 |
|
|
|
|
| author/source:Sunday Times (SA) |
| published:Sun 7-Mar-2010 |
| posted on this site:Sun 7-Mar-2010 |
|
| Article Type : News |
|
| "To what extent will the empowerment agenda militate against the progress of the country?" |
 |
|
By Dumisani Muleya
Zimbabwean businessmen based in South Africa have expressed outrage at their country's new "indigenisation" laws, which seek to seize control of foreign-owned companies and hand them over to locals. The businessmen said the indigenisation regulations, which came into force on Monday, pose a serious threat to Zimbabwe's economic recovery. After a decade of cumulative economic decline, Zimbabwe has shown signs of recovery since the formation of the inclusive government last year. However, on Monday the government started implementing the measures which demand that, within the next five years or from commencement of the business concerned, foreign investors must give "a controlling stake of not less than 51% of the shares to indigenous Zimbabweans". Companies that fail to meet the empowerment quota risk having their directors fined or jailed.
The new law flies in the face of the government's campaign to lure foreign investors into the economy. The government recently sent the co-ministers of home affairs, Kembo Mohadi and Giles Mutsekwa, to South Africa to try to convince Zimbabwean businessmen to return and invest in the country. But now, a few weeks later, it seems to have shot itself in the foot. Prominent Zimbabwean businessman William Nyemba, a banker who runs Wilta Investments, a financial consultancy in Bryanston, Johannesburg, said the indigenisation laws would undermine investor confidence and ruin the economy. "The thinking behind the policy is noble but the timing and approach are wrong," Nyemba said. "Look at what is already happening: share prices are tumbling, investors have put their capital earmarked for big projects on hold and some of them are taking their money out. Investors are scared. If anyone thinks that this policy won't affect investment they are very naïve."
Nyemba, who was part of a South African business delegation that met President Robert Mugabe to discuss investment opportunities and property rights, said Zimbabwe should learn something from South Africa on indigenisation. "In South Africa they have BEE and usually there is a lot of consultation before decisions are made. The programme needs to be structured and organised to avoid destabilising the economy." Nyemba, a former Trust Bank CEO, fled Zimbabwe with a number of top bankers and businessmen in 2004 at the height of bank collapses. Bankers accused government of hounding them out of the country, while the government claimed they were corrupt and incompetent. Another leading businessman from Zimbabwe, Mutumwa Mawere, who runs Africa Heritage Society - an association of corporates and individuals that focuses on black economic empowerment among other things - in Rivonia, Johannesburg, said Zimbabwe's empowerment laws would cause damage.
"As we look at the motivation of the indigenisation law, we cannot help but reflect on what Zimbabwe needs at this juncture in its development history. It needs investment, in the knowledge that any such injection will be value-adding, and without it the prospect for renewal and growth is doomed," he said. "The minerals will remain in the ground; land acquired will remain under-utilised unless a dynamic approach to development is taken. It is never too late to ask ourselves what kind of Zimbabwe do we want to see and how can we get there." Mawere, whose mining firms and an associated chain of other businesses were seized by the Mugabe government five years ago, said Zimbabwe could self-destruct. "To what extent will the empowerment agenda militate against the progress of the country? It should be a Zimbabwe that can attract capital and respect the rights of persons and property. It should be a Zimbabwe that looks forward in the knowledge that any investment into the country lifts the country up."
The new laws affect many big, foreign-owned companies. Among the South African firms affected are Zimplats; Independence Gold Mining, the country's largest gold producer owned by controversial tycoon Mzi Khumalo; Stanbic Bank; Anglo American's Unki and Hippo Valley; and Mmakau Mining, owned by Bridgette Radebe, president of the SA Mining Development Association and wife of South Africa's justice and constitutional development minister Jeff Radebe. Mmakau and Shaft Sinkers moved into gold mining in Zimbabwe in 2005, paying US$4.5-million to buy the Eureka Mine from Placer Dome. Other big foreign-owned firms operating in Zimbabwe include Nestlé, which is embroiled in a milk-selling contract dispute with Mugabe's family; Unilever; British American Tobacco; Rio Tinto; Mimosa; Zimbabwe Leaf Tobacco, and Standard Chartered Bank.
Even businessmen who are still operating in Zimbabwe are opposed to the empowerment laws. They say that, like the land reform programme, the policy is designed to enrich Mugabe's cronies and will wreck the economy. The Business Council of Zimbabwe, which is made up of nine business umbrella organisations - the Bankers Association of Zimbabwe; the Chamber of Mines of Zimbabwe; the Commercial Farmers Union; the Confederation of Zimbabwe Industries; the Employers Confederation of Zimbabwe; the Zimbabwe Commercial Farmers' Union; the Zimbabwe Council for Tourism; the Zimbabwe Farmers' Union; and the Zimbabwe National Chamber of Commerce - has raised concerns about the indigenisation policy.
back to top |
|
|
|
|
