The minister was quoted by this paper declaring that government would not pay for shares grabbed from the indigenised companies, a dangerous proposition indeed.
“We will not pay for the resources,” said Kasukuwere. “This will apply to all companies and is not just confined to platinum mines. We are converting mineral resources in the ground in exchange for equity in mines. Where we are going to have shareholding, we are not going to pay,” he said.
Kasukuwere’s announcement can be dismissed as populist posturing because his sentiments on compensation do not necessarily represent government policy. But this –– coming from a party that has a history of grabbing without recompense –– will have a chilling effect on investors. They will see Zimbabwe as entering a dangerous phase of the empowerment process in which equity grabbers are lining up to snatch and run. It’s a break-and-enter strategy –– now targeted at banks.
Zimbabwe last year gazetted legislation providing for the transfer of foreign-owned assets to Zimbabwean companies. The notice did not however clarify whether the shareholdings handed over by foreign investors would be paid for or whether expropriation of assets was on the cards.
A number of large corporates including Zimplats and Mimosa have agreed to surrender part of their shareholdings in a plan which includes community share ownership schemes and giving equity to the Indigenisation Board. Analysts have pointed out that pressure that has been exerted on these big players is most likely going to force smaller players to lend themselves to this dubious plan of partial nationalisation.
If government succeeds in resisting compensating Implats, the whole deal would be tantamount to expropriation or nationalisation by another name. However, goverment has all along been saying it would pay fair value for the equities surrendered to it by foreign-owned companies. The rules of the game seem to be shifting every now and then and that makes the whole situation a lot worse.
What has not helped matters is the absence of a clear policy statement from the government of national unity on the transfer of the shares and who is expected to benefit from the equity. The absence of a predictable policy position on the issue was further exposed last week in Johannesburg at the Fossil Fuel Foundation conference convened to discuss investment in the coal sector.
At the conference Chamber of Mines economist David Matyanga told investors that Zimbabwe’s indigenisation law stipulated that the state would not be the shareholder, “but there will be designated agents”. He said the transfer of those shares would be at market value. This is the local mining sector’s reading of the policy. This position is also shared by Finance minister Tendai Biti but his cabinet colleagues believe otherwise.
At a press conference on Monday Prime Minister Morgan Tsvangirai pointed out that the indigenisation policy continued to affect many sectors of the economy and the mixed messages from government had not helped matters. “The fact is that you cannot have a Ministry of Investment Promotion while at the same time appearing to have adopted a policy that does not in any way promote investment in the country,” he said.
His quest to convene a special Council of Ministers meeting on Tuesday to deal with this issue fell flat on its face after Zanu PF minister boycotted the session. There is discord in the GNU over this very critical issue and amid these mixed messages the surest outcome is deliberate chaos which will only help the looting gang whose interpretation of the indigenisation is nationalisation.
The same foggy policy path during the chaotic execution of the land reform programme blocked fair value compensation to dispossessed farmers as laws were changed arbitrarily to avoid paying for improvements. The result was large scale plunder of farm machinery and fixtures, and of course hunger and starvation. That we are heading this way again with the rest of the economy is too ghastly to contemplate.
This government has inflicted huge damage on this economy through disastrous leadership and policy failures which have ruined the country.