Let's rebuild confidence

HARARE - Calls by the MDC to immediately amend the Indigenisation and Economic Empowerment Act, a law that compels all foreign-owned companies to sell or cede 51 percent of their assets to black Zimbabweans to reflect the government’s new thrust must be backed by all right thinking citizens of this country.

It is not enough to signal a policy change verbally without enacting legislative amendments to capture that policy rethink.

The policy U-turn by the government and the attendant acknowledgement that in its present form, the indigenisation programme is an elitist transfer of wealth which will not create any new value or achieve broad-based economic empowerment is a Damascene moment for the Zanu PF government.

But it’s not enough to signal a policy shift without changing the law.

The Zanu PF government needs to immediately take its proposed new thrust to Parliament to consider indigenisation thresholds on a sector-by-sector basis.

That is the only way government can engender confidence in this programme, and inspire foreign investors to bring their money here.

Under the programme, which is being driven by President Robert Mugabe and his Zanu PF party, foreign companies must cede control and ownership of at least 51 percent of their Zimbabwe operations to locals.

The policy need not be aimed at taking wealth from one group and giving it to another. It must essentially be a growth strategy anchored on development and enterprise development, and not merely the redistribution of existing wealth.

We all back the principle of economic empowerment, but are opposed to the model that all along has been implemented by Zanu PF.

We are glad Zanu PF has finally realised that the approach it took would not work.

There were many flaws. The law obliged the indigenous entity the duty to buy 51 percent equity in existing firms. That meant it was a model that was not creating new value but was meant to redistribute available wealth. As we stated in our Nieebgate exposé, no ordinary Zimbabwean has that kind of money to buy equity in these conglomerates.

Zanu PF’s equity transfer approach did not take into account the fact that Zimbabwe is a small economy with a budget of just over $4 billion and in need of capital in the form of foreign direct investment, overseas development assistance and savings.

Without belabouring the shortcomings of that programme, we are glad Zanu PF finally has realised the need to revisit that programme as expressed in the independence day statements by Mugabe and Tuesday’s statements by Finance minister Patrick Chinamasa during the Mauritius-based AfrAsia Holdings Limited (AfrAsia)’s 62,5 percent takeover of its local subsidiary.

Black economic empowerment is an important policy instrument aimed at broadening the economic base of the country and in the process stimulating further economic growth and creating employment.

But it must be done in a sober way.

Our country requires an economy that can meet the needs of all our economic citizens – our people and their enterprises – in a sustainable manner, not the plan that was being pursued by Zanu PF. The economy needs to build on the full potential of all persons and communities across the length and breadth of this country by taking amendments to this law to Parliament and signalling this new policy thrust.

That’s the only way to inspire confidence in the national economy and bring in desperately needed foreign direct investment.

That’s the only way to go.

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