PRESIDENT Robert Mugabe this week met with a high-powered French business delegation and used the opportunity to explain to the potential investors that the indigenisation law is not so bad after all.
Zimbabwe Independent Editorial
The French team wanted clarity on the emotive government project of indigenisation and they are not the only ones looking for answers.
Successive business delegations to Zimbabwe have been seeking clarifications on the policy while Zimbabwean policy-makers and business teams, which have travelled abroad seeking investment have been confronted with the issue.
The Chinese business delegation that was in the country last week also wanted assurances and a clear government position on the indigenisation project.
The indigenisation policy states that all foreign firms worth over US$500 000 have to hand over a majority shareholding to black Zimbabweans, but critics have said the law scares away foreign investment.
Mugabe on Wednesday told the French delegation the 51/49 ownership policy in favour of indigenous people only affected the extractive sector.
Mugabe’s clarifications on the indigenisation policy are not new. He started talking about softening the policy last year during his Independence Day address when he announced that only foreign companies that exploit raw materials from inside Zimbabwe will be obliged to hand over 51 % of their shares to local business people.
The new direction has been repeated by ministers in his government and yet it is ironic that the French delegation, nine months after the announcement of the policy shift is still seeking answers and assurances.
What is apparent is that Mugabe and his government are failing to mollify the international community who remain jittery about investing in a market where property rights are not guaranteed.
This is expected. Probing questions and trepidation from investors will not evaporate soon because foreign investors are mindful of Zimbabwe’s disastrous implementation of land reform programme.
The trail of destruction left by the land reform programme and the resultant actions of the state to disregard fundamental property rights has been a PR disaster by our government.
The introduction of indigenisation policy was mishandled from the start. It was not only portrayed as an empowerment project but was also brandished as a weapon to punish foreign companies whose countries of origin imposed sanctions on Zimbabwe. Mugabe has often spoken menacingly about “400 British companies” doing business in Zimbabwe.
The proposed raft of changes to the indigenisation law will also seek to give ministers powers to decide on indigenisation thresholds in industries they control. This has been criticised by industry as it promotes corruption and arbitrage in the administration of the law. Manicaland Zanu PF senator for Manicaland, Retired Lieutenant-General Mike Nyambuya last year clearly articulated what the government needs to do.
“. . . If you leave it to line ministries and officials; you might create some room for rent seeking behaviour. It would be good if could lay down one solid policy which is friendly to the investors.
“We need fresh money in this country and FDI is one clear source of attracting fresh money into the economy. What I am saying is that, I would have been happier if the clarity had been done from a ministry point of view, rather than delegating it to the line ministry,” said Nyambuya.
He is right. This is what Mugabe needs to do to placate restive investors. The indigenisation policy requires a new message of fairness, development and profit. The old gung-ho rhetoric has been a disaster for this country and we are paying the price for this belligerence to investors.