Zimbabwe wants more locals in business
Indigenisation and Empowerment Secretary in the President’s Office Ozias Hove on Wednesday said it was unfortunate that after 26 years of political independence, the majority of Zimbabweans were still impoverished and sidelined from the mainstream economy.
He added that the decision to come up with a law to drive the empowerment process was part of a grand empowerment programme Zimbabwe has been pursuing in the past two decades and was aimed at redressing perennial economic injustices, which are direct offshoots of 90 years of colonial rule.
If Parliament approves the Indigenisation and Empowerment Bill, which is currently in its final drafting stages at the country’s Attorney General’s Office, the State will have the required arsenal to provide mostly incapacitated indigenous people with financial lifelines to set up their businesses.
They will also be allowed at law to acquire a 50 percent shareholding in foreign-run companies through rights issues, employee share ownership shareholding and management buy ins and buy outs.
Hove said the Bill proposes the setting up of a National Indigenisation and Empowerment Fund.
This Fund will drive a long awaited massive entrance by indigenous people into Zimbabwe’s corporate world that has largely remained closed to locals despite exceptional successes registered in agrarian transformation through the Fast Track Land Reform Programme.
The main component of the Bill, the official said, shall be to assist the National Investment Trust (NIT) to mobilise more financial resources for empowerment purposes.
NIT is an empowerment vehicle that was set up in the country in the year 2000 to spearhead the empowerment process.
It warehouses a number of shares for empowerment purposes that are channeled into taking up shareholding in other companies, expanding existing businesses through rehabilitation and transformation of infrastructure, loan guarantees and the provision of working capital.
However, Hove was concerned that NIT has not been adequately capitalised to sustain the mammoth task and it has sorely depended on corporate finance arrangements.
The National Social Security Authority (NSSA) has largely provided these funds.
“There is no country that will develop economically or otherwise on the good mercies of foreign interests.
“Economic nationalism is the hallmark of all sovereign nations and government will assist the NIT in mobilising funds for this cause,” Hove said.
Hove said this when NSSA presented a $40 million lifeline to the NIT for on lending to small-scale enterprises.
He added: “Our people have suffered much impoverishment under colonial rule, they are so hungry for wealth and have in most cases succumbed to the get-rich-quick syndrome to the extent of even diverting funds from the agreed projects.
“This is manifested by rapidly rising cost of goods and services in indigenous enterprises, even if the costs of production are far less than is charged to the consumer.”
Critics have said Zimbabwes economic empowerment crusade was targeted at excluding international companies from the economic system.
However, the government argues that the project is a pragmatic growth strategy focused on helping Zimbabwe achieve its full economic potential through the mass participation of indigenous peoples.
Indigenisation and empowerment are seen by many as the cornerstone of Zimbabwe and Africa’s policies and strategies, in order to alleviate the acute poverty prevalent among locals.
NIT chairman Keith Guzah said the future of not only Zimbabwe but the whole African continent would be based on the establishment of vibrant economies that would have a large bearing on continental investment strategies with respect to indigenous businesses.
“To date, more than 1 000 bankable projects are in our database waiting for funding. Corporate investors should look at investment in unlisted equities as a good alternative to grow their finances, and at the same time fostering indigenisation and national development,” Guzah said.
NSSA has previously provided other financial lifelines towards the NIT’s operations.
In the year 2000, the NIT received Z$200 000 from the social security institution, which bankrolled more than 50 projects.
In 2001, the NIT borrowed Z$500 000 on a revolving basis and in 2004 a further Z$15 million was channeled into the NIT.
The new Bill comes as many similar policies have also been lined up for the country’s lucrative mining sector.
In February this year, a number of companies raised issue with the State after it was announced that there were plans to open up that sector to indigenous players through preferential treatment policies.
The government proposed that locals control 51 percent of mining ventures in the country as an empowerment strategy.
At present, the policy has not yet been fully enunciated or put in the form of a Bill before the House of Parliament.
Mining contributes about four percent of the country’s Gross Domestic Product (GDP).
In South Africa, an influential Black Economic Empowerment (BEE) crusade has also strongly advocated for locals in that country to control a significant stake in the national economy and the project has been highly successful.
In the mining sector alone, blacks have advocated for 30 percent shareholding and strong and influential black businesspeople are now driving that industry.
While legislation has not yet been put in place for the financial services sector, Zimbabwe, like many other countries across Africa, has managed to groom a strong army of entrepreneurs in this sector and locals run most operating banks.
The manufacturing sector has however still remained in the hands of foreign companies.
The general feeling, however, is that with the capability that locals have demonstrated in the financial and agricultural sectors, they can also match their foreign counterparts in manufacturing.
Guzah fired a broadside at the multinational companies that he said benefited from government programmes but very few of them have taken a decision to plough back profits for the advancement of Zimbabwe’s citizens.
Zimbabwe has in the past six years witnessed massive capital flight.