BY TAURAI MANGUDHLA
ZIMBABWE’S economic empowerment initiative through legislation to encourage participation of locals in the economy via ownership of shares in corporations and controlling the means of production was noble, but has been marred by chaos and lack of transparency, analysts say.
The drive, which became ruling Zanu PF’s major drawing card in the 2013 harmonised elections and legislated under the Indigenisation and Economic Empowerment Act was an opportunity to empower many locals, which was squandered.
Loans to capitalise youth projects were given to Zanu PF youths while government and ruling party officials were accused of extorting foreign-owned corporations for protection from the law.
Previously being a country that had largely left the means of production in the control of colonial masters, there was no doubt a need to redress the skewed ownership of productive assets in the country just in the same way countries such as Zambia, Brazil and South Africa have addressed the imbalance.
The degree of the empowerment drives — whose major aim was to increase the role played by the previously marginalised groups in the mainstream economy while correcting imbalances in resource ownership — differed from one jurisdiction to another and so did the success stories.
Markets analyst Evonia Muzondo said while empowerment is noble there is a need to strike a balance between empowerment and investment.
“Indigenisation was not viable as it insisted on 51% ownership across all sectors and the policy was poorly implemented in general,” Muzondo said.
“However, there is a need to revisit it as empowerment can come through many forms, for example communities and previously disadvantaged groups can be given a chance to participate in new projects.”
Arguably among the success stories is that of the Royal Bafokeng Holdings (RBH) in neighbouring South Africa where community members as early as 1834 pooled their resources and used it to buy back the land the Bafokeng had occupied and cultivated for centuries from foreign occupiers.
This was before they knew a major deposit of platinum group metals sat on their land and future generations ensured the community benefited from these minerals.
Today, RBH describes itself as an African community investment company which, together with its sole shareholder, the Royal Bafokeng Nation Development Trust (RBNDT or the Trust), are entrusted with the unique responsibility of preserving and creating intergenerational wealth for the traditional community.
As of December 2020, RBH managed an investment portfolio with a net asset value of R29 billion (US$1,9 billion) consisting of listed and unlisted assets across economic sectors, including infrastructure, property, financial services, telecoms and resources.
Just this week RBH cut a R17 billion (US$1,12 billion) deal with Northam Platinum Holdings for the sale of its 33% stake in Royal Bafokeng Platinum.
Recently, Zanu PF secretary for Indigenisation and Economic Empowerment Mike Bimha raised concern over violation of the reserved sector rule.
It is meant to ensure that foreigners do not operate businesses in the economic sub-sectors reserved for Zimbabwean citizens and these include tobacco grading and packaging, artisanal mining, taxis and car hire services, hair salons, grain milling, bakeries, passenger buses, retailing and wholesaling, advertising agencies as well as estate agencies.
In 2013, then Indigenisation minister Saviour Kasukuwere said companies would be required to have 25% representation of youths, under the age of 35, on their boards of directors in line with the Indigenisation and Economic Empowerment Act.
This followed a 2012 cabinet decision to reserve a 25% quota of all economic, indigenisation and empowerment facilities across the economy for the youth.
At the time, Kasukuwere said his ministry would apply the quota system to companies that had recently complied with the empowerment law.
Until now, the government has deliberately encouraged youth participation in the economy, through employment and offered tax incentives to corporations for employing youths.
Muzondo said corruption was a major obstacle to the implementation of the indigenisation process.
“Although the country has witnessed some encouraging enquiries and investment in certain sectors, corruption and mismanagement has seen locals being sidelined,” she said.
“In essence, the government’s function in indigenisation and economic empowerment is to create an enabling environment in order to promote sustainable social and economic development.”
Economist John Robertson, however, begged to differ, arguing the term empowerment has been abused.
“It merely involved transferring ownership from one person to another person who has not worked for anything. It does not help grow the economy or create jobs,” Robertson said.
“Empowerment should be worked for and the best empowerment for the youth is employment creation not to give them a company that they did not work for or shares in a new venture they have not worked for.
“Such decisions have eroded investor confidence and seen companies shrink,” he pointed out.
Indigenisation, Robertson argued, has never worked anywhere.
“I can tell you it was the same case in South Africa where some investors like Anglo left and the reality is they lost a lot of potential investment and potential growth as a result.”
Economist Chenayimoyo Mutambasere said economic empowerment remains imperative and was a noble idea which was poorly executed and politicised.
“It’s not a bad thing but we have a systemic crisis of corruption, it’s our systems that do not facilitate successful implementation of good ideas otherwise the idea in itself is noble,” Mutambasere said.
“We should get to a place where we are empowering the next generation and ending dependency on government handouts.”