Candid Comment: What next after Zimplats’ ‘indigenisation’?

 

Zimplats has been doing well not simply because it sells one of the world’s most highly-priced minerals but also as a result of its sound management. It has had world class management. We are more concerned about government trying to get into business. As we have said before, governments worldwide generally do not have a good track record of running businesses.

 

Ours is no exception. Once again a gentle reminder is the demise of parastatals such as Air Zimbabwe, NRZ, Zupco, and the Cold Storage Commission to name but a few. Many of these are or were at one stage virtual monopolies, but still floundered because of poor management.

In the mining industry one can think of Zisco, Kamativi, Mhangura and even Hwange. Because of poor management, these government-owned enterprises failed to take advantage of, in the case of Zisco, the demand for steel by China and India from the mid 80s, which saw prices firm. Mhangura lost out on the surge in copper prices in the mid 1990s, which saw the Minorcos of the world increase their fortunes, while closer to home, the Konkola Deep mining project in Zambia received attention from Anglo American Corporation.

 

After decades in the doldrums, tin mining in Kamativi may be resuscitated thanks to interest from some foreign investors. Ironically, it’s foreign investors that are being looked up to at both Kamativi and Mhangura, the same way India’s Essar have breathed a new lease of life into Zisco.

 

And yet, on the other hand, foreign investors are being booted out of Zimplats and Mimosa. With the diamonds, it’s the Chinese that have the upper hand. This apparent inconsistency on what constitutes indigenisation creates what psychologists call cognitive dissonance, ie confusion to the brain when two conflicting ideas are juxtaposed.

We are aware that inspiration has been drawn from Chinese state capitalism. But Chinese state capitalism did not occur overnight. It began almost 50 years ago after the “great leap forward” (1958 to 1963) which subsequently became a disaster, but was China’s first attempt to indigenise its economy using its own economic theory. After the Maoist Cultural Revolution (1965 to 1968), which saw the equivalent of our “Upfumi Kuvadiki” and “Chipangano” emerging, this was followed by a gradual transition from communist ideals to the embracing of capitalism.

So after their disastrous experiments the Chinese embarked on a well-thought out model to indigenise their economy. Credit for China’s transition to capitalism is in the main attributed to Deng Xiaoping, whose famous quote was “It doesn’t matter if a cat is black or white, so long as it catches mice”.

Deng took over the reins of the Communist party after Mao’s death in 1976 and effectively became premier in 1978. The economic model created under Deng’s leadership is the reason for China’s success to date.

Ours, however, appears to be simply driven by nothing other than political expediency ahead of anticipated elections. We have to remind the authorities that it’s management that makes businesses tick.

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