Platinum deal marks breakthrough for Zimbabwe
Zimbabwe’s empowerment law has faced many obstacles, but foreign businesses are now coming round to the reality that economic indigenisation is not going away.
A fortnight ago, the world woke up to the news of the signing of terms for the transfer of a 51 percent stake in Zimplats – the country’s leading platinum miner – between the government of Zimbabwe and the mining house’s South African parent firm, Impala Platinum Holdings.
Under the deal, Implats will sell 10 percent of its shares in Zimplats to the community that lives near the mine through a share ownership trust, while another 10 percent will be sold to current and future workers under an Employee Share Ownership Trust.
The remaining 31 percent will be sold to the National Indigenisation and Economic Empowerment Fund, which is run by the government.
The shares are valued at US$971 million and Zimplats will facilitate the transaction by providing vendor financing at an interest rate of 10 percent per annum.
The man superintending the exercise, Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere of President Robert Mugabe’s ZANU-PF party, says the deal marks a major breakthrough in Zimbabwe’s quest for economic independence.
“The deal signifies that the time has come for African resources to start benefiting ordinary people in the continent than a situation where they only benefited a few foreign elite,” he says.
“It shows that there can be accommodation of investors and ordinary people where investors share control of companies with locals. It allows ordinary people who are fighting poverty … to realise their dreams.”
Much criticism has been levelled against the empowerment drive, which seeks to ensure that locals have at least 51 percent ownership of any enterprise that is valued at US$500 000 or more.
Among the biggest critics have been President Mugabe’s partners in the coalition government, the MDC-T and MDC political parties.
They have received much backing in their criticism from foreign capital, which stands to directly lose when ownership of businesses is indigenised.
Their major argument has been that no investor would want to put their money in a country where they do not enjoy majority shareholding.
But Minister Kasukuwere dismisses this assertion and warns these investors that empowerment is a reality of the 21st century.
“We are not against foreign direct investment but we want equitable partnership in foreign companies that do business in Zimbabwe because we cannot allow a situation where communities do not benefit from businesses in their areas.
“This is the way to go. We know we cannot prescribe what other African countries should do but we have ample evidence that we can achieve equitable distribution of wealth.
“African leaders must start giving value to their minerals so that communities can benefit,” says Kasukuwere.
According to the minister, the empowerment law has so far seen communities around the country getting involved in businesses through share transfers worth in excess of US$1 billion.
He adds that at least US$110 million has so far been distributed to community share ownership trusts, while over 800 companies have had their proposals to dispose of shares to their workers approved.
Kasukuwere explains that the Zimbabwe government’s programme of empowerment is in line with the Millennium Development Goals and other international instruments that seek to ensure local communities benefit more from the resources around them.
University of Zimbabwe lecturer in the department of International Relations (Economics), Dr Charity Manyeruke, says the Implats Holdings’ empowerment deal demonstrates that there is no going back on the indigenisation drive.
Resource nationalism, a development school of thought that advocates greater local control of natural resources, will not be wished away, she says.
“I am sure companies who thought this exercise was a joke can now see that there is no going back after one of the biggest mining companies on the continent conceded to the law.
“When locals have shareholding in companies, it brings sustainable development to the people and the country because it addresses problems caused by colonialism and neo-colonialism.
“Communities are now going to benefit because we are no longer going to have islands of wealth but entire communities will be empowered.
“The African revolution won’t be complete if we don’t have economic independence. What Zimbabwe has done marks the beginning of another revolution because we cannot be content with political independence without economic independence.
“For workers to be among the shareholders brings stability because we will not have more Marikanas (reference to the shooting of striking workers at Marikana Mine in South Africa last year),” Dr Manyeruke opines.
But, she warns, African governments must hone their negotiation skills so that they stop selling off strategic resources for a song.
“It is important as a continent that when we are negotiating deals with foreigners we put our best human resources into the negotiating team: lawyers, economists, trade experts and other technocrats are needed instead of relying on politicians alone.”
The president of the Zimbabwe Federation of Trade Unions, Alfred Makwarimba, also believes resource nationalism is the way to go – and that Zimbabwe is a world leader in this regard.
“As a federation, we are very happy with any programmes that result in workers benefiting. This is one such programme that seeks to empower the employees.
“Africa as a whole should embark on such schemes so that the imperialists do not divide us by shunning Zimbabwe for other African countries. We should all speak with one voice for our continent to realise the full benefits of its natural resources.
“It is unfortunate that there are some African governments that tend to soften their laws, particularly on issues that have to do with foreign capital and this gives rise to greater protection of foreign interests than local ones,” laments Makwarimba.