HomePoliticsZanu PF persists with ‘illegal’ community share trusts

Zanu PF persists with ‘illegal’ community share trusts

THE proverbial expression “much ado about nothing” appears to capture well the noisy and high-sounding claims surrounding the community share ownership schemes which Zanu PF is persisting with ahead of the crucial general elections.

Report by Elias Mambo

Under the indigenisation policy — Zanu PF’s collapsing selling point in the make-or-break polls expected mid-year — the key objective of the schemes is to ensure communities benefit from the exploitation of natural resources in their immediate environments.

Through this vehicle, companies are obliged by law to avail at least 10% of shares out of the total value of the company to the selected groups of people represented by a community trust.

The trusts are chaired by chiefs and consist of all key stakeholders within the relevant communities, including district council officials.

The schemes started operating as part of government’s campaign to force foreign-owned companies to sell 51% of the equities to broke local investors. In these deals, communities located in areas where mining companies exploit minerals get 10% of their stakes in the empowerment deals.

However, questions continue to be raised about the legality of these schemes and whether they would benefit local communities in practice, with critics saying they are just a disguise for legalised racketeering by Zanu PF-connected political and business elites.

Allegations of patronage, nepotism and corruption surrounding indigenisation deals, as well as lack of visible development projects in targeted communities reinforce claims the process is more about elections and self-aggrandisement by Zanu PF officials than genuine empowerment.

Despite lack of transparency and controversy engulfing implementation of indigenisation policy, which economic analysts say is damaging as it has triggered capital flight and forced investors to adopt a wait-and-see approach towards the country, President Robert Mugabe is set to launch another community share ownership scheme in Mashonaland East before the elections.

The other seven schemes were launched in Masvingo (Bikita), Mashonaland West (Mhondoro-Ngezi), Midlands (Zvishavane and Tongogara), Matabeleland South (Gwanda), Manicaland (Marange-Zimunya) and Matabeleland North (Hwange).

Political analyst Jabusile Shumba said the schemes are a “pie in the sky” as the majority of communities would not benefit anything significant.

“This is a campaign gimmick meant to win votes for the beleaguered Zanu PF party. The whole idea is like putting lipstick on a pig, something which does not change anything.”

Director of the Zimbabwe Institute for Democracy, Pedzisai Ruhanya said the programme is a vehicle for electioneering and plunder by Zanu PF.

“The whole programme is an opportunity for electioneering and selected political elites to continue looting resources in the name of indigenisation,” said Ruhanya.

“We have not yet heard a convincing testimony on the benefits of these schemes. All we hear are scandals unfolding and this is proof that the programme is designed to benefit a few individuals.”

Indigenisation minister Saviour Kasukuwere — who last week was in Uzumba-Maramba-Pfungwe to prepare for the launch of the last community share ownership scheme in Mashonaland East before elections — has repeatedly insisted the empowerment programme is meant to broaden the ownership structure of the economy and help the previously disadvantaged majority.

His critics, however, say the problem is the way it is being implemented which is damaging the economy still struggling to recover from the ravages of hyperinflation and corruption under Mugabe’s previous failed regime.

Chaos, corruption and greed appear to have blighted the programme.
In August 2012, Local Government minister Ignatius Chombo had to intervene in Zvishavane and direct chiefs to return US$2 million they had withdrawn from the community trust account and shared among themselves.

The five chiefs had also awarded themselves US$5 000 each as sitting allowances for meetings they had called. Chiefs Mazvihwa, Masunda, Mapanzure, Wedza and Mafala had reportedly awarded themselves between US$200 000 and US$250 000, according to a number of their subjects.

In a similar incident, Kasukuwere had to read the riot act to the Tongogara scheme chiefs after they demanded US$5 000 each as sitting allowances.

The MDC-T has attacked indigenisation in its current form, equating it to theft by Zanu PF, saying foreign-owned businesses are being arm-twisted into supporting illegal schemes that have no credence in a normal country.

“Zanu PF is on a crusade to fleece companies in order to fund its elections war chest,” the party said recently.

Finance minister Tendai Biti said the schemes are “illegal” as they are not provided for in the law. Companies have been forced to contribute between US$10 million and US$15 million to these schemes.

“On what legal basis are companies being made to part with US$10 million or US$15 million?” Biti queried.

“There is nowhere in the Indigenisation and Empoerment Act that compels companies to donate money to a community share scheme or to any farm or to anything; so what you are actually seeing is coercion; companies being forced to part with US$10 million or US$15 million.”

Kasukuwere says the schemes are aimed at forcing companies to invest in the development of communities where they operate, but Biti said the arrangements were an after-thought aimed at sanitising a “predatory and elitist” programme.

“In the Indigenisation and Empowerment Act, you will not find the word community share trust, you will not. Then you come to the regulations, statutory instrument number 30 of March 2010 that was passed or enacted, again, you will not find the name community share trust,” said Biti.

“So the issue of community share schemes is actually an after-thought which is not backed by the law, the Indigenisation and Empowerment Act. Such that community share schemes don’t actually have legal existence vis-a-vis the Indigenisation and Empowerment Act.”

Political analyst Brian Raftopoulos said although the indigenisation initiative remains a worthy cause, Zanu PF is merely pursuing the controversial programme to gain votes.

“By implementing this controversial programme, Zanu PF has managed to recover some ground it lost to the MDC parties in the 2008 disputed elections and increase its support base,” Raftopoulos said. “It is unfortunate indigenisation has exposed the state itself as being some kind of a possession of a particular political party which is using this process to spearhead its elections campaigns,” he said.

Critics say instead of rigidly going for the 51-49% equity model, government should have adopted a dynamic approach which included other measures such as supply-side methods, royalties and partnerships used in other countries.

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