“You are advised that your request for a 30-day extension has been rejected by the honourable minister and your company is expected to comply with the law as stated in our February 22 letter to you,” Indigenisation ministry secretary George Magosvongwe said in a letter addressed to Zimplats CEO Alex Mhembere.
The letter was written on Friday last week. A meeting between the permanent secretaries of Indigenisation and Mines failed to take place on Tuesday to resolve the issue.
These dramatic events came after Indigenisation minister Saviour Kasukuwere told Impala, the world’s second-biggest platinum producer, last month it had 14 days to hand the 29,5% to the National Indigenisation and Economic Empowerment Fund or face “enforcement mechanisms”.
Government, or precisely the Zanu PF wing of it, which is escalating threats to seize control of foreign-owned companies under the guise of empowerment as elections draw closer, wants Implats to transfer the equity to the state-run fund immediately and without proper arrangement.
This is how Zanu PF operates and its reckless approach has been extensively damaging to the economy.
Given that Zimplats is a success story and showcase for foreign direct investment, grabbing the company’s shares or withdrawing of its licence would almost certainly undermine Zimbabwe’s investment prospects and nascent economic recovery after a major rebound in the past three years following dollarisation and exchange-rate stabilisation.
The economy is already reeling from a liquidity crisis, threatening to collapse the fragile banking sector.
The Zimplats saga could also worsen the country’s political risk profile, while damaging its chances of competing effectively to attract limited and often timid capital.
Zimbabwe needs a massive injection of capital and investment to recover from a decade of cumulative decline which saw the economy going through an unprecedented meltdown and hyperinflation. For the country to recover and grow, it needs a ruthlessly efficient government and leaders, a new model for economic development, skilled workforce, technology, resources, which are plenty, and of course capital. Resources which are underground without being exploited mainly due to lack of capital don’t mean much. We have seen many countries around the world suffering in the middle of plenty. In fact, that is the tragedy of Africa.
So without a doubt, the current indigenisation campaign is not the best way to attract the much-needed investment. Instead, there is overwhelming evidence that the chaotic process, which is led by officials who have demonstrated they don’t understand what needs to be done beyond personal interests, has caused massive capital flight, besides undermining investor-confidence and leading investors to mark Zimbabwe as a “no go area”.
For Zimbabwe to succeed, the country does not need the ongoing rabble-rousing. It needs a well-thought out and structured approach to indigenisation to transform the economy. But perhaps more importantly, the country needs a viable economic model supported by a competent leadership which is able to come up with development programmes and meet their targets.
A policy of seizure or grabbing other people’s properties through intimidation and coercion cannot achieve economic growth and prosperity. Instead of chasing away the investors already on our shores, we need to find a mutually-beneficial model of working with them, particularly when dealing with the issue of companies, which is very different from land reform. This needs to be understood by those behind this unconvincing and questionable indigenisation policy. Although the principle of it is good, the model is bad and needs to be changed.