Zimbabwe Review

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UK Sunday Times ties itself into a knot over Mugabe

Posted by CM on November 11, 2007

In the hysterical style we have now become accustomed to from sections of the British press, the UK Sunday Times of November 11 screamed “Barclays bankrolls Mugabe’s brutal regime.”

Excerpts:

Barclays is bankrolling President Robert Mugabe’s corrupt regime in Zimbabwe by providing substantial loans to cronies given land seized from white farmers.

The British bank lent £750m to the country’s new landowning elite in the first half of this year, mostly through a government scheme to boost farm productivity.

Many of the farms now funded by Barclays were forcibly taken by mobs organised by Mugabe’s Zanu-PF party. They were distributed to leading figures in the regime, even though the policy was intended to give farms to landless black Zimbabweans. The beneficiaries included Mugabe himself, who is said to have three estates.

Despite worldwide condemnation, Barclays, which faced criticism for operating in South Africa during the apartheid years, has remained one of only a handful of banks with extensive operations in Zimbabwe. It has recently been opening new branches in the country.

Barclays is required to finance the loans under Aspef (Agricultural Sector Productivity Enhancement Facility) as part of a set of conditions laid down by the Zimbabwean government which permit it to operate in the country, where it made £34m in profit last year. Its £750m Aspef loans are an increase of 17% on the previous year.

A spokeswoman for Barclays said the bank had operated in Zimbabwe since 1912 and had 1,000 employees and a network of 20 branches serving 150,000 retail, business and corporate customers in the country.

Now, we all know Mugabe is not your most cuddly world leader, for all sorts of reasons. We also know that the mere mention of his name makes the British press apoplectic with rage, for all sorts of reasons. But this story is a classic example of how papers like The Times simply can no longer be taken seriously when reporting about anything to do with Mugabe.

Oddly enough, it was someone writing a brief response in The Times’ own readers’ forum who provided the factual details and context which the paper should have done to make its story more credible:

Barclays does not deserve this criticism.

I believe the article grossly overstates the amount advanced to farmers. Most likely the figure of £750m was derived based on the unrealistic Zimbabwean official exchange rate. Barclays Zimbabwe does not have the capacity to fund a loan book of that size. (And most likely, nor does the country’s agricultural sector currently have the capacity to utilise that kind of money! CM)

Besides, agricultural loans are not funded by Barclays, but by the Reserve Bank of Zimbabwe (RBZ). Barclays, like any other commercial bank operating within Zimbabwe, is disbursing ASPEF loans to farmers on behalf of the RBZ. Banks in Zimbabwe are reluctant to fund agricultural operations as the risk of default is perceived as high.
(Generally all over Africa and in many places beyond, agricultural lending, especially to inexperienced part-time farmers with little collateral, is not something banks rush out to do! CM)

We should also note that Barclays Zimbabwe operations are largely funded by deposits mobilised from the local market, not offshore credit facilities as implied by this article. (Barclays has found Zimbabwe a tough but obviously lucrative banking environment, which is no doubt why it continues to open new branches, with profits earned in the country, not those of British investors, banking customers or taxpayers. CM)

Mike, Harare, Zimbabwe

Times reader “Mike” was too polite to say so, but it was kind of mischievous of the paper not to tell us if its fantastic pound sterling figures were converted from Zim dollars. If so, as is likely to be the case, what exchange rate did they use? If they used the Zimbabwean government’s low, widely ridiculed and ignored rates (approx.Z$62,000 = £1), then one could see how they could come up with the incredible figure of 34 million pounds sterling as Barclays’ Zimbabwe profit for just one year. Based on what would be truly fantastic returns, the British ought to be encouraging the bank, and others, to be increasing their investments in Zimbabwe, not scaling them back!

But if the conversion from Zim dollar to pound sterling were done at the rapidly changing “parallel market” rate that almost everybody uses (today it is at Z$3,200,000 = 1£) then The Times figures would look much less formidable and impressive, by at least 50 fold!

Just on the basis of leaving out this huge and important exchange rate discrepancy, the Times story’s figures are largely nonsensical as a reflection of doing business in Zimbabwe.

So, Times, we know you can’t stand Mugabe. A lot of people in Zimbabwe share your feelings. But it is nauseating when a paper of your stature has to appear so desperate to attack Mugabe on the thinnest grounds that it must write non-stories such as this. Apart from the exchange elements I have limited my comments to, there is nothing in the story that has not been known or written about thousands of times over the years now. I am puzzled at the attempt to hype this recycled information to appear as if it is new.

And it took The Times three reporters to write this non-story!

When there are so many solid grounds on which to criticise Mugabe, it is a measure of The Times’ standards of Mugabe-bashing desperation that it should feel the need to sink this low.

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