That the Indigenisation and Economic Empowerment Act, which came into effect in 2008, has been a source of dispute and controversy — at home and abroad — is very clear.
After the appointment of Francis Nhema as indigenisation minister in 2013 — who was largely seen as a moderate in Zanu PF — to replace the hawkish Saviour Kasukuwere and the subsequent softening over the application of the contentious law, many thought the indigenisation hullabaloo would come to an end. And just as it all seemed to be settling down as the protests subsided, President Robert Mugabe’s nephew, Patrick Zhuwao, appeared on the scene with an even tougher hardline stance that would make Kasukuwere look like a moderate.
Christopher Mushohwe’s reign at the ministry was devoid of controversy and confusion.
Now the differences in the letter and spirit of the law in cabinet has now been brought into sharper focus with the appointment of Zhuwao last month who has wasted no time in attacking some of his colleagues over the implementation of the law.
While addressing National University of Science and Technology students in Bulawayo during a lecture on leadership last weekend, Zhuwao said ministers and other top government officials who sought to insinuate that the Indigenisation and Economic Empowerment policy had been toned down were ill-informed.
“The one thing that needs to be urgently addressed is to eliminate ignorant statements around indigenisation and economic empowerment because there are statements that are being made by some people, some in the level of ministers in cabinet, including top government officials,” Zhuwao said. “The statements show ignorance about the whole exercise. I have said it before, and warned people, including ministers, to be careful about making ignorant statements about this issue otherwise I will correct them in public.”
The self-proclaimed new sheriff in town was at it again in Chinhoyi this week. Addressing a Zanu PF provincial co-ordinating committee meeting in Chinhoyi, Zhuwao took a swipe at some unnamed ministers for allegedly sending wrong signals to the world concerning the country’s indigenisation policy.
“Those are ignorant utterances from some high-level government officials including ministers, who promise to review the policy … That will not happen in my tenure as minister unless the people of Zimbabwe reverse that,” he declared.
This is in apparent reference to statements made by various ministers among them Finance minister Patrick Chinamasa and Policy Co-ordination minster in the Office of the President and Cabinet, Simon Khaya Moyo.
Speaking at the launch of the United Nations Conference on Trade and Development World Investment Report 2015, then economic planning minister, Moyo said government was seized with the task of amending the indigenisation law, among a cocktail of measures to attract more investment.
The report showed that the country only managed to attract a paltry US$545 million in foreign direct investment (FDI) in 2014 which pales in comparison to neighbouring countries in the Sadc region such as Mozambique, which received US$4,9 billion, almost nine times more, South Africa (US$5,7 billion) and Zambia (US$2,4 billion). The poor FDI inflows have been largely attributed to the indigenisation law which scared away interested investors.
The indigenisation problem was aptly summed up by outgoing Australian ambassador Matthew Neuhaus, who said investing in Zimbabwe was “like swimming in the Zambezi between crocodiles and hippos”.
However, Zhuwao has scoffed at pronouncements made to the effect that the piece of legislation, which is largely considered as deterrent to investment, will be amended, saying the law “cannot be watered down like it is Mazoe (orange drink)”. This is a clear indication of the discord in government over the issue.
The confusion prompted by the indigenisation policy will only worsen investment inflows as government fails to speak with one voice on a law that has been in existence for the last seven years, analysts say. The impact is reflected in the latest Global Competitiveness Index report compiled by the World Economic Forum which shows Zimbabwe declined by one place to 125th out of 140 countries. In the 2015/16 report published recently, Zimbabwe is ranked 15 from the bottom — the lowest since 2012/13 when it was 12 places from the base.
The feud over the indigenisation law has involved different protagonists over the years, but the result remains the same — the law remains as clear as mud.
The confrontations over the policy will ensure that the country remains in financial doldrums, according to economist John Robertson.
“The law promises endless advantages to a growing number of people, but nothing is happening,” Robertson said. “As a result, the country will remain poor.”
He said the law was seen by government ministers as a vehicle for personal benefit rather than as a policy that stimulates the country’s ailing economy.
Zhuwao said he believes that FDI can come from Zimbabweans in the diaspora who can invest in the region of US$50 billion. This, he claims, despite the country’s well-documented struggle to harness funds from the diaspora with remittances for the whole of 2014 totaling only US$837 million.
Zhuwao has also proposed an indigenisation levy of 10% of gross revenue on foreign-owned companies which will be discounted in proportion to the extent which the company is indigenised. The levy will increase to US$12,5% in 2017 further burdening companies already heavily taxed.
Economist and former ZNCC president Oswell Binha warned that the position taken by Zhuwao could be construed as serving a personal agenda rather than national interest.
“Cabinet has to rein in on some portfolios and ensure that those portfolios are not misunderstood to be serving individual portfolio holders’ interests, but national interest,” Binha said.