IT is inevitable that one must ponder on the calibre, or the intents, of those whose function it is to provide President Robert Mugabe with facts, information and guidance.
Are they driven by a desire to fulfil their obligations to him as effectively as they can (in which event they are indisputably incapable and inept), or by their perceptions of what they believe the president wishes to hear irrespective of whether those perceptions are soundly-based, or are merely their misconceptions.
Whatever the reality, it is irrefutable that not only do they fail to inform and guide him correctly but, in failing to do so, they render the president and country an immense and highly prejudicial disservice.
Over the years there have been many occasions when such misinformation and ill-conceived guidance have been incontrovertibly evident, but recently one of the most pronounced indications of such advisory disservice to the president was when he spoke at the World Economic Forum on Africa, held in Dar es Salaam. Mugabe (who is also Head of Sate and Government and Commander in Chief of the Zimbabwe Defence Forces) unreservedly dismissed all foreign investor concerns relating to Zimbabwe’s new Indigenisation and Economic Empowerment Act and underlying regulations. He stated that not only was it fair, just and equitable that 51% of all businesses be reserved for indigenous Zimbabweans, but also that those who said the legislation would drive away investment were totally incorrect. He asserted that this was not the case, and that many foreign investors had continued to be forthcoming. After all, he explained, “forty-nine percent is a lot. I don’t think it’s a painful thing for them”.
Nothing could be further from reality. The minute that the Indigenisation and Economic Empowerment Regulations were promulgated, hundreds (if not thousands) of intending investors, who had very seriously been considering substantive investment in Zimbabwe, flocked away in droves. Whether their contemplated investments were within the mining, manufacturing, tourism, financial services, information technology or other sectors, there was an overnight total loss of interest by the droves of investors who had been vigorously evaluating Zimbabwean investment opportunities. Not just millions, or hundreds of millions, but billions of investment dollars were immediately demotivated from being sent to Zimbabwe as an investment destination. The imminent creation of thousands of critically needed employment opportunities disappeared. So too did all the economic downstream benefits which would have flowed from the new investment operations and the considerable potential fiscal inflows, by way of direct and indirect taxes as a result of those investments. This is in blatant contradiction of the presidential statement that “People have said it will drive away investment. We say it won’t!”
It is time that the president’s advisors and informants told him facts, instead of that which they think he wishes to hear.
Reinforcing his statement that investors would not be driven away, the president said: “Companies have been forthcoming… I don’t think it’s a painful thing for them. Forty-nine percent is a lot.”
If that were so, why could indigenisation not be pursued at 49%, instead of 51%? Surely that which is sauce for the goose is sauce for the gander? The reality is that 51% vests control in the holders, whilst 49% is a minority holding which subjugates the holders to the determinations, the whims and fancies of the majority holder. A 51% to 49% equity structure vests domination powers in the majority holder, and renders the minority equity holder into potential subservience and oppression.
It is untenable for almost all foreign investors that they be expected to provide the entirety, or the greater substance, of an enterprise’s capital, as well as technology transfer and access to markets, and yet be subjected to virtual impotence in the policy formulation and management direction of the business which they have made possible. When this investor perception has been voiced, some Zimbabweans have sought to counter it (as did, for example, the chairman of the Harare branch of the Zimbabwe National Chamber of Commerce) by alleging that Zimbabweans are able to contribute substantially to the capital requirements of new investments. They support this contention by alluding to the extent that Zimbabweans own houses and other properties. But the investment ventures require money, not residential properties, and the debilitated state of Zimbabwe’s money market is such that access to funding founded upon the security of properties is minimal.
Revitalisation of the money market, and the economy, requires massive inflows into Zimbabwe of money from external sources, but the indigenisation legislation is a big impediment to such inflows being forthcoming. Moreover, much of Zimbabwe’s economic development requires not only monetary injections, but also technology transfers, franchises and licences, and access to external markets, but none can be realistically expected to be willing to make those available without any concomitant retention of some control.
In the same manner as the president appears to have been grievously misinformed as to investor perceptions and requirements, so too has Prime Minister Morgan Tsvangirai, albeit to a markedly lesser intent. Addressing the same gathering at the World Economic Forum on Africa, he reportedly said that “Zimbabwe is ready to do business”.
Clearly this is not the case; it is only ready to receive what is tantamount to investor philanthropic handouts. He said that “it is time that investors started looking at Zimbabwe from a different perspective”, but the perspective of investors the world over is that investments must be secure, in economically stable environments, with the potential of fair, market-related investment returns. That is certainly not so in the case of Zimbabwe, and especially so for so long as the unrealistic and destructive, indigenisation legislation is continued in its present format, instead of being restructured for just and equitable indigenisation and economic empowerment, concurrently with respect and fairness for non-indigenous investors.
However, the prime minister correctly stated that: “If Africa’s time has come for investment, then Zimbabwe cannot miss the boat.” Zimbabwe must make sure that it does not miss that boat, and as first steps towards sailing in it, the destructive legislation must be constructively amended, concurrently with the global political agreement being belatedly fully implemented, Bilateral Investment Promotion and Protection Agreements being honoured and complied with and, undoubtedly, the president and prime minister receiving factual and constructive advice, instead of being told that which the advisors unilaterally assume they wish to hear.