HomeOpinion & AnalysisEric Bloch: Indigenisation Must be Constructive

Eric Bloch: Indigenisation Must be Constructive

FOR nearly three decades the subject of indigenisation has been on the Zimbabwean political agenda. 

In the 1980s it was the key theme of the Affirmative Action Group (AAG) of which the currently prominent businessman, Philip Chiyangwa was, for some years, a very active and forthright president.

For all intents and purposes, “indigenisation” denoted energised vesting of a predominance of the Zimbabwean economy in those Zimbabweans as were non-European, or other non-Zimbabwean racial origin.  The contention of indigenisation proponents was that Zimbabwe was for Zimbabweans, provided that they were black.

To achieve this, the fundamental demand was that a majority holding in each and every business enterprise in Zimbabwe should be beneficially owned by such Zimbabweans.

At that time, the demand was that those not such Zimbabweans should be compulsorily obliged to transfer majority ownership of their business, and their business properties, to qualifying Zimbabweans.

Many, if not most, of the proponents for such policies not only demanded that the transfer of ownership should be free of any compensatory consideration or, at the most, should be subject to only a minimal compensation.

They sought to justify their demands with arguments that the businesses and properties had been funded at the expense of the Zimbabwean populace.

They were conveniently oblivious of the extent that the businesses had been funded and developed by inward remittances to Zimbabwe of capital, by providing such businesses with technologies, skills, trade marks, franchises, and the like, possessed externally, and by the endeavours, skills, labours and the commitments of the business founders.

In the course of the 1980s and 1990s, many indigenous Zimbabweans very successfully established businesses, and progressively accumulated wealth, being a just reward for their determined pursuit of their ambitions and aspirations, and for their motivation and expertise.

After having been barred from accessing necessary education and skills development for more that two-thirds of a century, and similarly unjustly barred from property and business ownership other than in designated high-density areas, there was transformation.

In the last few years preceding Independence, and after that momentous development, removal of racial barriers to education, entrepreneurship and enterprise development became an opportunity for almost all, save that most were faced with immense constraints of non-availability of capital.

To a limited degree, that need was addressed by the then Small Enterprises Development Corporation (Sedco), a government-funded and managed facilitative body.

Progressively, availability of funding from banks and other financial institutions also developed, although minimal in extent as against that required by the masses of aspirants to become economically empowered.

Concurrently, there were many indigenous people who became economically empowered by intense recourse to corruption opportunities accorded them.

Whilst far from a characteristic of all those politically engaged (or connected), or in public service positions which provided such opportunities, many unhesitatingly made self-beneficiating usage of opportunities of enrichment.

And, having thereby procured some considerable substance, that wealth was then assiduously applied to the generation of further great riches.

However, the overwhelming majority of the populace had little or no opportunity of having economically engaged enterprises, save and except in generally small-scale informal sector operations.

Year after year, government enunciated intents to bring about economic-empowerment opportunities, but produced nothing but such talk.

Ultimately, partly to enrich themselves, and partially as a sop to the population craving economic opportunity more substantive than employment or informal sector vending and allied activities, government resorted to implementation of a programme of land acquisition, redistribution and resettlement.

It did so in blatant disregard for the consequential devastation and near-total destruction of agriculture, which was the solid foundation of the economy.

Its disregard for the resultant loss of employment for over 300 000 agricultural workers, for the impoverishment of almost two million people and for the fundamental principles and international norms of property rights was exceeded only by its inability to recognise that, even if successfully implemented, the land programme would only convey economic empowerment to 4 500 of Zimbabwe’s indigenous population.

Moreover, it was not only implemented, but was the calamitous catalyst of economic disempowerment for many.

Experience is defined as “making a different mistake next time”, but the Zimbabwean government has demonstrated itself to be most inexperienced, for it persists in making the same mistakes over and over again.

In 2008 it promulgated the Indigenisation and Economic Empowerment Act, which is a legislative masterpiece of vagueness for, save for the intended creation of an economic empowerment fund, it effectively contains nothing but an obligation for a minimum of 51% of all enterprises being owned by indigenous Zimbabweans (as defined), and a virtual “blank cheque” empowerment for the relevant minister to make determinations, by Statutory Instruments, to achieve the legislation’s objectives.

Over and above the then extremely distressed state of the economy, and the gross prevailing political instability, this legislation became a gargantuan deterrent to investment.

That investment is a prerequisite for substantive economic recovery, for the generation of much-needed employment, and for inflows of critically necessary monies from abroad, over and above required ongoing and increasing technology transfer.

No investor is interested in investing if compulsorily reduced to the role of junior partner, irrespective of the quantum and proportion of capital and other inputs provided.

No investor is prepared to be confronted with a possible imposition of a partner or partners upon him.

If there are to be co-investors, the investor expects an entrenched right of own selection of such co-investors, and of agreeing the investment terms and conditions, and the basis of ongoing operations and control of the venture in which he is investing.

But not only is the legislation silent on these issues, in addition there are recurrently conflicting policy statements from the president, government ministers, activists such as AAG, and others.

Prima facie, it appears that there is a determination to emulate the land “snatch” by a similar “snatch” of business enterprises, undoubtedly with similarly disastrous consequences.

In the meanwhile, the economy continues to be held back from the long-desired recovery and growth, and the majority of Zimbabweans continue to suffer.

Most of all, government and the “indigenisation” proponents and advocates continue to have a myopic disregard that transfer of enterprise ownership, in whole or in part, cannot economically empower a significant portion of the population, but only a favoured few.

The “Robin Hood” act of taking from the rich to give to the poor does not work with enforced indigenisation as espoused by government, by Chiyangwa in a recent statement, by the AAG and others.

It can only make some of the rich poor, in order to make a few of the rich richer!  Instead, the emphasis needs to be on facilitation, enablement and funding for more and more to become economically empowered (provided they qualify therefore, by being appropriately skilled and motivated).

Zimbabwe needs constructive, not destructive, indigenisation and economic empowerment.

 

Eric Bloch

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