'Indigenisation dampens economic prospects'

HARARE - Zimbabwe's indigenisation policy dampens the country’s prospects of attracting the desperately needed foreign direct investment (FDI) and is irreconcilable with employment growth forecasts, says economist John Robertson.

This comes as President Robert Mugabe’s administration has maintained its stance on the policy — compelling foreigners to cede majority stakes to black locals — with Finance minister Patrick Chinamasa recently going out of his way to explain how the empowerment programme would be implemented and insisting that there was not going to be any variation from the current position.

“I feel I need to take this opportunity to clarify the position and set the record straight,” he said, while presenting his 2014 National Budget.

“In the case of resource-based investments, our contribution is the depleting asset in the form of the in-situ value of the mineral which will be our contribution to the 51 percent of the business,” Chinamasa said, adding that “the investor who comes with capital, technology and managerial skills to exploit this depleting resource is entitled to 49 percent of the shareholding.”

He added that in the same vein, where the enterprise does not benefit from a natural resource or raw material derived from Zimbabwe, the business partners in the investment are free to make their own decisions on how and when, within the gazetted framework, the 51 percent contribution is to be financed or achieved.

“Government does not expect this to happen overnight, but expects it to be a process which should ultimately lead to conformity with the law.

“It should also be clarified and understood, Mr Speaker Sir, that the investor has a privilege of choosing his/her Zimbabwean partner,” Chinamasa said.

However, Robertson says “in choosing policies that isolate Zimbabwe from any prospects of attracting investors and defending policies that have forced the country to become dependent on imports of just about everything, even our main staple diet, Zimbabwe has chosen policies that are incompatible with employment growth.”

“In claiming that we have policies designed to protect our God-given natural resources, our infinitely more precious young people are now becoming the country’s main export,” he said.

He noted that the country’s prospects of achieving the envisaged 6,1 percent Gross Domestic Product growth rate this year were severely compromised by the indigenisation policy.

“The minister does not try to estimate how many billions of dollars would need to be invested to add almost a billion of GDP.

However, whatever the figure, the minister’s defence the IEE regulations place those billions beyond the country’s reach,” said Robertson.

He added that the policies we have now in place have already driving away the hundreds of investors whose business skills and investment capital could have uplifted millions of Zimbabweans.

“Zimbabweans need jobs. To the investors, the only product of a mine of any importance is the mineral, but for the country, the most important product is the jobs. Zimbabweans need incomes and to get these they need employers from whom they will get much more than their wages.

“On the job, they would also get training and work experience that would genuinely empower them,” Robertson said.

This comes as the Zimbabwe Investment Authority (ZIA) last year approved foreign investment projects worth nearly $700 million, down from close to $1 billion recorded in 2012.

 

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