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Comment: Another body blow for investment

GOVERNMENT’S decision to compel foreign-owned companies in the country to “cede” controlling stakes to “indigenous” Zimbabweans at a time when the economy is emerging from the woods will do nothing to empower ordinary citizens or engineer national recovery.

All odds are against pursuing the wealth redistribution exercise. Banks are not lending, capacity utilisation is low, liquidity is still tight, and fundamentals point to an economy in trouble. 
After Empowerment minister Saviour Kasukuwere spooked already nervous investors two months ago with his economic empowerment regulations, National Indigenisation and Economic Empowerment Fund (NIEEF) chairman David Chapfika is adding salt to the wound with his plans to levy all companies valued at US$500 000 and above.
In simple terms, the same companies targeted for empowerment will also be compelled to contribute funds to enable the government to dispossess them of their shareholding in their businesses.
Chapfika, who before the formation of the unity government last year was a deputy Finance minister for years and is a banker by profession, should know better and advise government accordingly. On the contrary, Chapfika seems to be taking his new job rather too zealously and is keen on proving to his bosses in Zanu PF his worth. His announcement to journalists in the capital recently could not have come at a worse time. The announcement smacks of greed and creates a breeding ground for corruption.
The latest bid demonstrates that a company that performs well will be punished for its success. In other countries government would be looking to award such companies with incentives to further boost their performance. Not in Zimbabwe! Chapfika is on record as saying they will “consult widely” on these proposals. Kasukuwere said the same about the empowerment regulations but still came up with a bill that has been widely rejected, which begs the question: Who and how did he consult?
To hear Chapfika say the same will bring little comfort to investors as they know that he will still go ahead to do what he wants, not what has been suggested. Already the Chamber of Mines is proposing that locals can buy a minimum of 15% in mines. The Chamber argues the focus should not be on existing mines but greenfield projects that will result in the industry’s growth.   
In the words of Deputy Prime Minister Arthur Mutambara: “It is better to own 10% of an elephant than 100% of a rat”. 
The same regulations that gave birth to NIEE are now being revised to rid it of words such as “cede”, which implies giving away for free.  But if NIEE follows through on its plans to force companies to pay indigenisation levies, shares will go for free as intended in the economic empowerment regulations. Worryingly, Prime Minister Morgan Tsvangirai, who is supposed to be the voice of reason in the unity government, is nowhere to be heard in the midst of this policy madness. 
Strangely, Tsvangirai was on a charm offensive abroad assuring investors that Zimbabwe is now a safe investment destination, something few will believe. Tsvangirai and his party’s silence as Zanu PF goes berserk is deafening. How does any fair-minded investor commit investment to a country where foreign businesses contribute money to a fund that will one day lead to a hostile takeover of their investments? How does a country with such contempt for property rights become a safe investment destination? The MDC-T silence on the latest empowerment levy exposes its true stature and standing in the unity government — as a junior partner.
How else can one explain the PM’s flip-flopping? One week he is assuring investors that Zimbabwe is a safe destination for investors and all was well in government and the next he is holding a press conference calling on the Sadc mediator President Jacob Zuma to urgently convene the bloc’s summit to resolve the crisis in government.
Zanu PF, for all its disastrous policies, is at least consistent in its career of plunder. The MDC however is not in the same mould. No matter how much support the party has from the electorate, such inconsistency could prove costly in terms of its credibility.

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