Harare, Sept 4 - U.S. food group H.J. Heinz Co, which has sold its 51 percent stake in Zimbabwe's top cooking oil maker to President Robert Mugabe's government, said it has pulled out of the country because of economic instability.
In a statement, Heinz said the sale was part of the group's strategy to consolidate its operations towards profitable growth and the investment in Zimbabwe's Olivine Industries did not look promising.
"On June 1, 2006, Heinz took a charge to write down its investment as a result of the continuing uncertainty regarding the stability of the currency and economic conditions in the country," it said.
Zimbabwe is struggling with chronic shortages of food, fuel and foreign currency, inflation over 7,600 percent, and crumbling services, in an acute economic crisis many blame on Mugabe's government.
Mugabe says the crisis is caused by Western opponents and is driving controversial policies he says are aimed at empowering Zimbabwe's black majority.
U.S. State Department spokesman Tom Casey said the misguided policies of the Zimbabwean government led to an unfavorable investment climate.
"I think the business decision by Heinz to divest itself of this is symbolic of what ... you might just call Zimbabwe's economic meltdown," Casey told reporters in Washington.
The Zimbabwe government's acquisition of Olivine marks the start of its campaign to take control of foreign-owned companies in the southern African country.
The government has introduced in parliament a law seeking to transfer majority ownership of foreign-owned companies to locals.
Indigenisation and Empowerment Minister Paul Mangwana told state radio Tuesday the Indigenisation and Economic Empowerment Bill would become law within 30 to 45 days.
Heinz, which makes Ore-Ida potatoes and Smart Ones frozen meals in addition to Heinz ketchup, was one of the first foreign investors in Zimbabwe after the country's independence from Britain in 1980.
But relations between Olivine and Harare soured in 2006 over charges the company stopped producing cooking oil after being barred by Washington from buying from white-owned farms that had been seized by Mugabe's government and redistributed to blacks.