Nestle, Mugabe and the Devil’s Alternative

Residents of Sakhile township in Standerton, Mpumalanga, have celebrated their grievances against their elected officials in the traditional way: by setting fire to businesses.

It is tough running a business in the world’s most unstable countries.  A business, no matter how small, is a permanent structure.  It takes a lot of money to create, and is difficult to move when circumstances change.

When times are bad, people may lash out at these obvious symbols of value.  Conversely, when times are good, people may just as easily protest that they aren’t getting their share of that wealth.  Either way, investors and business owners bear the brunt of society’s ire.

Rather than being some sort of secret conspiracy holding a nation in slavery, businesses are more like canaries in a mine-shaft; the first indicators that all is not well.

Which brings us round to Nestle’s experiences in Zimbabwe.

Robert Mugabe’s Zimbabwe is a horrible place to live and work.  Life expectancy is the lowest in the world, at 37 years for men and 34 for women. Mass starvation has followed the forced expropriation of farms, and investment has all but collapsed, leading to 94% unemployment.

The few businesses that have remained, which include Old Mutual, Murray and Roberts, Edgars, and Spar, have all had to make compromises to do so.  They have faced extortion, political excoriation as “enemies of the people”, forced nationalisation of their assets, depressed earnings, and corruption.

And they have stayed.

Their reasons are varied, and I have no wish to put words in their mouths, but I imagine them as follows: politics is not forever and governments change; the investment that has been made is already spent, best to remain in the hopes of recovering it; there are people who depend on the services provided by these companies, both in customers and in staff.

How difficult a decision for a company like Nestle in a country where most are malnourished?  The collapse of agriculture left fewer and fewer sources for milk.  Some of the most productive farms are now stolen property in the hands of Mugabe and his cronies.  Sooner or later, Nestle would be faced with the choice of stopping operations, or doing business with the devil.

"Had Nestle decided to close down its operations in Zimbabwe, the company would have triggered further food shortages and hundreds of job losses among its employees and milk suppliers in an already very difficult situation," says a statement from Nestle.

Other companies face a similar choice elsewhere: in Sudan, Myanmar, Iran or Venezuela.  Western companies, governed by US or European standards of law, point out that their leaving would simply open the way for Russian or Chinese companies.  These are companies that are supported by governments that have little interest in human rights at home and virtually none elsewhere.

Outraged consumers living in pleasant countries can express their indignation against companies like Nestle and influence their actions.  There is little that can be done against faceless Chinese companies directly supporting a Sudanese government now accused of committing genocide.

I don’t have a solution.  I don’t know what investors or business owners should do when faced with such awful decisions.  Stay, and you can lose your investment or indirectly support an evil regime.  Leave, and you lose your investment and abandon your responsibilities to staff and customers.

The problem, though, is not one created by businesses.  It is one of a government’s making.  Protesting against businesses is unlikely to change that.  All governments, even ones that lack international legitimacy, require the support of the majority to survive.  Even the most evil regimes collapse in the face of rebellion by that majority.

Any protest against a violent and oppressive government should be focused, not on the businesses peripheral to events, but on the violent and oppressive majority who give that government its power and its mandate.