I am astounded by the misplaced exuberance of those who have been given the responsibility of implementing this important transformation of our economy, and thereby our society. Each day I hear Saviour Kasukuwere, the minister responsible, fighting off critics and literally bullying companies into submitting to his version of indigenisation. 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 Jonathan Moyo and others have joined the fray to criticise.
This ridiculous comedy continues to demonstrate to all of us out here that there is serious confusion and conflicting motives on how to implement the policy – although all agree that it is necessary. How can we then expect foreign investors to plough their funds into the country, when we cannot even agree among ourselves on what needs to happen?
Most of us 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.
But because the Zimbabwe economy has been characterised by patronage for so long, it is highly unlikely that this habit has suddenly disappeared. Zanu (PF)’s patronage system has led to the underdevelopment of Zimbabwe and continues to limit the effectiveness of any of its economic policies. This issue has already reared its head with the revelation of the 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, in typical Zanu (PF) style.
As for the National Indigenisation and Economic Empowerment Board (NIEEB), such a body, if needed it at all, should be above reproach and comprised of competent, informed and objective individuals with no vested interests. They should be answerable to you and me. I am still not convinced that this is the case.
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, and concentrates on short term and visible gains. This happened with agriculture. Because of this, the implementation is rushed without serious thought being applied to possible long term negative unintended consequences. If indigenisation is meant to attract votes to Zanu (PF) it is certainly doing the opposite.
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. 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 anybody or institution to have the sole right to approve indigenisation transactions or partners.
The 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.
Supply side empowerment as promoted by 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.
Another economic crime against Zimbabweans is being committed – to the benefit only 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. – Join the debate. Send your comments to: vtmusewe@gmail.com
Post published in: Opinions & Analysis