Indigenisation or indigenous confusion?

HARARE - As a law, the Indigenisation and Empowerment Act states that foreign businesses operating in the country have to cede 51 percent of the shareholding to indigenous Zimbabweans.

However, in light of the criticism since its enactment in 2010, attempts have been made to portray it as flexible. Is it?

As things stand, Zanu PF’s flagship “policy” is mired in fuzziness.

But the correlation between policy and delivery is commonsensical. Without sound and clear policy, you cannot deliver results.

Francis Nhema, the Indigenisation minister said: “There is no debate on the imperative of indigenisation; it is the process of implementation that attracts interrogation…

“We are not applying a one-size-fits-all approach. The peculiarities in each sector and nuances therefore are taken into account in the implementation process.”

Mines and Mining Development minister Walter Chidhakwa said last week that, in exchange for the setting up of refineries, there was the possibility of a rethink of the indigenisation law regarding foreign-owned mining companies. The two ministers seemed to indicate possible flexibilities in implementing indigenisation.

Not so, President Robert Mugabe stated soon after Chidhakwa’s comments, stating: “There will be no exception to the 51 percent to 49 percent indigenisation threshold, which seeks to give Zimbabweans greater control in foreign companies operating in the country.

“I have heard in some quarters that there can be exceptions, but I am saying no. We are saying 51 percent to 49 percent. It’s very clear, that is our stand.”

In other words, Mugabe supports the one-size-fits-all as spelt out by the law.

So what exactly does the “policy” entail?

It would seem, according to Mugabe, the ministers cannot exercise discretion against a law that stipulates a fixed threshold in black and white.

Furthermore, no policy document exists to support the concessions the ministers have been pronouncing.  As such, indigenisation is bereft of clarity. In fact, it so happens that no policy exists on indigenisation. The Herald columnist, Nathaniel Manheru, wrote a few weeks ago: “For a good half a decade after its declaration, indigenisation and economic empowerment does not have a single policy document, a coherent economic argument or model, beyond a cryptic slogan text,” he wrote. 

“Not many admit to this, which is why consensus on it is so easy to strike. Each one carries his or her own conception of it…”

Nhema and Chidhakwa — key drivers of the project — hold their own conception of it that seems to contradict Mugabe’s.

One is bound to ask: indigenisation or indigenous confusion?

In the words of Manheru, “indigenisation is yet to become a governing policy; indeed a way of organising the economy and distributing its benefits.”

This is the “policy” upon which Zanu PF has premised transformation of the socio-economic conditions of Zimbabweans by granting them a stake in the economy.

Manheru’s article was titled “Victory without a Party.” Without a clear policy on indigenisation, such “party” for Zimbabweans remains a long way away, if ever. For a potential investor, the mixed signals make it difficult to make any decisions.

Indigenisation resembles a dog’s dinner. But the “indigenous confusion” does not end there.

The government has set up a number of community share ownership schemes for mining operations such as Mimosa, Zimbabwe Platinum Holdings, Unki and Marange Diamonds.

Nonetheless, the schemes do not seem to be premised on any firm legal ground.

Former Finance minister Tendai Biti stated: “There is nowhere in the Indigenisation Act that compels companies to donate money to a community share scheme or to any farm or to anything; so what you are actually seeing is coercion; companies being forced to part with $10 or $15 million.”

“So the issue of community share schemes is actually an afterthought which is not backed by the empowering act… Community share schemes don’t actually have legal existence vis-a-vis the Indigenisation and Empowerment Act.”

Indigenisation has been controversial. But Zanu PF should end the “indigenous confusion.”

It does not help that its flagship economic project lacks coherence and implementation guidelines.

Comments (1)

Anyone who has read the Act driving the indigenisation process will tell you that whereas it requires foreign owned companies and businesses to cede 51% ownership to indigenous people,the Act assumes businesses 'own' themselves and can 'force' ownership changes.However, most businesses are owned by 'shareholders' who may or maynot be directors of the companies.Thus at law, it maybe both illegal and unconstitutional for companies to 'force ceding of ownership' by private shareholders.

chokwadi chokwadi - 17 December 2013

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