Should military be involved in business?

Zimbabwe Independent

20th May 2016

ZIMBABWEANS are unlikely to be rubbing their hands in anticipation of tangible benefits accruing to Treasury after last week’s announcement by Mines Minister Walter Chidhakwa that the military will be partnering a South African mining company in a chrome smelting project in Kwekwe.

According to Chidhakwa, the Ministry of Defence entered into a joint venture with Africa Chrome Fields (ACF), a subsidiary of South African mining company Fanshawe Mining Holdings for an exothermic chrome smelting project.

“I am happy with the joint venture between ACF and Ministry of Defence,” Chidhakwa said during the tour of 10 chrome smelting plants which was also attended by Vice-President Emmerson Mnangagwa and Defence Minister Sydney Sekeramayi.

“Sekeramayi is here representing the establishment. I know you are used to protecting the country, but now you will be protecting the resources,” he said.

Mnangagwa said the plant would produce ultra-low carbon ferrochrome in 45 seconds. He said the plant would produce 20 000 tonnes of ultra-low carbon ferrochrome a month. Other touted benefits would be the fact the new technology which does not require electricity will be used while 3 000 jobs will be created. This sounds well and good, but then again it is not the first time Zimbabweans have been promised heaven on earth after the military ventured into mining and other business ventures.

Just last week, the Zimbabwe Independent reported that Chinese diamond mining company Anjin Investments, in which the military has an interest, exported under shady circumstances more than three million carats of diamonds from Chiadzwa to China’s financial hub, Shanghai.

The reports vindicated former Finance minister Tendai Biti who spent the better part of his tenure from 2009-2013 bemoaning the veil of secrecy in Anjin’s operations and its failure to make meaningful remittances to Treasury.

Given this background, this latest military foray into mining and related business ventures poses more questions than answers as was the case with other army projects like the platinum mining project in Darwendale, Mashonaland West and the methane gas exploitation project in Lupane, Matabeleland North.

The sad reality is that it is unlikely that the latest venture will be any different. As analysts point out, such business ventures should be left to the relevant ministries and institutions for the country to stand any chances of realising any benefits.

Lawyer David Coltart said while it was not necessarily illegal, the military’s involvement in such business activities posed serious ethical issues.

“It poses serious problems. How would you deal with the military in the event that they are in breach of contract? They should stick to their core business as is the case with the military in most democracies,” Coltart said.
According to Rhodes University Senior Political and International Studies lecturer, Gwinyayi Dzinesa, military involvement in business (also known as “Milbus”), picked up in earnest in the 1990s after the end of the Cold War as a “means to appease the military and coup-proof liberalising governments such as those of Russia, China, Brazil, Pakistan and Egypt.”

“Saddled with substantial cuts in public expenditure, including military spending, allowing the military to create business enterprises compensated for their financial losses and helped avoid officers’ mutinies.”

Dzinesa said that Zimbabwe’s inclination towards expanding the phenomenon of military business may be designed to protect regime security and ensure political hegemony. “The politico-military-business complex can create a kingmaker caste that will spare no effort to secure the patron regime’s security,” he said.

Dzinesa, who is a former security analyst at the Institute of Security Studies, could well be right given the background of the close links between the Zanu PF government and the military that has propped up President Robert Mugabe from the challenge posed by MDC leader Morgan Tsvangirai since 2000. The military was heavily implicated in political intimidation and violence that ensured Mugabe returned to power in the violent June 2008 presidential election run-off which was boycotted by Tsvangirai who had won the first round in March.

Since 2002 when the late Defence Forces commander General Vitalis Zvinavashe, who was involved in the business of supplying the army during the Congo war — a conflict of interest — made the infamous speech about the presidency being a straitjacket reserved for those who participated in the liberation struggle, the military has been vociferous in its partisan support Mugabe and Zanu PF. The army’s unfettered access to mineral resources and other business ventures could therefore be seen in the context of rewards and patronage to keep them on the side of the political establishment. However, as Dzinesa noted, the government could “inadvertently create a frankestein monster in the form of commercially viable and independent military that could ultimately challenge it.”

Dzinesa said that Chidhakwa’s remarks that the entry of the military into the smelting sector was necessary to protect the country’s resources should be seen in the context of government walking the talk about “indigenisation of the economy as well as “value addition and beneficiation.”

“The military will serve to provide reassurance about what are perceived to be national interests that is, the protection and beneficiation of the country’s mineral resources,” said Dzinesa adding that, “Milbus could therefore not only provide essential services, but also generate employment and revenue and contribute to national development.”

However, as shown by the Anjin case, there is little evidence to support this theory as ordinary Zimbabweans have benefitted little from the military exploitation of the country’s diamonds.

“The downside (of the military involvement) is the dark areas of illegitimacy and secrecy in the world of ‘Milbus’, and Zimbabwe is no exception. In most countries, unlike corporate entities, military owned business enterprises are not subjected to public or any other scrutiny, including by the parliament or civilian government auditing agencies, or civilian courts,” Dzinesa said.

Another analyst Farai Maguwu, the director of the Centre for Natural Resource Governance, said the country is unlikely to realise any meaningful benefits from this latest venture.

“It will be another harvest of thorns just as we saw in Chiadzwa. There will be no-one to hold the military to account and this venture will operate outside the confines of the law,” Maguwu said on Tuesday.

He said the army should focus on projects related to its core business such as manufacturing weapons rather than encroaching into mining which should be left to the relevant ministries, institutions and companies.