Businessman Mutumwa Mawere Warns Dangote of doing business in #Zimbabwe

Business Class: Rule of Law v Rule of Big Men – A letter to Dangote
Risking fortune with unpredictable regime … Nigerian billionaire Aliko Dangote with Mugabe
09/09/2015 00:00:00
by Mutumwa Mawere
Taking a risk by investing in Zimbabwe and dealing with Mugabe regime … Aliko Dangote

Dear Mr. Dangote,

I am writing this open letter to you as a concerned African.

My concern is limited to broader public policy and institutional issues arising from your recent visit to Zimbabwe and subsequent actions pursuant to your company’s interest in investing in Zimbabwe.

I believe any decision to invest in a target country should be a voluntary and sovereign one. I am a Zimbabwean by birth and have been exposed to a number of experiences and insights that may add value to your decision making.

It is not my place or intention to discourage your company from making investments in Zimbabwe but merely to highlight certain issues that you may wish to consider.

It is not in dispute that Zimbabwe needs investment not only from your company but from all who wish to turn their capital into productive and profitable use.

I need not remind you of my own personal circumstances but it is important to highlight that this letter is inspired simply by a desire to ensure that you and your colleagues are not blind-sighted by state actors who may give the impression that Zimbabwe’s challenges are externally driven rather than self-inflicted.

You will no doubt be aware that post-colonial Zimbabwe has passed through many phases but what is significant is that its elected state actors believe that economic like political freedom can best be won by non-market forces and big ideas like Zim-Asset.

The idea that Big Men know better is implicitly endorsed by your decision to visit Zimbabwe and is exposed by the choice of your hosts and facilitators. I am sure, in your journey to the station you occupy in life today, you must have come to appreciate the importance of the rule of law in commerce.

Zimbabwe’s journey to where you find it has seen many business actors who have been subjected to the rule of Big Men and where the organs of state established to protect and promote the values in the constitution have been used to advance personal and predatory interests. Such victims include indigenous business actors as well as non-indigenous actors.

The experience of independence has taught many of the victims to choose to be silent and, therefore, their stories will remain hidden in their minds. If you care to pierce the veneer of the indigenisation rhetoric, you will appreciate that the lack of a strong, organized and vibrant indigenous business is not accidental. As a new comer to Zimbabwe, we have a duty to share our experiences with you.

As the richest man in Africa, you carry an enormous responsibility to assist in shaping the character and personality of not only Nigeria, your country of birth, but also the other African states, including Zimbabwe, whose state actors believe that they can manufacture laws as they please and, more importantly, that prosperity can be best won by personalizing the state.

I have no doubt that the inclusion of a lawyer in your company’s due diligence team confirms that legal issues are important in your company’s decision making processes. The rule of law principle is critical in advancing human interests. The principle provides that law should govern a nation and refers primarily to the influence and authority of law within society particularly in limiting the predatory nature of man. The rule of law implies that every citizen is subject to the law, including the Big Men.

Zimbabwe is a democracy yet there are worrying trends including the fact that the processing of your company’s investment intentions suggests that the Big Men of Zimbabwe exercise absolute authority and are not bound by laws that have general application.

It must worry you when your due diligence team has first to meet with the Deputy Chief Cabinet Secretary to consider an investment in a democratic state. Rule of law and rule by man are two phrases that have different connotations as set out above. Rule of law implies fairness and predicable application whereas rule of man or rule by law implies unfairness, inconsistency and injustice.

Your team would, this week, have read the article entitled: ‘Attaching the RBZ property not an option, High Court,” in relation to an order of the High Court was granted by Uchena J that a creditor, Farmtec Spares & Instruments must return the assets it had seized following the failure by the RBZ to pay for the goods sold and delivered.

In terms of s44 of the Constitution of Zimbabwe, it is provided as follows: “The State and every citizen, including juristic persons, and every institution and agency of the government at every level, must respect, protect, promote and fulfil the rights and freedom set out in the constitution.”

In addition, s56(1) of the Constitution provides that: “All persons are equal before the law and have the right to equal protection and benefit of the law.”

The facts of the matter of a dispute that was before Uchena J are simple and straightforward Two parties were involved in the transaction that would seem bizarre in any constitutional state.

It is common cause that Farmtec, a juristic person duly registered in terms of the laws of Zimbabwe, was contracted by the Central Bank to supply 150 tractors under a quasi-fiscal operation, a brainchild of the former Governor of the RBZ, Dr. Gono, in 2008. I am sure you will agree that it would be highly unusual, for instance, for the Central Bank of Nigeria to be involved in transactions of this nature.

However, the facts are not taken out of a movie but reflect the reality of Zimbabwe under the watch of the Big Men that are openly welcoming you without telling you the full story of what can happen and is happening in Zimbabwe.

It is also not in dispute that 60 of the 150 tractors were sold and delivered to the RBZ for an invoice amount of US$2.1 million. The price of US$2.1 million is what the RBZ was supposed to pay in exchange for the goods. At the time the goods were ordered and supplied, it would appear that the RBZ had no funds to pay for the goods yet proceeded to receive such and deal with such goods.

It is the case that at the material time, no mention was made by the RBZ that it was a state organ enjoying any immunity from prosecution. The deal involved two voluntary and sovereign contracting parties i.e. the RBZ and Farmtec, a private entity.

The RBZ was involved in similar transactions whose value exceeded US$1 billion that was never paid to the creditors. The government has since assumed the debts incurred in opaque transactions intermediated by the RBZ as a principal.

Pursuant to the operation of s56(1), one would expect the RBZ and Farmtec to be treated equally before the law. The RBZ does not dispute the indebtedness to Farmtec. It was Farmtec that was forced to sue the RBZ and approach the Court seeking an order to attach the RBZ property including stands in Kariba, Harare, Mutare, Nyanga. The attachment order was granted by the Court paving the way for Farmtec to execute.

However, the RBZ rushed to the High Court arguing that its status at the time the transaction was completed had changed to a superior one i.e. a state organ and as such, the attachment order was incompetent. The equality doctrine, a fundamental tenet of the rule of law, was deemed by the presiding Judge to be inapplicable and irrelevant in adjudicating the matter.

The Learned Judge agreed with the RBZ, a defaulting debtor, that Farmtec’s rights had evaporated pursuant to the operation of a Statutory Instrument Number 115/10 promulgated by President Mugabe, the Number One Man, protecting a debtor against a creditor in respect of property subject to execution following an undisputed default.

The Learned Judge opined that: “The legislature obviously intended to equate the applicant to State organs which cannot be executed against because it had accrued debts which left it open to detrimental executions.”

He further explained his ruling as follows: “This, in my view, is why the provisions had to first be made by way of Presidential Powers (Temporary Measures), and when enacted, through the General Laws Amendment Act Number 5 of 2011, had to be backdated to June 18 2010.”

In addition, he ordered the creditor to pay the costs of the suit.

The fact that this ruling, among many more, exists must worry any party that engages in business transactions with the government of Zimbabwe and its organs.

It is not a precedent in Zimbabwe and it is self-evident that the Courts that will adjudicate your company’s Zimbabwean subsidiary entities should a dispute arise, have already accepted and entrenched the principle that a law can be applied retrospectively based on the dictates of the Big Men.

I have not chosen to include my own bizarre experiences with the judiciary and the executive branches of the state on similar matters. As a brother who has earned his stripes through commerce, I can only encourage you to be vigilant and refuse to be part of a process to undermine the rule of law because without it, what remains is chaos.

It is your voluntary choice to be associated with chaos but you ought to consider, seriously, the interests of building an inclusive, just, prosperous and progressive Africa. The obligation to build the Africa we want must start with us and must never be subordinated to the blind and unbridled quest for material wealth.

Values do matter and it is time that we rally behind you to deal with the difficult issues that have combined to limit Africa’s possibilities.

After reading this letter, I have no doubt that you will not hide behind ignorance to allow you to be used as an African trophy by backward-leaning Big Men.

I trust that you will consider the above and, more importantly, the future of innocent Zimbabweans whose voice on what matters has been sufficiently eroded to allow the Big Men to do what they please in the name of the people.


Mutumwa Mawere

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