Chinese firm ventures into prohibited sector in Zimbabwe

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Brenna Matendere

The first schedule of the Zimbabwe Indigenisation and Economic Empowerment Act (Chapter 14:33) lists 12 commercial sectors that are reserved for local business entities.

These are: transportation: passenger buses, taxes and car hire services; retail and wholesale trade; barber shops, hairdressing and beauty salons; employment agencies; estate agencies; valet services; grain milling; bakeries; tobacco grading and packaging; advertising agencies; provision of local arts and craft; marketing and distribution, as well as artisanal mining.

The Zimbabwe Investment and Development Agency (ZIDA) Act makes exceptions to retail by foreigners—in special economic zones for instance—but the investors must first obtain authorisation from the commissioner general of the Zimbabwe Revenue Authority and ZIDA.

Our investigation confirmed that Livetouch had not applied for an exception, nor did it get authority, to retail.

Door frames

It was established that the Chinese investor has spread its business enterprise from manufacturing of cement to retail and wholesale of bricks, sand, door frames and quarry stones.

Livetouch, which is led by Chinese directors Dongning Wang and Feng Wang, is licensed to manufacture cement under the brand name Diamond Cement at the firm’s plant located at Number 2713, Old Steelworks Road in Redcliff.

Previously, as indicated in government audits, it dealt in chrome.

During a visit to the company’s premises, this reporter witnessed clients casually going in and out of the plant to buy various items that included door frames.

Livetouch is one example of a Foreign Direct Investment (FDI) established in Zimbabwe following the country’s “Open for Business” policy introduced by President Emmerson Mnangagwa when he took over power from the late Robert Mugabe with military assistance in November 2017.

Chinese investors, both state-owned and private, have been receiving preferential treatment in the licensing and contracting of foreign businesses in Zimbabwe.

Livetouch recently came under the spotlight for extensive pollution at its plant amid rising cases of silicosis and related deaths.

Confirmed

The Kwekwe District Development Coordinator (DCC), Fortune Mpungu, confirmed that Livetouch had ventured into brick moulding, sand sales and quarry stone trade.

“It’s true that Livetouch is undertaking such business activities,” Mpungu told.

However, he insisted that monitoring of Livetouch and other companies was the responsibility of the Redcliff municipality.

“They (municipality) do that in conjunction with the ministry of Industry and Commerce and ZRP (Zimbabwe Republic Police),” he said, adding: “I will liaise with concerned stakeholders for a way forward.”

A report that this publication obtained during the course of the investigation also confirms the illicit commercial activities by Livetouch.

The report was produced by the Kwekwe-based Anti-Corruption Trust of Southern Africa (ACT-SA) under the title, “Money over life: The Case of a Chinese Investor (Livetouch Investments (Pvt) Ltd) t/as Diamond Cement) in the town of Redcliff in the Midlands Province of Zimbabwe.”

“Livetouch is not only into cement manufacturing but was engaged in the manufacturing of furniture, moulding bricks and pavers and crushing quarry stones in direct competition with the local people.

“This lays bare ill-thought licensing decisions considering Section 32 (1) of the Zimbabwe Investment Development Act [Chapter 14:37] which encourages relevant authorities to assess the impact of foreign investments on existing industries before issuance of these licences,” reads part of the report.

In the dossier, ACT-SA makes several recommendations that include an investigation by ZIDA and relevant authorities into the illegal retail by Livetouch.

“The Zimbabwe Investment and Development Agency and other relevant authorities should investigate Livetouch to assess whether or not its activities are within its mandate as stipulated in licence/s that it was given upon registration,” urges ACT-SA.

Compromised

The corruption watchdog’s director, Obert Chinhamo, suspects that the Redcliff council is not acting against Livetouch because some it is receiving kickbacks from the company disguised as philanthropic work.

“The municipality of Redcliff may be compromised in its ability to hold Livetouch accountable for several shortcomings including environmental violations due to the municipality’s longstanding relationship with the company.

“The numerous donations and financial contributions made by Livetouch to the municipality have created a situation whereby the municipality may be reluctant to take any action that would jeopardise its benefactor’s standing in the community.

“This dependency on Livetouch’s generosity has, in effect, shackled the municipality’s ability to enforce its own laws and regulations, effectively granting Livetouch carte blanche to engage in violations with impunity,” he said.

NewsHub established that, when the former Redcliff mayor, Clayton Masiyatsva, passed on in January this year, Livetouch provided financial assistance for his burial.

In 2022, the Office of the Auditor General (OAG) flagged the Redcliff authority for a barter deal with Livetouch in which it exchanged land worth US$847 962 for numerous vehicles.

The vehicles involved in the transaction were four Toyota Hiluxes, one Toyota Fortuner, one Backhoe loader, five Nissan NP300 trucks, one grader, a skip bin loader, a Toyota 18-seater bus, one Toyota Quantum ambulance and a fire tender.

Part of the report reads: “Livetouch Investments (Private) Limited was not in the business of supplying vehicles but in the business of chrome processing,” noted the OAG report that described the deal as irregular.

The purchase of the service vehicles was supposed to be authorised by the Local Government ministry, the Office of the President and Cabinet as well as national treasury, but the municipality failed to provide the OAG with documentation proving that.

The current Redcliff Mayor, Vincent Shangwa Masiiwa, dismissed the allegation that his municipality was compromised.

“That (land-for-vehicles deal) happened long back and I don’t see how it can compromise us,” he said.

On numerous occasions, the mayor kept promising to check if the Redcliff municipality had authorised Livetouch to engage in retail trade, but did not do so.

Gift Mugano, an economics professor, bemoaned the widespread tendency by foreigners to engage in businesses reserved for locals.

“It’s not only the Chinese. l see foreigners running tuck shops and Zimbabweans are security guards there and the ones who help you to carry the stuff from the small shops to your car,” Mugano told NewsHub.

He accused the government of turning a blind eye on the illegal activities of foreign companies.

An investigation commissioned by Information for Development Trust (IDT) and published by NewZimbabwe.com in July 2023 revealed that retail business in Harare’s central business district was increasingly getting dominated by Chinese, Indian, Pakistani, Nigerian, Ethiopian, Malawian and Tanzanian nationals.

Municipal and other public authorities were facilitating the licensing of the foreign retail in contravention of the law.

The Small and Medium Enterprises ministry subsequently toured the city centre and vowed to clamp down on the illegal businesses but has not done so to date.

Industry minister, Nqobizitha Mangaliso Ndlovu, did not respond to questions sent to him via WhatsApp and ignored voice calls.

George Makonese, the Livetouch spokesperson, confirmed seeing questions on the findings of this investigation but said he preferred the company lawyer to respond.

“I will have to refer you to our company lawyer. He is the one who knows what is legal and illegal and is more knowledgeable about law than me,” he said.

He also said he feared being misquoted by the media.

Makonese ignored repeated requests to link this publication with the company lawyer and other efforts to track him were fruitless.