HomeBusiness DigestThe systemic problems posed by indigenisation

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We discussed the fact that mergers and acquisitions are not always successful due to the inability of the leadership to deal with the consequential complexity, particularly when such leadership comes from any of the two organisations that merged. In brief, the reason for such lack of competency is driven by the fact the leadership would have been hired for their ability to run the previous entities, not the new complex outfit.

A couple of weeks ago, my associate in this publication, Itai Masuku asked the question, “What next after Zimplats ‘Indigenisation’”. The answers are not readily forthcoming, but the reality of the situation is staring us in the face. Masuku emphasized the fact that Zimplats was doing well to date because of sound management. Will that be the same management after the new order? Putting a corporation into the hands of a different group of people may bring about the change of guard. This situation may attain in most of the corporations that will be “indigenised” in the days to come.

Last week we pointed out that the doom of merged corporations is the elevation of leadership to their highest levels of ineptitude. The question of how the control of the indigenised entities will be run from the boardrooms remains unanswered. The voting-in of a board requires the vote of the majority of shareholders. A new majority of the indigenous owners will likely assemble and wrestle away boardroom command. The motive to gain controlling share is ordinarily incarnated by the  installation of a board partisan to the shareholders with the controlling stake.

The corporate governance systems in our economy may be under threat in the wake of indigenisation. The very proponents of the indigenisation drive are rooted in political circles. What is the symbiotic aloofness between politics and business going to be in our economy? The corporate systems in Zimbabwe are at an emergent stage in respect of grasping principles. The injection of politics into the corporate system may undermine corporate governance, which is ordinarily apolitical. The non-public corporate world is driven by profit and sustainability motives. On the other hand, political systems are driven by populist motives  geared at guaranteed success in retention of public office, nurtured through rhetoric.

Politics is best left to government administration where economic sustainability is ordinarily buoyed by taxes, further taxes and signorage. Governments can reduce service delivery when the economic fortunes are on the downside. Companies do not have such liberties. Most government-run entities around the world struggle to survive. As Masuku reminded us, state owned enterprises such as Air Zimbabwe, Zupco and Cold Storage Commission have been run down through operational inefficiencies. There are murmurings of intentions to place restrictions on road freight cargo in efforts to resuscitate next- to -lifeless National Railways of Zimbabwe. The game of survival is different in the corporate world where absolute monopolies do not exist like in government.
The stinging fact about the majority ownership of corporations in our land being in foreign hands is a point that most partisan Zimbabweans may identify with. It is a noble argument to state that the spoils of our country should benefit the sons and daughters of our soil.

The question is how we should be going ahead with the empowerment of our people without running the economy ship aground? Most of the foreign-owned entities are sustainable  concerns that were strong enough to sail through the economic mayhem of yesteryears. We need to increase our indigenous share of the national cake; however, we should not make the cake sour or smaller. As sons and daughters of this land, we may need to rethink our indigenisation model. Wisdom comes from reflection and adjusting the sails while we are at sea, otherwise we may navigate towards an unintended destination. After we achieve the espoused 51% percent indigenisation, what then do we do to keep the business running?


Do we keep the old controlling shareholders’ management teams? Are we as the new cohort of majority shareholders going to trust the commitment of the existing management that was installed by the former foreign majority shareholders? Should we ask the existing leadership to vacate office for a new cohort aligned to the new order? We arguably have some of the highly educated and skilled business leaders on the African continent in our midst; however, the value of knowledge of  the old leadership should not be brushed aside if we are serious about continuity.

Let me add a voice to the indigenisation discourse from a Systems Thinking approach. We need to avoid a few dilemmas in the indigenisation and empowerment drives that are noble ideas. The indigenisation initiative should not be a vehicle for a few well-connected individuals to  benefit through political bullying of foreign-owned corporations. Corporations will succumb to these individuals with political influence to gain freedom from strife. If this happens, how then will we economically empower the ordinary person?


It is a struggle in vain to take control from a foreign entity into a few individuals, and still fight another battle to re-distribute such wealth amassed by the few local individuals back to the ordinary citizens. The re-distribution of wealth should be  economic empowerment for all, not just the change of the owners’ names to local indigenous names. Poverty would be alleviated better through ensuring that a greater share of the resources  benefit  society at large, including deploying some of these gains, through non-partisan  sovereign wealth funds and investing in long-term community projects.

The transfer of ownership is a noble idea and the systemic enabler maybe a small fraction of the ownership stake. The sway of power in the running of an entity requires a majority shareholder vote. Without the power to influence corporate decisions due to technically-tipped local ownership, foreign direct investment into our economy will not be revived anytime soon. I am neither advocating for the sustenance of majority ownership of corporations vesting in foreign entities nor am I encouraging majority indigenous ownership with possible systemic failure problems.

A reflective perspective of the matter may be necessary. A critical analysis of a balancing of power model may be necessary. Botswana, one of the thriving economies in Southern Africa, gets 70% of its export earnings from a diamond mining entity run on a balance of power model between the state and a private company.


The government of Botswana owns 50% of Debswana, the world’s largest diamond producer by value. The operations account for 30% of the country’s Gross Domestic Product and 50% of government revenue. The Botswana Government ownership level in the venture is enough to influence business decisions. In our land, the value of our diamond deposits could be worth up to US$800 billion; twice South Africa’s Gross Domestic Product (GDP) and could be a revenue stream for the next 80 years or more.

The espoused objectives of indigenisation initiatives in our land are to; “provide for support measures for the economic empowerment of indigenous Zimbabweans” through the “deliberate involvement of indigenous Zimbabweans in the economic activities of the country” and  to ensure “equitable ownership of the nation’s resources”. Good prose that spells superior intentions?


What does the Indigenisation and Economic Empowerment Act hold for the common unemployed poor citizen who does not know where his/ her next meal will come from? Will this individual possibly gain from the current approach?  Is the Botswana balance of power model not feasible in Zimbabwe? Is the 1% difference between 51% and 50% a huge enough difference worth risking a national economic malfunction?


Sam Hlabati specialises in Systems Thinking and Reward Management. You can contact him on samhlabati@gmail.com

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