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Nestle Resumes Operations in Zimbabwe - But Message to Investors is Cautionary


Pressure by ZANU-PF ministers on Nestlé to buy milk from a dairy controlled by the family of President Robert Mugabe, leading to Nestle’s pre-Christmas shutdown of its plant, has been seen as a red flag to potential investors

Although Swiss-based multinational Nestlé said last week that it was reopening its Harare plant, the incident continues to reverberate in business circles.

Pressure by ZANU-PF ministers on Nestlé to buy milk from a dairy controlled by the family of President Robert Mugabe, leading to Nestle’s pre-Christmas shutdown of its plant, has been seen as a red flag to potential investors.

South African-based economist Richard Kamidza said the seemingly amicable settlement reached last week between Nestlé and the Ministry of Industry showed that ZANU-PF has lost some of its clout, which he says is a positive development for businesses operating in the country.

A Nestlé spokeswoman told VOA late last week that the company resumed operations in Harare on December 31 after receiving assurances from Industry Minister Welshman Ncube regarding the safety of Nestlé managers and staff.

Neither Nestlé nor the ministry have released the exact terms of the agreement, though sources said Gushungo Dairy Estate, controlled by Grace Mugabe, wife of the president, would sell its milk to a cooperative also including state-owned Dairibord, which would in turn supply Nestlé with raw milk. So although a supply relationship would exist this would be at arms length.

A statement issued by Nestlé said: "The company reiterates its commitment to source milk exclusively from its contracted farmers."

Economist Kamidza told VOA Studio 7 reporter Patience Rusere that the incident could still discourage would-be investors in Zimbabwe.

NB: This article incorporates a correction as to the date Nestlé resumed operations; an earlier version gave it as December 29.

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