ONE afternoon, just over a decade ago, a young man sat across the table in my office at a Harare law firm. He had been sent down by one of my colleagues, who being higher up the food chain probably did not have much time to deal with small clients of this young man’s type. This particular client was a young white man.

I certainly hadn’t had dealings with his kind before.

I wondered what he thought of me — young and green as I certainly looked.

I have to admit I was quite eager to make an impression.

There was the added incentive to impress the boss, too.

As it happened, things went well over the next few weeks and I had secured for myself a satisfied customer.

So satisfied, in fact that he returned the next day, holding a bunch of files, which he placed on the table and discussions commenced. He explained that he was starting a new business but wanted a lawyer to look after certain aspects of his work.

He had recently incorporated a company and his principal line of business was selling mobile phones and lines for a mobile phone company. It was a pretty competitive environment in those early days — the days of the large mobile phones which were derisively referred to as zvidhina (bricks), on account of their size.

In those days, the mobile phone was a status symbol. It announced one’s arrival, as it were. My new client satisfied the who is who’s desire to be seen with these bricks and other accessories.

But not everyone who wanted the new phones had the means. They got them anyway, on credit, which they still could not pay.

So my client wanted me to pursue them. Essentially, he wanted me to be his debt collector.

Now, debt collection is not a particularly exciting line of legal practice. In any event, the bulk of the work I did for the state-owned company that I have already referred to was largely collection of debts from customers who had failed to meet their payment obligations.

Most of them were ancient debts — the circumstances of which went some significant way to demonstrate how state companies had been sucked to near death by those who were supposed to look after them who turned out to be parasites.

Over the next few weeks, the files trickled in, evidence of customers who don’t like to pay their dues. Then he came again and said he wanted to register some trade marks.

Now this was more high profile work in the field of intellectual property. The only problem was that this line of work was carried out by a specific department in the firm so the best I could do was to pass him on to my colleagues. I did so, with much reluctance.

I am not sure how that piece of business went on.

A few months later I called him to say I had been awarded a scholarship for postgraduate studies in Britain and I was due to leave the firm in late 1999. We agreed that his custom would be handled by a colleague who was in line to replace me. He wished me good fortune.

That young man went on to build one of the most successful technology businesses in Zimbabwe. It is listed on the Zimbabwe Stock Exchange and remains one of the most vibrant companies in the country.

The moral of the story is that human ingenuity knows no bounds and if allowed freedom, it can flourish to everyone’s benefit.

If you place barriers, you stifle innovation and ultimately, you disadvantage all those who are potential beneficiaries — employees, suppliers, customers, etc. In other words, you kill off the goose that lays the golden eggs.

It is against this background that I have observed with some concern the new rules introduced by government ostensibly to promote indigenisation of large companies operating in Zimbabwe.

It is not because I am against the principle of empowerment, especially of formerly disadvantaged people, given the context of colonial experience which tended to be exclusionary.

Rather, it is because the law potentially creates a moral hazard and fails to properly take into account the nature of the problem they are trying to resolve.

Far from being a tool for empowerment, it is likely to create incentives for lethargy and rent-seeking behaviour.

The moral hazard is that you create a generation that believes that you can benefit from the efforts of others — that having property or a stake in a company alone is the key to success.

Wealth creation is a result of many factors but importantly, you have to possess the equipment to make property work.

In other words, you need knowledge, ability and drive. It creates a nation of consumers and not creators of wealth.

To my mind, Zimbabwe does not have a shortage of black men and women who at some point or another have done well in business.

You only have to look at the transport industry to see the potential there has been from an historical viewpoint.

Yet, by and large, after experiencing enormous bouts of success in the short term, most of the bus companies have failed to survive their original founders.

Something certainly is wrong somewhere, in the business model pursued by these businessmen or indeed in the general governance of the businesses.

To return to the example of my client: he built his technology company and then listed it on the stock exchange to raise more capital to fund growth.

True his ownership became diluted but it ensured that the company could survive him, passing into new hands through exchange of shares from time to time.

If government truly wants to empower people it needs to make an honest assessment as to why many of the so-called indigenous businesses do not survive their founders.

In my view, the greatest form of empowerment is to provide a facility for business knowledge and skills. The informal sector is awash with young, innovative minds and hard-working hands.

But how come these businesses remain in the informal sector — carried on kuSiya-So in Mbare? Why can’t they transform into fully fledged formal businesses employing people, paying taxes, etc?

There are reasons why they cannot transform and instead of advocating the seizure of existing companies government simply needs to identify the challenges faced by the informal industrialists and create avenues to empower them — provision of micro-finance, business knowledge through training, etc.

Giving people stakes in companies simply to meet the 51% rule is not going to cure the business knowledge deficit that has seen many indigenous business fail to live up to the rigours of the market.

A man does not have to be given half a share of the fish that someone has already caught — rather, it is better to give him the equipment to enable him to catch his own fish.

As I observe the developments I can’t help but think of the contrast between my two clients a decade ago that I have referred to above: one a large state-owned with great potential but generally run down and in a comatose state and the other, a fresh, young company that was only finding its feet.

The state company has remained in a coma since then; the parasites still sucking from it annually, as they have always done.

The young man’s company has grown in leaps and bounds — it is now listed on the ZSE, employs hundreds and has a future to look forward to.

Yet, the makers of the new law want the company built by that young man to cede 51% control to so-called indigenous people because its owner is not indigenous enough; whilst the lifeless state company which basically lives off taxpayers’ funds remains in the hands of vampires.

Quite frankly, it’s ridiculous and an insult to the many ordinary Zimbabweans who respect hard work and would rather be given a facility to grow their own rather than a chance to free-ride on others’ efforts.

The government had better focus on helping people acquire knowledge on running business. Otherwise one day we’ll wake up and there will be no 51% rule to enforce because there probably won’t be any decent company to enforce it against.

Alex Magaisa is based at, Kent Law School, the University of Kent and can be contacted at This e-mail address is being protected from spambots. You need JavaScript enabled to view it     or This e-mail address is being protected from spambots. You need JavaScript enabled to view it

BY ALEX MAGAISA

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