Empowerment rethink will boost investment

HARARE - President Robert Mugabe’s softening stance on the controversial indigenisation policy is a welcome development that will likely spur industrial and economic development in the country.

In a major climb down from his usually confrontational attitude, Mugabe told the nation during his Independence Day speech that the indigenisation policy was misunderstood, indicating there was room for negotiations.

We have always maintained that the controversial law, which forces foreign companies to transfer 51 percent of their shareholding to locals as part of an empowerment drive, is not only irrational but self-defeating for a government that should be doing everything it can to attract investors and revive the economy.

The indigenisation law was never about community benefit but was only used to position individuals in political spheres to allow them to penetrate mostly the mining sector and loot minerals.

Zimbabwe is currently experiencing a rapid economic decline due to massive deindustrialisation and lack of capital to retool industry which was heavily battered by years of hyperinflation.

Given this scenario, it doesn’t make sense for government to bar Foreign Direct Investment (FDI) when the country clearly has no capacity to inject fresh capital into the economy after adopting a multiple currency system in 2009.

It’s heartening to note that the Zanu PF government has finally had its damascene moment, realising that following the enactment of the indigenisation law in 2010, the country did not benefit anything from the policy.

On the contrary, Zimbabwe is now worse off than it was in 2009.

The economy is weakening, companies are closing down en masse, social and health delivery systems have broken down, unemployment is rising dramatically while power and water shortages have reached unprecedented levels.

Given the poor state of our economy, we are not in a position to dictate terms to foreign investors at a time when other economies better than us are offering conducive and investor friendly environments.

We may boast that we have the best land in the world and possess a host of minerals, but as long as those resources are not utilised for the benefit of the general populace and the economy, it’s as good as nothing.

Without a proper plan to industrialise, there is no way this economy will ever tick.

Every nation that has prospered went through massive industrialisation.

And Zimbabwe at the moment needs foreign investment, more than any other country in the world, to help us industrialise.

This calls for more flexibility on economic policies, tax breaks for investors and other incentives to attract foreign capital into the country.

Comments (1)

All those that benefited from this Indigenistaion policy by grabbing shares from mining companies should be made to pay back from their ill-gotten wealth.

Dr Know - 24 April 2014

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