THE Minister of Youth Development, Indigenisation and Empowerment has not been living up to his first name as far as the economy is concerned for, if anything, he has been acting more like a destroyer than a saviour.
That must be so when one observes how steadfastly he is determined not only to prevent the economic recovery critically needed by Zimbabwe, but also to destroy almost all substance of such economy as does exist.
When in February last year he gazetted the Indigenisation and Economic Empowerment Regulations, he was immediately confronted with a flood of authoritative representations as to the grievous consequences and repercussions of those provisions. The representations flowed not only from those who would be obliged to part with control of the enterprises they had established and developed, but also from many in the indigenous population.
They were aware that the method of implementation of the critically needed indigenisation and economic empowerment would have a deleterious impact upon the economy, and therefore upon the population.
Like inputs were forthcoming from many international monetary and economic organisations who sought to give unbiased, constructive advice for the achievement of a viable, virile economy which would be supportive of the restoration of wellbeing to an impoverished, suffering, populace.
Similarly, the many who were contemplating substantial investment in Zimbabwe made it categorically known that pursuit of the minister’s policies would create an impeachable barrier to such investment.
However, the minister (strongly supported by the president, the politburo, war veteran organisations, and activist groups) was resolutely deaf to all such representations for a very considerable period of time. Ultimately, as the pressures intensified, he created a façade of 13 sectoral boards (the composition thereof being wholly his appointees, albeit with a pro forma inclusion of some private sector representatives). Those boards were mandated to:
- Consult with respective sectors and make appropriate recommendations regarding aminimum net asset value above which businesses would have to comply with the regulations;
- Recommend prescribed levels of indigenised equity participation, maximum time periods for compliance, and allied issues; and
- Recommend policy strategies to overcome specified barriers and challenges.
Last week the minister announced that the sectorial boards had completed and submitted their reports, which his ministry had analysed and submitted to cabinet. Amplifying, he specifically addressed the mining sector, deferring statements on other sectors. In contemptuous disregard for all private sector representations, and in particular wholly ignoring all submissions of the Chamber of Mines, he announced that:
- It is required that 100% of alluvial diamond mining shall be held by indigenous shareholders, and a minimum of 51% of all other mining operations must be so held;
- Share ownership trusts operating for community benefit shall be entitled to 10% of pre-tax profits of all mines;
- At this stage no credit would be given for offset against prescribed indigenous shareholdings in respect of expenditures on community development and services;
- A sovereign fund is to be created (undoubtedly by levies on mining entities!);
- Timeframes for compliance will be prescribed.
Save for anyone intentionally oblivious to the consequences of those draconian regulations (in other words, the minister and his myopic cronies), it was immediately abundantly clear that the cabinet in general, and the minister in particular, have rung the death knell for the Zimbabwean mining sector.
Realistically, there can be no expectation that any non-indigenous, whether Zimbabwean resident or otherwise, will invest into mining development or operations and provide essential technology-transfer if they are obligated to be minority equity participants, with absolute subordination of control to the majority shareholders.
Expecting investors to provide substantial capital and expertise without any authority over its usage is naught but foolhardy. Effectively, the minister and cabinet have declared that Zimbabwe does not wish for investment, save and except if by indigenous investors.
That declaration is particularly appalling as the extent to which indigenous Zimbabweans have the resources to invest is miniscule.
Whilst there are some with real wealth, they are very few and far between, out of the more than 11 million of Zimbabwe’s indigenous population. (It is probably wholly coincidental that many of those few who are endowed with investment resources are politicians, or connected to the politicians!).
One must unavoidably ponder whether the real motivations for the stance on indigenisation evidenced by the minister and his colleagues is not primarily driven by avaricious desires to enhance the wealth of the few, concurrently with creating a perceived vote-gathering inducement for the next elections.
Already one can envisage the forthcoming recurrent political posturing and statements that Zimbabwe’s immense economic ills, and the pronounced national poverty and suffering, is exclusively a consequence of evil and malicious machinations of the former colonialists and their friends.
This, it is claimed, is evidenced by the “illegal international sanctions”, but the caring government is compensating the oppressed and distressed Zimbabweans by giving them the businesses!
Unless and until the cabinet thinks again (if it is able to do so), the considerable investments that are a prerequisite for economic recovery will not be forthcoming.
Instead, the positive but very tentative moves towards that recovery achieved over the last two years will be reversed, poverty will become ever greater, and such economy as does exist will be considerably destroyed. By obdurately disregarding the constructive inputs of the Chamber of Mines, and presumably of other private sector representations to the other sectoral boards, the “destroyer” has struck again!