Zimbabwe’s indigenisation policy – nothing to worry about!

Zimbabwe’s indigenisation policy under which it says 51 percent of all investments into the country must be in the hands of locals is nothing to worry about because “there is no investment in any country that is secure if it does not involve locals. It is as simple as that,” says Supa Mandiwanzira president of the Affirmative Action Group.

Economic consultant and businessman Eric Bloch, however, feels that the government should clean up the policy because it is scaring away investors.

Mandiwanzira says if black Zimbabweans had enjoyed the same land rights as their white counterparts Zimbabwe would not have had the chaos in agriculture that it has today.

“But when the people of Svosve realised that they did not have access to their land like their white counterparts they invaded the white farms. This was long before the so called land-grab. So foreign investment is welcome but it will be more secure with local involvement,” he said.

Bloch said Zimbabwe should adopt something like BEE (Black Economic Empowerment programme) in South Africa and CEE (Citizens Economic Empowerment) in Zambia.

“They promote indigenisation but are more reasonable. They say locals should have 25 percent but this should be achieved over an extended period. Foreign investors can select their own local partners instead of these being imposed and there should be pro-rata payment of equity into the business by both local and foreign investors,” he said.

“We must come out clean on our indigenisation policy because it tends to scare investors. Right now it looks as if we are saying an investor can bring in his capital and then expect to lose 51 percent of that to indigenous people.”

Mandiwanzira, president of the more militant, pro-black AAG, however, said there was a lot of misunderstanding about the indigenisation policy. There was therefore need to demystify the policy because it appeared most people thought that the 51 percent was required from day one.

“Yes the law says 51 percent of any business should be owned by locals but we must demystify this. The law does not say the 51 percent is required from day one. You can discuss the terms and the time by which you will achieve the 51 percent. It is an expectation, a benchmark. You can say you require 10 years to achieve that. There is room for this.”

Obert Sibanda of the Zimbabwe National Chamber of Commerce said his organisation believed in a market driven economy, so it was not worried about who came in.

“We believe in a market driven economy so we welcome any investor as long as there is fair competition. Where we ask for intervention is when we feel there is unfair competition.

“Right now we are asking questions about how something from South Africa is cheaper here in Zimbabwe than in South Africa. We believe that this is unfair competition so we are investigating how this is possible. If there is unfair competition we will ask the government to intervene. If it is straight business, we welcome people to do their business without any interference.”

Apart from the indigenisation policy there has been a common feeling that Zimbabwe, particularly President Robert Mugabe, is hostile to British investors, but Bloch says this is not the case.

“The things he says are a deterrent, but in reality things are very different. What he says and what the government does are totally different. British investors are quite welcome,” Bloch said.

The same sentiments were expressed by John Makumbe, one of the strongest critics of Mugabe.

“There is no hostility towards any foreign investor, including the British,” Makumbe said. “We still have more than 400 British companies in Zimbabwe. I personally interviewed CEOs of some of these companies in 2006 and 2007. They all said they were not pulling out because they were quite certain things would change for the better and they view the GPA as the first step towards regime change which I think it is.”

The GPA, the global political agreement, brought together President Mugabe of the Zimbabwe African National Union-Patriotic Front, Prime Minister Morgan Tsvangirai of the Movement for Democratic Change, and Deputy Prime Minister Arthur Mutambara of the smaller faction of the MDC, into the inclusive government that has been running the country since February last year.

“Landrover I understand wants to come in now,” Makumbe continued. “In fact we have more British companies in Zimbabwe than any other investors. The only sad thing is that the companies are also victims of the targeted sanctions imposed on the Mugabe regime because no one is giving them credit lines as they are accusing them of propping up the Mugabe regime.”

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