Indigenisation too hard an act for govt to follow

Ray Matikinye


ON paper an indigenisation programme covering all aspects of black economic empowerment (BEE) to create employment and reduce poverty among Zimbabwe’s indigenous people looks comprehensive enough to impres

s.

But the demands on government for its successful implementation also seem too hard an act to follow.

Government is yet to fully adopt indigenisation as a policy to redress the imbalances of the past. Until recently the programme was without a clear policy framework and operational guidelines.

A first attempt at indigenisation succeeded in creating a legion of briefcase businessmen and petty traders. It also created a small clique of nouveaux riches, largely thriving on crony capitalism and feeding on an intricate patronage system.
Now a revised policy framework devised by the Department of Indigenisation and Empowerment in the Office of the President spells out clearly what the government intends to do in various sectors of the economy.

Chief among the sectors targeted for black involvement are mining, agriculture, manufacturing, telecommunications, and the financial sector.

The framework document says legislation should be enacted so that when the state commercialises or privatises parastatals, it ensures that half of the shares are immediately taken up by indigenous entrepreneurs.

It says government itself should arrange to procure 75% of its goods and services from indigenous companies. An act should make it mandatory for any companies merging or unbundling to set aside half its shares for indigenisation and empowerment.

The script appears to mimic the South African model, itself currently the subject of embittered protests from intended beneficiaries who feel short-changed.

Major complaints revolve round the repeated appearance of the same beneficiaries in different deals and guises.

In striking similarity, most of the board members in Zimbabwe’s statutory bodies are the same charmed circle.

Even when legislation regarding BEE comes into force, the Zimbabwean policy framework for indigenisation goes out the window.

Black empowerment can only succeed in an environment of economic growth buttressed by a vibrant private sector with full accountability all the way down the line.

However, policy inconsistencies over the years have led to disinvestment and gradual de-industrialisation by major international conglomerates due to the hostile economic environment.

Populist policies that government adopted for political expediency since 2000, which witnessed the destruction of agricultural industry and company invasions have colluded to make black economic empowerment unworkable.

The framework notes that to create an enabling environment for mobilisation of financial resources, government should reduce its expenditure and accelerate the commercialisation and privatisation process so as to reduce the high budget deficit.

At the moment, Zimbabwe’s weakened economy does not bode well for indigenisation.

For instance, in 1997 the government sought to nurture the Affirmative Action Group (AAG) and Indigenous Business Development Centre (IBDC) and had made headway in uplifting the status of indigenous entrepreneurs.

But it did not take the public long to realise that whatever noble intentions government had, these were likely to be accompanied by crony capitalism.

When asked why the Affirmative Action Group — the black empowerment lobby group — was not helping Strive Masiyiwa in his protracted battle to get a licence for a mobile phone project, businessman-turned-politician, Phillip Chiyangwa, replied: “We have advised him not to confront government. I have also realised in my dealings with government that if you can’t beat them, join them. But he has remained stubborn.”

That response at a media economic workshop left no doubt the Zimbabwean genre of black empowerment was founded on shaky grounds.

Lack of concrete policy had resulted in indigenisation being perceived by most of the key stakeholders in a narrow context, with limited focus on the disposal of state-owned enterprises, buying of shares and takeovers of existing companies. 

Televised scenes of Zanu PF legislators harassing and haranguing industrialists in a show of misplaced radicalism have also done little to retain the confidence of local and international investors. More importantly the erosion of property rights has scared off the few investors who showed an interest in the country.

Such limited focus by government and empowerment lobby groups vitiated genuine empowerment. It was perceived as only resulting in the enrichment of a few indigenous people at the expense of the disadvantaged population.

In Zimbabwe and other countries that have embarked on BEEs, the programmes have been stung by criticism that they have become vehicles to enrich a few.Strident debate is raging in South Africa — a country that has made commendable progress in BEE — that the scheme is benefiting a small circle of an elite clique of those connected to the ruling party.

Former state bureaucrats have lined up to receive plum empowerment deals with big corporations by virtue of their connections in the African National Congress in a similar fashion that the political elite in Zimbabwe have been the main beneficiaries.

South Africa’s Black Economic Empowerment Commission suggests in a draft report that “the state’s privatisation and restructuring programme has failed in so far as empowerment objectives are concerned”.

It argues that “effective black participation has been hindered until now by a multitude of factors. Assets are privatised or restructured with the assumption that empowerment will flow from new black ownership. Instead new owners have been confronted with debt-burdened enterprises, a tough financing environment, and in some cases, confused privatisation objectives and conflicting interests.”

In Zimbabwe ultimate policy framework should include crucial indigenisation activities like land redistribution, expansion of the economic base through greater participation in productive activities, and entrepreneurial skills development, industrialisation and mobilisation of financial resources.

The need for a more appropriate strategy is widely recognised. But in the current climate it is unlikely to happen