'Community share trusts abused'

HARARE - Community share ownership trusts are benefitting a few already-rich individuals at the expense of the poor citizens, leading independent Economist Erich Bloch says.

“We need a constructive indigenisation and empowerment law. What we do not want is to seize ownership of a company, enriching a few, while the rest are impoverished,” Bloch said at the Zimbabwe National Chamber of Commerce (ZNCC) Bulawayo chapter 2013 National Budget review last week.

He said cases of corruption had been reported, unearthing corruption surrounding the much-hyped indigenisation programme.

“…it’s a sad scenario,” Bloch said. Community share ownership trusts were created to benefit communities in which companies operate as part of government’s indigenisation programme.

The trusts launched this year after foreign-owned mining groups  like Unki Mine and Zimplats among others had complied with the Indigenisation Act.

The Indigenisation Act requires all foreign-owned mining to cede at least 51 percent shareholding to black Zimbabweans.

The Act has been widely criticised as being hostile to foreign investors, with the country in dire need of foreign direct investment.

Bloch said an ideal model of indigenisation that could benefit both the country and investors is when the foreign companies cede 25 percent.

“I would propose 25 percent not 51 percent and strengthen the law so that it protects minorities. We should also adapt our educational system so that it is relevant to the industry,” Bloch said.

He said Zimbabwe should study how other countries structured their laws and work at improving the country’s image as a good investment destination.

Bongani Ngwenya, faculty of business dean at Solusi University, said those who benefit from indigenisation should also be able to sustain the company’s operations.

“If one holds 51 percent of shares, it means that you are a major shareholder and should have the capacity to inject capital into the company in order to sustain operations,” Ngwenya said. - BULAWAYO CORRESPONDENT

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