Zimbabwe's indigenisation can be a success
Indigenisation has become cacophony of idiocy on what should be a focused and well articulated economic transformation agenda.
I am quite astounded by the misplaced exuberance of those that have been given the responsibility of implementing what I think is a very important economic transformation law such as indigenisation. Each day I hear Saviour Kasukuwere, the minister responsible for indigenisation, fighting off critics and literally bullying companies into submitting to his vision.
On the other side I hear Tendai Biti, the minister of finance, giving his considered opinion as he attempts to bring some sanity to the madness while promising to reverse any dubious deals in the future. Gideon Gono, the Reserve Bank Governor, has put in his two cents worth by encouraging supply side empowerment, a model which Jonanathan Moyo and others have joined the fray to criticise.
We are truly witnessing a cacophony of election campaign idiocy on what should really be a focused and well articulated economic transformation agenda. It is a ridiculous comedy that continues to demonstrate to all of us out here that there is serious confusion and conflicting motives on how to implement it. How can we then, as a country, expect foreign investors to plough their funds into the country, when we cannot even agree amongst ourselves on what needs to happen?
Personally, I fully support the objective of economic transformation which is long overdue. There can be no logical or intelligent argument against the imperative for Zimbabweans to own and control their own resources. Even developed economies have laws in place that protects the ownership of their economies and strategic resources. Nobody is arguing about that.
My point of departure is firstly that, because Zimbabwe has been an economy characterised by patronage, it is highly unlikely that this habit has suddenly disappeared. ZANU (PF)'s patronage that has led to the underdevelopment of Zimbabwe continues to limit the effectiveness of any of its economic policies. This issue has already reared its head with the revelation of the rather suspicious role of consultants in the process, and I am sure there is more to come. The minister must account for all this confusion and his alleged relationships with Brainworks Capital. I can bet you some money has passed under the table, typical ZANU (PF) style.
As for the National Indigenisation and Economic Empowerment Board (NIEEB), my opinion is that such a body, if needed it at all, should be above reproach and comprised of competent, informed and objective individuals with no vested interests in the process and they should be answerable to you and me. I am still not convinced whether that is the case or whether we need them at all.
Secondly, history has shown us that when an important issue such indigenisation, is used as an election campaign tool, its implementation tends to ignore the long term costs to the economy, but merely concentrates on short term or immediate and visible gains. This happened with agriculture. Because of this, the implementation is rushed without serious thought being applied on the long term negative unintended consequences. I guess that one should really not be surprised because that is the ZANU (PF)'s approach since independence which has cost us so dearly. If indigenisation is meant to attract votes to ZANU (PF) it is certainly doing the opposite, it's a fiasco.
For the umpteenth time I must state that: The ownership of equity stakes in existing companies does not add economic value; it merely transforms ownership profiles and creates serious liabilities for all involved; it is not an economic growth strategy.
What surprises me is that this ownership must be "approved" by a referee whose credentials are not very clear and whose objectivity creates public doubt. In my opinion, this acts against free enterprise and the rights of all Zimbabweans to pursue and get involved in economic activity on a non partisan basis. It is therefore unconstitutional for any body or institution, to have the sole right to approve indigenisation transactions or partners. In my opinion, NIEEB is therefore a superfluous participant in what should be a process driven by corporates who must choose black partners with whom they are comfortable to do business with.
Supply side empowerment as promoted by the Reserve Bank Governor, Gideon Gono, or what I prefer to call indigenous enterprise development, is bound to be more beneficial both in the short and long term. It creates immediate economic benefit without significant capital outlay vis-a-vis the vendor financed model which is costly, and has a long waiting uncertain period before targeted beneficiaries can enjoy unencumbered dividend flow. In addition, in vendor financed structures, the new empowerment partner takes zero capital risk and sits and waits for dividend cheques; it is a passive investment with no incentives to perform or add value.
Indigenous enterprise development (supply side empowerment) can be broader and more effective in reviving local industry and thus create more jobs. The only danger is that where goods are merely imported and not manufactured locally, this model can lead to local over pricing of goods and services and does not necessarily result in local enterprise development as intended. You tend to end up with trading companies who merely shift goods from A to B while adding a huge mark up for no value add at all as is the current practice in Zimbabwe.
On the issue of youth empowerment funds, this is s disaster in the making. Entrepreneurship is critical to economic growth, but you cannot throw money at youths who have zero training and experience at building a business. Youth should be trained first, qualify and then put into some sort of business incubation programme that is closely monitored by professionals before they are advanced any funds.
I will avoid at this instance to comment on community share schemes because I am not sure how these have been structured. Suffice it to say that the sad reality about community trust is that the trustees tend to end up being advantaged more than the intended beneficiaries.
We therefore need a balance between these approaches, so that we do not recreate the same disastrous scenario that we did when it comes to agriculture. We destroyed viable enterprises, had no funds to pay land owners, restricted ownership through patronage and undermined our own food security, all in the name of black economic empowerment. The sad fact is that we are repeating the same mistakes and some amongst us are even proud of it.
You know what saddens me most? It is the fact that as educated as we claim to be, we are clearly failing to use our education to our economic benefit. I think I know why - it is because of ZANU (PF)'s lack of long term vision and seriousness in really addressing economic development in Zimbabwe.
My wish is that we all have a mature and intelligent approach to this matter because it is important. They are numerous Zimbabweans out there with brilliant ideas on how we can indigenise Zimbabwe without destroying the very thin economic base that we now have. Brainworks (aka the economic hit man) does not have the monopoly of ideas and a USD45 million fee is a preposterous proposition that needs to be reversed. Surely the chairman of NIEEB cannot defend this travesty with a straight face as he did the other day. Structuring a vendor financed transaction is one of the simplest exercises. For once, I agree with Gideon Gono; I support his stance and encourage him to keep the pressure.
Another economic crime against Zimbabweans is being committed and unfortunately it is not what is beneficial to all of us Zimbabweans that seems to be the priority, but the vested interest of those rather exuberant politicians who are the loudest and most manipulative together with their hyenas clothed as consultants. In the end it is the ordinary poor Zimbabwean who must once again pay the price.
I am hugely embarrassed but I must say I am not surprised at all. I encourage President Mugabe to get on top of this matter as a matter of urgency because he is the one who deployed the minister.
Vince Musewe is an economic analyst based in Harare. You can contact him directly on [email protected]
Click here to sign up to receive our free daily headline email newsletter
