. This has resulted in widespread violation of private property rights which is the cornerstone of any market based economy. Through-out human history there has never been a lawless society that has economically succeeded. Its unlikely Zimbabwe will be the first one to succeed in an environment characterized by property and human rights being non-existent .Lawlessness breeds poverty and unstable economic environment.

The separation of powers doctrine, a fundamental requirement in any
constitutional democracy, is no longer applied in contemporary Zimbabwe.
The selective use of the law to punish and reward targeted persons
undermines the rule of law, which reduces investment in the economy. The shocking breakdown of the rule of law has had its own adverse effects on economic performance.

The break down of the rule of law was particularly apparent in the
destruction of the Agricultural sector which led to
Wide spread disruptions on Agricultural production. Whilst land reform
was absolutely necessary its implementation accompanied by law
breaking and court orders being ignored and the Ministry of Home
affairs mostly doing nothing exacerbated the economic decline. Confidence
building critical to attract investment and restore
Economic growth .There is need for new investment to increase
production and tame Zimbabwe’s record setting hyper-inflation.

Law and order is a basic requirement of any functioning modern
society. Unfortunately, the Ministry of Home affairs which has the
responsibility of maintaining law and order has done such a bad job
that the former ruling party cannot and should not be entrusted with
this critical ministry if Zimbabwe is going to re-join the
international community and regain lost glory due to the reputation
acquired by due to the failure of this ministry to uphold the law.

From around year 2000, Economic slide was accompanied by the break
down of the rule of law starting with invading productive farms most of which had not even been gazzetted .And during that period Company
invasions increased. During that period Company invasions increased this led to the resignation of the then Minister of Industry and Commerce Dr Nkosana Moyo
It was clear then that without rule of law there won’t be any economic prosperity and it’s clear now that the Ministry needs fresh ideas and focus and direction
and it has to be made aware of the critical role it will play in
Zimbabwe’s Economic recovery by creating conducive business
environment by fair application of the rule of law.

Foreign Direct investment will not increase if there is no rule of law
.Foreign aid which has been critical in various sectors is unlikely to come if there is no culture reform and a serious attempt to rebuild confidence in the law enforcement agencies which are part of the Ministry of Home Affairs.

Brain drain has resulted in massive loss of skill and experience .Its
unlikely this will be reversed if the conditions that have been
allowed to make Zimbabwe very hostile to skilled and experienced
employees are not addressed.

Capital flight will continue as long as there is perception of
lawlessness and selective application of the law. This means the
Ministry of home affairs needs a culture change and has to be under a
different party to manage that change and improve perception that the
law will be applied uniformly.

During the stage managed anti-graft campaign of 2003-4, the Ministry of
Home affairs through the Zimbabwe Republic Police (an institution
whose credibility is in tatters) facilitated and enabled a massive
wealth transfer with several business people either arrested,
threatened with arrest or haunted out of the country .Whilst this was
hailed at the time it had a negative impact on the Economy, investor
confidence and caused brain drain and partially reversed economic gains.

The ministry of Home affairs through ZRP instead of investigating
first, they proceeded to arrest so as to investigate .Whilst these
arrests were going on a record number of businesses changed hands
under controversial circumstances .Such events affect investor
sentiment and confidence .Below is the partial list of the Businesses
that changed hands courtesy of the Ministry of Home affairs.

1- Royal BANK from J.Muzwimbi to Government of Zimbabwe
2 - Barbican Bank Dr M.Ncube to Government of Zimbabwe
3 - Trust Bank
4 - Shabanie Mashaba Mines from ARL to Government of Zimbabwe
5 -Kondozi Farm
6- Century Bank Holdings from ENG Capital to RBZ Governor, Dr Gono
and Mr. Sean Maloney
7 -First Mutual Life
8 - CFI Holdings
9 - Intermarket Holdings from Transnational Holdings to Government
owned ZB Holdings
10 - Zimre Holdings

This made global news headlines, whilst it seemed normal, it wasn’t in
that it highlighted the lack of uniformity in application of the law
.This generally fed into the perception that it’s risky to invest in
Zimbabwe because there is no rule of law. And to change this
perception it’s imperative that the law enforcement function be
reformed and be under an untainted custodian.

Gilbert Muponda is a Zimbabwe-born entrepreneur. This article appears courtesy of GMRI Capital. He can be contacted at gilbert@gmricapital.com. More articles at www.gmricapital.com