Africa 2010 – Challenges and Opportunities for economic empowerment

OPINION – Today, Friday, 31 December 2010, being the last day of the first decade of this century provides an opportunity to take stock of not only the events of the year but of the last decade.

It seems like yesterday when we celebrated the dawn of this century dubbed as the African century. Yes, we can say that for the first time in the history of world soccer, we can stand tall and proclaim proudly that one of our own did Africa proud.

As we look forward to the next decade, we have no choice but to reflect on the whole question of empowerment and the role of the state in nation building.

It was only two weeks ago that ZANU-PF held its annual conference under the theme of total economic empowerment and indigenization.

A few weeks before, the African National Congress (ANC) held its National General Conference and one of the issues discussed was nationalisation as a strategy to transform the inherited dualistic economy.

South Africa is the youngest post-colonial African state. Zimbabwe is already 30 years old. Nation building remains a challenge for many of the post-colonial African states.

After 30 years of independence, it is significant that the relationship between the black majority and wealth is yet to be understood as are the causes of sustained poverty even under majority rule.

Are Africans poor because of the actions of other people? Can the state be a trusted agent for transformation? Can an electoral system be trusted to produce leaders with the kind of understanding of what needs to be done to create a conducive environment for wealth creation? How should benefits from the exploitation of resources be shared? How can risk capital which is not abundant in Africa be attracted and deployed to benefit all?

In the absence of a rational explanation of the condition that the majority of the African people live under, it is easy to attribute poverty of blacks to some kind of conspiracy by the rich and more significantly to imperialism.

In the case of Ghana, for example, after 54 years of self rule, the same arguments are used to explain black poverty as in the younger countries suggesting that as we look forward to a secure and brighter future, we need to review our own conceptual understanding of the construction of capital and what is required to lift our standing as a people.

The only country that has established a full department of state to deal with the question of indigenization and economic empowerment is Zimbabwe.

Why Zimbabwe? Zimbabwe faces similar challenges to the ones faced by its sister African countries. The country has invested in building a solid foundation of intellectual and human capital and yet the investment has not produced the kind of outcomes expected in building a shared future.

As I began writing this last installment of 2010, it dawned on me that a decision that was made by the government of Zimbabwe (GOZ) a few weeks ago to replace the empowerment model with a new approach will create its own opportunities and challenges in the coming decade.

A decision was made to create a Sovereign Wealth Fund (SWF) that will house the government’s interests in the productive sector. By taking this approach, the government has abandoned a model used in South Africa that has seen a few individuals amassing substantial personal wealth in the name of indigenization.

We now know that the GOZ has also decided to make Minister Kasukuwere the only official spokesman on indigenization. This is significant and makes it imperative that investors take note to understand the thinking of Minister Kasukuwere on empowerment.

For many of us in business, it is often easy to take a minimalist approach to national discourse that affect business growth and development.

With respect to Zimbabwe, if one is looking for an empowerment partner, the state is now officially the only partner to engage particularly in mining.

We know that the last 30 years of independence has not produced any successful model of state intervention in Zimbabwe. Most of the state institutions established since independence has failed to produce the expected outcomes and yet persuasive arguments continue to be made about the viability and need for new state ventures to be set up in the name of progress.

It is now being argued that if, for example, Norway, China, Qatar, UAE, Singapore etc can set up SWF and succeed then why can Zimbabwe not use this model to leverage on its abundant natural and mineral resources.

An argument has now been presented that the state has sovereign rights over the minerals and granting prospecting and mineral rights confers on the receiver substantial economic benefits that must be shared beyond the normal fiscal arrangements.

It has been suggested that it is fair for the GOZ to take a 100% stake in all alluvial diamond mining ventures and a 51% stake in all mining ventures. These are the new rules which leave little or no scope for individual indigenous participation.

This new approach presents food for thought to all interested in participating in Zimbabwe’s lucrative mining sector.

With respect to South Africa, mineral rights are vested in the state. Accessing these rights requires licences and through licensing, the government has managed to create room for blacks to collect economic rents.

In mining, we must accept that the licence itself has a value and it is being proposed in Zimbabwe that the value must accrue to the state rather than to individuals.

To the extent that Zimbabwe is now a pace setter on the question of empowerment, investors are compelled to reflect carefully on how best to respond as many other African states will most likely follow the Zimbabwean route if it succeeds.

My message to investors for the coming decade is that we definitely have a challenge before us. If the Middle East can successfully use its resources to spur development without relying on donations, resource rich African countries will naturally ask the question why they cannot do the same.

There are no easy answers but pretending that there is no issue on the table will be suicidal.

We all have to fasten our seat belts and watch the space. In doing so, we are compelled to use new approaches to dialogue.

The next Zimbabwean election will be defined by the ability to respond to the empowerment challenge that was meant to be resolved earlier on in the journey of nation building.

However, as they say there is never a wrong time to do the right thing.