BELEAGURED central bank governor Gideon Gono last week crept out of his cocoon to attack as “reckless” and racist government’s Indigenisation and Empowerment Regulations gazetted in January to coerce foreign investors to cede their majority shareholding to blacks within the next five years.
The Reserve Bank czar strongly argued that the regulations would scare off badly needed investors to revive our economy which for the past year has been emerging from a vegetative state.
Gono, a key government policy advisor on economic issues, told a local weekly that way back in 2007 he advised government against crafting indigenisation laws antithetical to investment and which encourage capital flight, but the advice was ignored.
I was at the Harare International Conference Centre on October 1 2007 when Gono presented his mid-year monetary policy statement and advised government that a “fine balance should be struck between the objectives of indigenisation and the need to attract foreign capital”, but government proceeded to enact the Indigenisation and Empowerment Act in 2008 categorically stating that foreign investors must cede 51% stake to blacks.
Three years later, Indigenisation minister Saviour Kasukuwere gazetted the regulations that have resulted in would-be investors putting on ice their plans, operating companies freezing expansion programmes and a bearish run on the Zimbabwe Stock Exchange (ZSE).
The ZSE –– the barometer of functionality of our economy –– retreated when the regulations were gazetted with the bourse’s benchmarks losing up to 25% on trade as 79 listed companies face a sanitised expropriation.
According to the bourse, last year’s market was foreign-investor driven, contributing between 45% and 50% of the US$200 million turnover.
This negative impact of the regulations has strangely been largely ignored by government –– especially by those from Zanu PF, hence it came as a surprise last week when Gono broke ranks with his colleagues and assailed the regulations.
“The last six months have seen a flood of interest in both friends and foes and we must not disturb the momentum by reckless, inconsistent and self-contradictory with our pronouncements or with what we say or do,” Gono said. “You don’t shoot yourself in the foot during a time of scarce capital availability and neither do you start any new wars before concluding battles of yesteryear.”
Gono warned that like the chaotic land reform programme a decade ago, the indigenisation drive may benefit a powerful elite at the expense of the majority.
There are countless reports that ministers and senior government and party officials already have a shopping list of companies they intend to expropriate under the guise of the indigenisation drive. Among the companies are big corporates who have operated and supported our economy for over half a century in good and difficult times.
What is striking about the empowerment drive is Kasukuwere’s unequivocal stance to be impervious to the voice of empirical logic and reasoning that the regulations should be revisited if we are to avoid chasing away investors we desperately need.
As in the land reform programme, sensible people –– citizens and investors alike –– support economic indigenisation but are against the methodology Kasukuwere and his colleagues intend to use in executing it given that our economy cannot sustain such a revolution. The capital needed to undertake the indigenisation drive is not there and is not likely to garner any support outside our borders because of its antagonistic nature.
The drive also smacks of naked racism and Gono was dead right when he said: “We must realise that the subject of indigenisation and empowerment is in fact intrinsically a supreme debate that has its roots in the constitution.
“When one looks at the Constitution of Zimbabwe and look at who is being defined as Zimbabwean, one sees the coverage of black Zimbabweans, Indians, and mixed races that are also Zimbabweans.
“This inclusivity and diversity dictates that we de-politicise both the constitution-making process, and we must also de-politicise the indigenisation and empowerment process itself. We must consider objective facts that shun racial discrimination or political polarities that do not move the country forward.”
Gono’s advice must be taken seriously by government and it is also my hope that Prime Minister Morgan Tsvangirai should press hard for the revision of the regulations for the benefit of this country. We do not want a repeat of the damaging land reform programme which ended up benefiting a few.
Kasukuwere should not be impervious to the voice of logic and if his intentions are good, he should take Gono, and other people’s, companies’ and organisations’ advice seriously and have a re-think on the regulations. This will be a test of his maturity.
Let’s hope that the indigenisation drive is not yet another campaign tool for Zanu PF with elections now expected next year!