Indigenisation confusion must end

THE third week of March 2016 opened on a low note with the indigenisation debate taking a new turn. As industry and commerce representatives, it is certainly a matter of concern to us when confusing assertions are flying in the air regarding the modus operandi of executing the policy itself. The March deadline has brought pandemonium in the corridors of commerce on the future after the set date.

Christopher Takunda Mugaga

The Zimbabwean government embarked on a policy of indigenisation and empowerment as a practical means to achieve inclusivity on sharing the cake. With the announcement of the policy, different stakeholders took different stances with some seeing it as an affront to attracting foreign direct investment (FDI) whilst others saw it as a genuine economic liberation for the native Zimbabweans.

For starters, when a law is established, it is advisable to adhere to its letter and spirit. This, therefore means all companies operating in Zimbabwe have to oblige with the requirements of the law without fail. This, therefore implies there is no excuse for foreign owned companies which are failing to comply. They have to comply, period!

However, there is a flip side to the whole drama, what if they do not comply in stipulated time, is shutting their doors the solution? The strides made by the government of Zimbabwe since the turn of 2016 in trying to address the ease of doing business are quite commendable. That the Office of the President and Cabinet has been directly involved in driving the process has been a source of relief. Any attempt to invoke Section 5 of the Indigenisation Act which calls for cancellation of licences of non-compliant firms is a direct attack on government’s attempts to improve the country’s ease of doing business.

What damages a country’s standing in the global economy is more of perception than the intention. As much as every patriotic Zimbabwean looks forward to being empowered in their homeland, they also do not want to be left holding on to shares of a shell.

We have had our own serious challenges as a nation and events at NetOne are just but a tip of the iceberg on what could be common in a number of state-owned enterprises. It is time to reflect and ask ourselves how far we had progressed as a nation in grooming the right minds who will take over the current leadership set-up in the non-compliant firms.

The minds we had entrusted with running our strategic parastatals had abused the privileges of empowerment, instead of utilising such positions to advance the interests of our beloved Zimbabwe, abused credit lines extended to the companies they superintended over, while at the same time not posting even an iota of dividends to run the government affairs for a single minute. In other words, they deepened the fiscal woes of the nation through continuously requesting for bailouts in the process debilitating government’s capacity to raise investment spending.

One cannot certainly view indigenisation in isolation of the land reform. As noble as the practice was, most of us are not sure we got it right in as far as the beneficiaries are concerned. How many are aware that the required average rainfall total for maize production is 200mm? Zimbabwe has received way above that minimum, but hunger continues stalking us with the new farmers pointing to low rainfall patterns.

What is more important at this juncture is a thorough audit and profiling of companies which have failed to meet the deadline. Armed with such information, we are well positioned to take the best action. Blindly calling for closure of all non-compliant firms is indeed disastrous and may lead to more job losses, weakening of the banking sector as they will be deposit flights, need for a revision of the 2016 national budget estimates as tax contributions from the said companies will dwindle with both the current account and capital account balances receding into turmoil.

Zimbabwe’s current ranking in terms of ease of doing business (155 out of 189) is totally unacceptable, the role of private sector led growth cannot be over-emphasised and once foreign capital is stressed, the obvious result is depressed investment. In embracing value chains, disruption of the supply chain is certainly a threat to full emancipation of locals.

In other words, supply-side empowerment is highly practical in this environment where locals will have a direct control over procurement sources for some of the multinational corporations. Why would Food Lovers, for instance, have a shelf full of South African imports when market gardening is thriving in Zimbabwe. If the government could take measures to correct such anomalies, it will be a big leap towards total empowerment of the locals.

As private sector representatives, we continue playing our advisory role in helping our government come out of this quagmire in as far as fiscal expansion is concerned. Figures from the Ministry of Finance and Economic Development calls for the nation to move out of its comfort zone and confront the revenue challenges head on.

The Zimbabwe Revenue Authority is under pressure and the informalisation of the economy has to be halted, no economy has grown beyond 4% when a greater chunk of its populace is in informal employment, this is evidenced by the lethargic labour productivity levels associated with such type of employment as well as lack of investment in infrastructure.

Indeed, we have concerns in the implementation of the law, but this does not mean companies should not oblige with the laws of the land. In fact, even the so-called democratic states will not entertain a foreign company to operate in their land without following all due procedures.

Ironically, it is in those countries where most of our products have failed to penetrate either through embargoes or unfair trade treaties such as the Agoa Act of which Zimbabwe is not a beneficiary. Let us just speak with one voice in our quest to achieve emancipation of the Zimbabwean populace without resorting to unnecessary fights.

Mugaga is the CE of the Zimbabwe National Chamber of Commerce. These New Perspectives articles are co-ordinated by Lovemore Kadenge, president of the Zimbabwe Economics Society. E-mail: kadenge.zes@gmail.com, cell +263 772 382 852