Nestlé’s Zimbabwean accounts frozen temporarily

Posted by Isobel Drake on 12th October 2009

The operations of the world’s biggest food manufacturer in Zimbabwe may be threatened, according to reports emerging from the African nation.

Swiss-based Nestlé lost half of their Zimbabwean suppliers at the beginning of the year, which they said led them to sourcing milk from a farm owned by Grace Mugabe – the wife of President Robert Mugabe. Less than a fortnight ago, they advised that they were now exiting a supply arrangement with the farm in question in the wake of unfavourable media coverage following the revelations.

Mr and Mrs Mugabe both face EU and Swiss sanctions but Nestlé is not subject to those sanctions because the dealings were made via their foreign subsidiary. However, reports suggest that a government official in the African nation had informed Nestlé that their decision would be viewed as an extension of EU sanctions.

According to the Zimbabwe Independent, Nestlé then had their bank accounts in the country frozen by the Reserve Bank of Zimbabwe last week.

The Governor of the Reserve Bank of Zimbabwe informed the Zimbabwe Independent that the accounts had only been frozen temporarily while “two or so transactions which we thought were irregular” were investigated and had since been freed because the investigation had been concluded. Despite the unfreezing of the accounts and assertions it was independent to recent events, some are concerned that the move may have been retaliation for Nestlé’s decision to stop buying milk from the Grace Mugabe-owned estate.

Matumwa Mawere, a Zimbabwean businessman who now lives in South Africa after his companies were taken over by the Mugabe-led party, told The Sunday Telegraph that restoring confidence in the country following the introduction of the power-sharing government would remain difficult if such moves were common.

“If the report on Nestle’s bank accounts is true, then it’s a sad day for Zimbabwe,” he said.