RESULTS of general elections held on Wednesday are expected to shape the country’s political and economic environment going forward.
Report by Taurai Mangudhla
Whether or not people’s expectations are realistic, particularly on how soon reforms should come and start reaping benefits, there is no doubt whichever government emerges has to deal with critical policy issues, chief among them the Indigenisation and Economic Empowerment Act.
In the run up to the crucial polls, political parties have had different views and proposals on how to implement the indigenisation law, with some Zanu PF officials said to have been considering a more lukewarm approach to the empowerment process in light of current economic imperatives.
The Zanu PF model, which is currently being administered by the Indigenisation ministry, compels all foreign-owned companies to surrender at least 51% shareholding to Zimbabwean locals through various approaches including employee share schemes and community share ownership schemes.
Recently, Zanu PF said company take-overs would realise US$7,3 billion in assets for the government, and will progressively create total value of US$29,2 billion.
Morgan Tsvangirai’s MDC-T has proposed major reforms to the Act, saying ownership and control of the economy should benefit the general public.
Among the key points of the MDC-T’s empowerment model is the provision of uncontested security of tenure, which is expected to unlock lines of credit to farmers and miners.
According to the MDC-T’s Jobs, Upliftment Investment Capital and the Environment (Juice) policy document, the proposed reforms are premised on a broad-based economic upliftment agenda in which the whole country and every citizen benefits from the national cake.
“The current indigenisation policy is meant to benefit a few in positions of power. In contrast, Juice seeks to benefit the whole nation. In this context, we define empowerment and upliftment as ‘a multi-dimensional social process that helps people gain control over their own lives. It is a process that fosters power in people, for use in their own lives, their communities and in their society, by acting on issues that they define as important’,” reads part of Juice.
“Zanu PF’s indigenisation policy is about replacing foreign capitalists with African capitalists connected to power with no difference to accumulation and consumption. There is sufficient evidence to show that Zanu PF’s current indigenisation policy is fundamentally flawed.”
The MDC-T argues the current indigenisation policy is limited in its application and amounts to a form of legalised looting by those with political power and their closest friends.
“Where Zanu PF believes in cronyism and distributional cartels and defines indigenisation in the context of grabbing farms and mines for the benefit of those in power, the MDC-T’s broad-based economic empowerment and upliftment agenda will be based on robust and empirically sound policies which promote economic growth, strengthening industry and creating jobs in the context of wider economic growth.”
Welshman Ncube’s MDC notes in its election manifesto that the pervasive talk of expropriation of mining shares in the name of indigenisation has worsened Zimbabwe’s economic situation.
Ncube’s party proposes a mechanism that ensures proceeds from national minerals are invested in infrastructure development that is hinged on a devolved agenda to equitably distribute benefits and burdens at national level in any project as well as the introduction of incentives for corporate social responsibility programmes and better remuneration to mine workers as a form of empowerment.
However, President Robert Mugabe set the record straight on Tuesday, the last day before polling, saying there was no going back on indigenisation.
“You call them reforms, but we call them development projects. Our indigenisation and empowerment will continue, we will continue with our empowerment,” said Mugabe.
Economic analyst Takunda Mugaga said there was need to fundamentally restructure the Indigenisation Act in order to accommodate foreign investors as 51% stakes are too much and generally on the upside.
He said indigenisation should not be the key policy in government at a point the country is in desperate need of foreign capital.
“In current form, the policy is not sustainable with the case of Zisco-Essar deal as evidence of how impractical the 51% stake is towards highly capital-intensive industries,” Mugaga said.
“The new government should not allow implementation to continue without an audit of progress made so far.”
Bulawayo-based economic analyst Eric Bloch recently said indigenisation has to be dealt with in the post-election period to give the economy a clear trajectory.
He said among many ill-conceived and ill-advised economic policies contained in the Zanu PF manifesto was a declared intention to continue with the destructive indigenisation and economic empowerment programmes, instead of modifying constructively and effectively those policies.
“That would reverse the immense harm that the existing policies and legislation have caused on the population and economy,” Bloch said.
“It cannot be denied that if Zimbabwe pursues indigenisation and economic empowerment policies in a manner which does not benefit a selected few using state-controlled (often abused) funds, but instead as has successfully been done by many countries in the Far East, and several countries in South America and in Africa, it would benefit millions of Zimbabweans and the economy as a whole.”
He argues that in contradistinction, pursuit of the present dogmatic policies will leave more people unemployed and poverty-stricken, as the much-needed foreign investment will continue to be withheld.
At the height of implementation of the Indigenisation Act, mining expert Chris Hokonya said Zimbabwe had lost close to US$4 billion revenue from potential mining operations due to indigenisation.
“Translated into tax dollars, we are looking at 4 to 5% of that in terms of royalties,” Hokonya said in April last year.
Hokonya, who is former Chamber of Mines CEO, said companies had been in waiting mode because of the danger posed by indigenisation.