Empowerment our divine right

THE Affirmative Action Group (AAG) has never, is not and will not contemplate seizing foreign owned companies outside the premises of the law.

The Zimbabwe indigenisation agenda in this country has been hijacked by alarmists who seek to nicodemously get international sympathy without adjudicating the facts.

During the last successfully held KFM CEO roundtable, businessman David Govere asked delegates whether they had seen Statutory Instrument 21 of 2010 (the indigenisation regulations).

The result shocked the panel as less than 5% of the participants had read the new law.

For goodness sake, this was a congregation of the country’s top business executives. Regrettably, these executives rely heavily on press reports — which mostly carry the opinion of the journalist — to make critical decisions. Such levels of apathy within high echelons of conglomerates are very unfortunate.

The genesis of the empowerment crusade was the formation of the Indigenous Business Development Centre (IBDC) led by John Mapondera, Strive Masiyiwa and other native business icons.

Later on IBWO, AAG and ZIEEO were established. Most of the founding figures of these agents of the empowerment crusade went ahead and negotiated their own empowerment deals on an individual basis. By the turn of the century, there was a  nationwide outcry that there was now an elitist black class that sought to own all the wealth at the exclusion of the black majority.

The drafting of the Indigenisation Bill, which sought to forge and create a broad-based black economic empowerment programme for indigenous Zimbabweans, commenced soon after.

The Bill became law in 2008 and was well publicised. Prominent in the law was the provision that a statutory instrument was going to be gazetted to trigger the operationalisation of this Act. In January 2010 the Minister of Indigenisation, Saviour Kasukuwere, duly gazetted the statutory instrument.

The Zimbabwe National Chamber of Commerce (ZNCC), the Confederation of Zimbabwe Industries (CZI), the Chamber of Mines, the Gays and Lesbians of Zimbabwe and others embarked on a ferocious attack against the Act demanding its repeal.

It’s apparent that they were and are still serving dominantly the interest of multinational conglomerates. In a constitutional democracy like Zimbabwe, laws are subjected to criticism. Since 2008 to date, no business organisation had ever approached government with a better indigenisation template than the one contained in the Act.

The AAG has been thoroughly studying all opinion pieces penned by some of our leading economists including Eric Bloch, John Robertson, Tony Hawkins and many others.

We recognise their constitutional right to freely express themselves and provide their guidance on matters of national importance. Discounting the vitriol in these articles, they are four major issues cited by these economists. These are investor flight, liquidity challenges, skills scarcity and cronyism.

These concerns are also shared by the CZI, Chamber of Mines and ZNCC. We will now attempt to respond to these pertinent matters.

It should be noted that the law is directing that only non-indigenous owned companies that have a net value of US$500 000 or more must comply.

Given the events of the last 10 years where little if any retooling occurred, aggravated by the continued depreciation of antiquated plant and machinery, many non-indigenous businesses are excluded. For instance, this will exclude the white lady who owns a boutique, the Indian family which owns a clothing company, and the Italian man who owns a coffee shop.

Firstly, there is the mischief that the law seeks to arrest those who refuse to let go their shareholding. International law provides that each country has the right to control and manage its own resources. No country in the civilised world would allow foreign companies to dominate key and strategic industries like petroleum, energy, food processing, pharmaceuticals etc because it is feared that they can manipulate and interfere with the sovereignty of the host country. In Zimbabwe, in the last 10 years, we saw Mobil, Johnson & Johnson, Coca Cola and many others pulling out unceremoniously.

Most of these foreign companies, some members of the CZI and ZNCC, had never planned any deliberate schemes to empower their own employees through equity participation and profit sharing.

The mandate of CZI and ZNCC is to represent the interests of the shareholders of  larger companies and not of the generality of the downtrodden. There have been disturbing press reports of racism at some companies led by some CZI black leaders and they remain silent. Why?

Our brethren, after working for more than 25 years, were given wheelbarrows, scotch carts and bicycles as tokens of appreciation for their long and loyal service to the company. Cases of racial segregation and unfair treatment severely affected indigenous employees.

All these ills can be treated by allowing employees to acquire equity using sweat capital. Section 3 (a) of the Act provides that non-indigenous companies shall sell, not surrender, 51% of their equity to indigenous people and retain at most 49%.

Let’s put this into perspective: a businessperson who is non-indigenous can dispose, for example, 20% to his shop floor staff and another 15% to his management team.

Effectively he and his other friendly partner control 65% of the company.

Employees may use their equity as security to access funding for housing construction, school fees, etc which will be paid back by dividends.

However, the statutory instrument provides for the minister to vary this provision should an investor request so citing reasonable and acceptable grounds. If this law is scrapped today, the need to empower our people will not die.

The investor flight argument is over-dramatised. Compulsory equity participation of local people in foreign owned companies is common worldwide. The practice is found in Malaysia (Bumiputra), South Africa (BEE), Zambia and the Far East.

The 51-49 rule just needs good packaging and to be saved from demonisation. We propose that all future mining rights must be exclusively granted to indigenous people who then partner with foreign-owned entities who will provide additional funding, skills and equipment.

India and China’s economies grew tremendously by looking inside rather than outside. Yes, foreign investment is good, but local investors must be given a launch pad because they will be there forever.

It is true that the country is facing  liquidity challenges and so is the entire globe.

There is need to have unity of purpose as a country to mobilise funding within and outside our borders. If you may recall, most foreign companies were funded by foreign banks to establish operations in this country. We can as a country pursue the same route to obtain foreign funding to pay for the equity acquired and use those companies as security.

There is also the need to effectively leverage our natural resources, eg gold, platinum and diamonds to obtain funding for this exercise. Robertson argues that if some of these companies are acquired, there are no available skills to run them.

That is contemptuous! By implication he is suggesting black Zimbabweans cannot own and manage business. On the contrary, we have scored success in this regard in the areas of tourism, banking, telecommunications and commerce.

The essence of coming up with an act is to openly announce the rules of engagement. The act is providing for the empowerment of employees, management, youths and women groups. These groups have been at the periphery of empowerment for a long time.

The statutory instrument provides for many areas where the minister may be allowed to grant waivers. Those who feel affected should approach the minister  rather than host seminars that seek to ridicule the minister and other organs of the state.

If you ask a former white farmer today what he would have done differently, he will tell you that with hindsight, he would have cooperated in sharing the land. Megaphone criticism without proposing better empowerment programmes is self-defeating.

In his book Why we can’t wait, Martin Luther King wrote: “The struggle for rights is, at bottom, a struggle for opportunities. In asking for something special, the Negro is not seeking charity. He does not want to be given a job he cannot handle… So, with equal opportunity must come the practical, realistic aid which will equip him to seize it.”

Musarara is the secretary-general of the Affirmative Action Group, sg@aag.co.zw

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