HomeBusiness DigestGovt moots indigenisation law

Govt moots indigenisation law

Godfrey Marawanyika

GOVERNMENT is contemplating an Empowerment Act that will make it mandatory for companies that are either winding up their operations or merging to ensure 50% of the shares go to indigenou

s entrepreneurs.

The Act will compel companies to give 50% of their tenders for services or the supply of goods to indigenous companies. For instance, a mining company will be required to buy 50% of its supplies from indigenous-owned companies.

The same will apply to out-sourced services such as security or auditing.

In a document titled Revised Policy Framework for Indigenisation of the Economy, drawn up by the Department of Indigenisation and Empowerment, there will be need to amend current legislation that impedes indigenisation efforts.

“The legislation should direct all companies and individuals to do business with a minimum of 50% of indigenous entities in respect of service provided and goods supplied,” reads the document.

The Act will also make it mandatory for government to allocate a 50% stake to indigenous groups when it commercialises or privatises state companies.

“Government itself should arrange to secure or procure 75% of its goods and services from indigenous firms,” it says. “For example, government should be expected to deal with indigenous banks, engage indigenous accounting firms, etc.”

The policy document was signed by the late Minister of State for Indigenisation and Empowerment, Josiah Tungamirai.

The document cites the Liquor Licensing Act, the Mines and Minerals Act, Income Tax Act, Manpower Planning and Development Act, Urban Councils Act, Shop Licences Act and the Banking Act among pieces of legislation that that need to be re-examined to speed up black economic empowerment.

“When making adjustments to the above legislation, care should be exercised to ensure continued competitiveness, productivity and therefore viability of both the new and existing companies,” says the document.

Zimbabwe has had numerous pressure groups since independence agitating for the empowerment of previously disadvantaged Zimbabweans.

The Affirmative Action Group shot to prominence in the early 1990s led by Phillip Chiyangwa to facilitate the entry of black Zimbabweans into the mainstream economy.

Before that there was the Indigenous Business Development Centre, once led by businessman Ben Mucheche.

There is also the Indigenous Business Women’s Organisation (IBWO) led by Jane Mutasa.

The common thread among all the groups was on the need for clear government guidelines and a legal framework on how to achieve their objectives.

Analysts are already advising caution, fearing that the proposed empowerment schemes would be done along political lines as happened with the current land reform that has turned out to be a poisoned chalice for its authors.

“Although on paper it’s a good suggestion, some people will be awarded contracts on the basis of party affiliation as has happened in the past. That is how Mutumwa Mawere purchased Shabanie Mashaba Mines through a government guarantee,” an analyst said.

“But now that his relations with government have soured his SMM is under virtual government control. The partnerships only work for a certain period of time to achieve a good political image.”

The government is also proposing an Empowerment Charter to ensure transparency in the award of the contracts to indigenous entrepreneurs.

The Charter will provide a framework for the empowerment of “historically disadvantaged Zimbabweans”.

The Act seeks to assist indigenous entrepreneurs by offering economic incentives like tax concessions to those companies which give contracts to indigenous businesses.

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