Zimbabwe Euromoney Conference – no time for mixed messages

OPINION – How Zimbabwe will manage to lure investors at the Euromoney Conference which opened in Harare Tuesday, a day after Zanu-Pf youths reportedly seized a South African company’s project, EasiPark is mind-boggling.

With the country short of US$10 billion for capital quick turn-around, it would be a big wasted opportunity if the distinguished 300 delegates expected to attend were to be subjected to mixed messages by their Zimbabwean hosts.

This is not the time to play cheap partisan politics. Neither is it an occasion for orchestrating false national unity for the cameras then ‘we are back on each other’s throat’ once the visitors have gone. There has to be an admission of the ongoing debate on the format which economic empowerment should take in Zimbabwe than to mislead the conference with false assurances or scare them with ‘indigenisation’.

It is also vital to remind ourselves about the rationale of affirmative action which in the 21st century should be colour-blind as opposed to ‘indigenisation’ which deliberately discriminates against non-blacks, thereby creating understandable resentment. The basic social science view of affirmative action was spelt out by the US President Johnson when he said:

"Men and women of all races are born with the same range of abilities. But ability is not just the product of birth. Ability is stretched or stunted by the family that you live with, and the neighbourhood you live in – by the school you go to and the poverty or the richness of your surroundings. It is the product of a hundred unseen forces playing upon the little infant, the child, and finally the man" (or woman) my own emphasis (wikipedia.org).

Although empowerment or affirmative action programmes are by nature very controversial the world over, in Zimbabwe it is the perceived deliberate attempts by the former ruling party to hijack a sound national programme for partisan and short-term gain ahead of elections. Even in South Africa affirmative action has been criticised for "enriching a minority of ‘black diamonds’ loyal to the governing African National Congress and driving away white businessmen" (The Guardian.co.uk, 31/07/09).

It remains to be seen how Robert Mugabe of Zanu-pf will lead the push for foreign investment when recently to mark his 87th birthday he was threatening to take over South African owned mining giant Zimplats accusing them it of externalising profits.

"Nestle refused to buy milk from Gushungo dairies," Mugabe told a crowd of Zanu-pf supporters, adding, "I told Kasukuwere (Indigenisation Minister) to begin with them and tell them he was sent by Gushungo. We should deal with them; let them get out of the country" (Zimbabwe Standard, 26/02/11).

Of course, it is undeniable that Zimbabwe needs to redress the economic imbalances inherited at independence 31 years ago. Obviously, it would not be empowerment if Nestle is nationalised because of a personal grudge with the leader of Zanu-pf. However, it is how the re-dressing is done which is debatable and not whether empowerment is necessary at all. The key point of this paper is doing away withy the race label.

Attempts by some Zimbabwean politicians to duplicate South Africa’s Black Economic Empowerment (BEE) legislation by using a score-card or alternatively copying the Bafokeng empowerment model are likely to run into difficulties because of different scenarios and possible resistance from within the power elite.

A good observation by the Financial Gazette (17/02/11) is that ‘the Bafokeng nation first forged a deal with mining firms in its territory in Rustenburg in which it was paid mining royalties . The mining royalties were later in the 1990’s converted into shareholding for the Bafokeng community.’

A variance of that in Zimbabwe would be for example, for the Chiadzwa community in Marange communal area to get mining royalties from Mbada, Canadile, ZMDC and the Chinese joint venture companies which are mining their precious diamond deposits and eventually convert the royalties into shareholding. While a very noble proposition, its likely to be a hardsell to some of the players already involved in Chiadzwa’s diamond mining amidst human rights abuses.

Another observation worth making is that the BEE programme, while admittedly potentially a disincentive to investors, could have a greater chance of success in South Africa than in Zimbabwe without causing serious damage to the economy. While Pretoria has a strong and highly advanced industrial base as well as diverse financial resources, the case is not the same with Harare where some listed companies like Gulliver and Cairns have halted some of their operations due to adverse trading conditions.

Zimbabwe, should scrap its current reckless indigenisation claim of 51% ownership of shares even in a family business or sole trade worth US$500,000 because the policy is flawed, partisan, racist, open to abuse and unsustainable. A better alternative to the controversial indigenisation law would be the use of fiscal and institutional measures to promote empowerment of disadvantaged youths regardless of race, colour, ethnicity, gender, disability, political affiliation and so on.

Such a mechanism would entail building an Empowerment Fund that is managed transparently by Treasury through a progress empowerment levy e.g. 5% on profits charged to multi-million dollar corporations in Zimbabwe for a duration of up to 10 years subject to a nationwide consultation exercise.

The Fund would be disbursed by Treasury to targeted disadvantaged youths between 18 and 30 years of age (no old men or women) on a means test basis as well as production of a bankable business plan with repayment of capital only and agreeing to a joint venture with a government mentor until the project shows evidence of being self-sustainable. You don’t give a trainee air pilot the controls until you feel confident that it’s safe to do so!

The advantages of the proposed option to indigenisation is that it is colour blind, transparent, non-partisan, sustainable, non-discriminatory except on merit, not corrupt or open to abuse like the current system which is plainly vindictive against an ethnic minority purely for narrow political reasons. This is the only way to pull the indigenisation rug from under the feet of prophets of partisan politics.

Conclusion:

Zimbabwe needs investors more than investors need Zimbabwe, so there is no point in ‘sabre rattling’. Empowerment of disadvantaged youths should be colour blind like that done by the Prince’s Trust in the UK. In order to build Zimbabwe, there is need for reconciliation, compromise, diplomacy and magnanimity. People want to see a consistent application of policy regardless of political persuasion.

Clifford Chitupa Mashiri, Political Analyst, London, zimanalysis2009@gmail.com