Indigenisation a 'losing policy'

LONDON - President Mugabe and his Zanu PF party have been bad for foreign investment to this country over the past 14 years.

To Mugabe and his party, foreign investment did not seem to matter much.

Once land was redistributed, Zimbabwe would be self-sufficient. The discovery of one of the world’s largest deposits of diamonds enhanced the thinking that Zimbabwe did not need the rest of the world.

Former Mines minister Obert Mpofu once said Zimbabwe would be self-sufficient because the country expected $2 billion from diamonds to boost to its annual budget.

So far, this has proved overly optimistic. Even when the benefits of diamonds are fully realised, foreign investment would be significant for job creation and taxes as it has been to rich economies.

In 2012, Britain appealed to and celebrated when General Motors announced it would produce the next version of its best-selling European compact car in the UK, choosing it over Germany.

As such, developed countries still recognise the importance of foreign investment.

Here, however, poor an economy as we are, Mugabe and Zanu PF have historically shown antipathy to foreign investment as illustrated by hostile policies and threats to foreign-owned companies.

In December 2010, Mugabe stated: “Why should we continue having companies and organisations that are supported by Britain and America without hitting back? Time has come for us to take revenge.”

In March 2011, during the tenure of the coalition, he repeated the threat. Addressing a rally in Harare, Mugabe said: “It is time now to take action and to start looking at these companies we must take over.”

A spokesperson for the British Foreign Office responded then: “This action is irresponsible. It will damage Zimbabwean livelihoods and deter much-needed foreign investment at a time when the Zimbabwean economy is starting to recover from the disastrous effects of Mugabe’s earlier economic policy.”

But Mugabe made similar threats when launching the Mashonaland Central Community Share Ownership Scheme in November 2012, and at the burial of former freedom fighter Mike Karakadzai in August last year. These statements would not have helped to encourage any potential investor.

The “policy” of indigenisation has proved hostile to foreign direct investment. Direct or personal violence through farm invasions and political clashes has played a part in discouraging investors.

Indigenisation brings another form — “structural violence”, “the cause of the avoidable difference between the potential and theactual, between what could have been and what is.”

Here, the “actual” is widespread unemployment, poverty and other negative effects on vital institutions. The “potential” is what foreign investment could bring.

Mugabe, however, now seems to recognise the significance of foreign investment.  After outlining the purposes of indigenisation at the ZITF recently, he said:  “With this clarification, let me take this opportunity to invite potential investors to come and do business in Zimbabwe in which there is huge potential for joint venture partnerships between investors, manufacturers, industrialist and the public sector. We want investment from abroad.”

Nonetheless, indigenisation still lacks the clarity he claims. To speak of a “policy” is lending a sense of coherence to a project with no policy document.

Mugabe and his ministers have been making different statements resulting in contradictions and ultimately confusion.

Information minister Jonathan Moyo says indigenisation is a “winning policy” which should not be changed. It may have won Zanu PF votes in the last election. But the country is not winning any investment or finance to lift the economy from the doldrums.

Finance minister Patrick Chinamasa has struggled to secure finance from International Financial Institutions (IFIs) because lenders want to see clear policies with potential to revive the economy so Zimbabwe is able to pay back the IFIs.

In whatever form it is currently, indigenisation has proved a “losing policy,” at least to the country.

Zanu PF needs to understand that changing course when something is not working is not a sign of weakness.

There is honour in admitting mistakes.

Comments (10)

we need foreign investment. Minda kana diamonds cannot provide for everyone. many youths are jobless. let foreigners come and open companies without these mad policies. the country is being driven by mad people.

george - 6 May 2014

Muchadya izvozvo. Zanu yakapromiser vanhu mabasa. Ma investors ati bodo. Zanu chinjai maitiro

pedzi - 6 May 2014

Mugabe was sure he would have no problem getting the $27 billion to finance his ZimAsset economic recovery plan. He was not sure about the West contributing but was cock-sure his old allay the Chinese would even contribute $ 30 billion! It is now nine months since Mugabe rigged the elections but still the ZimAsset has remained mockingly empty. Mugabe rigged the elections but unless he can rig the economic recovery he is in serious trouble.

Wilbert Mukori - 6 May 2014

politicians never want to admit they made mistakes. It is not in their DNA. indigenisation is just to make a few zanu people rich. not many can buy shares in these companies anyway but the big shots

lucky dube - 7 May 2014

Actual Mr Editor what Zimbabwe needs to do is ban the use of the word indigenisation in the country, it has caused untold suffering, company closures, loss of FDI, increased numbers of vendors in cities, even Baba Chatunga must delete the Ministry of Indigenisation from his Cabinet list and maybe replace it with Ministry of Investment which should go to an investment expect not his zanupf looters who always see money coming nto their pockets with each investment application form. Mai Mujuru said we should not harass investors she should have said we should not torture investors because that is what we are good at. Look even in operating services you need to pay somebody for you to get a service. To win a job for security services you bribe one of the company's employees, to fix computers at company B employee Soso in that department wants a cut, hence our services are expensive because there is a cut for someone on those figures so who would want such a scenatrio.

Maita Manyuka - 7 May 2014

Jonathan Moyo is right when he says Indigenisation is a winning policy but that's only when it comes to elections, it's a losing policy when it comes to the economy however and I'm sure he knows this. The policies of Indigenisation and Land reform need an urgent re-look.

Dr Know - 7 May 2014

@Dr Know. Yes, it is the COUNTRY that should 'win' from policies, not Zanu PF

steve - 7 May 2014

I gues we should adopt JUICE. I think that is what Conrad wants.

godfrey gudo - 7 May 2014

the Juices and ZimAssets are just sweet sounding documents. indigenisation needs clarity if it is to work at all

peter - 8 May 2014

51% of nothing is nothing. We have indiginised ourselves into poverty. No investor will come here. Soon the new poor will take over the farms of the war veterans / politicians/ businessmen

Savior - 9 May 2014

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.