State doublespeak leaves indigenisation policy hazy
30 May 2014 00:00 | Ray Ndlovu
The Zimbabwe government will not be unveiling any new indigenisation thresholds for nonresource-based sectors, an about-turn that brings into question the government’s sincerity in following through its commitment to soften its 51% indigenisation law.
Francis Nhema, the indigenisation and economic empowerment minister, told the Mail & Guardian this week that the 51% indigenisation threshold will, in fact, be maintained and applied to other economic sectors – outside of mining – as gazetted under general notice 280 of 2012.
Media reports on May 25 in the state-owned Sunday Mail newspaper indicated that the government was in a "major climb-down" in its empowerment programme and carried an interview with Media, Information and Broadcasting Services Minister Jonathan Moyo.
"We are reviewing and tightening the indigenisation and empowerment policy by being pragmatic without being dogmatic about it," Moyo was quoted as saying.
"Foreign investors will be allowed to recover their initial capital investment, an appropriate return on investment and operational costs, before the sharing of production outputs or profits."
Misinterpretation of policy
But in a strange attack, the Herald newspaper, which is in the same Zimpapers group as the Sunday Mail and is also state controlled, said its sister publication had misinterpreted the indigenisation policy.
"The problem is that there is, in fact, no such 'climb-down’ … [the] government is, in fact, digging in and has actually 'climbed up’ in requiring that Zimbabweans will, in fact, own 100% of their resources," it said in an opinion piece on May 27.
The latest round of doublespeak signals how the government has been talking right and yet walking left on the empowerment programme, which is what has unnerved foreign investors.
Nhema’s hardened stance in imposing a 51% indigenisation threshold comes more than a month after President Robert Mugabe spoke of a softened tack on indigenisation, saying a one-size-fits-all approach is inappropriate for all sectors.
Mugabe was supported by Patrick Chinamasa, the finance minister, who said the transfer of the 51% indigenisation stake would be applied only to the mining sector.
In April Chinamasa said Nhema would put together a "sector-by-sector" indigenisation threshold that would be presented to the Cabinet and applied to nonresource-based sectors.
'Nothing new is coming up'
Nearly a month later, there are still no signs of any new indigenisation thresholds having been tabled before the Cabinet. Nhema told the M&G his ministry would not come up with any new thresholds for indigenisation, but would make use of the existing provisions under the current Act.
"Those are the same thresholds that we will be applying for indigenisation in the other sectors. Nothing new is coming up," said Nhema.
The current Act targets multiple economic sectors – including tourism, financial services, education, sport, culture, engineering, construction, energy, telecommunications, transport and the motor industry – requiring all of them to abide by the 51% local ownership stipulation.
The general notice is the same piece of legislation used by Nhema’s predecessor, Saviour Kasukuwere, who at the apex of his tenure was pushing for the takeover of foreign-owned banks.
Walter Chidakwha, the mines and mining development minister, said mines are now warming to the indigenisation law.
"The restatement of the policy made by Mugabe recently affects mainly the nonresource-based sectors more than the mining sector. From our industry and mining perspective, the 51% indigenisation threshold has not changed at all," said Chidakwha.
Changing the indigenisation law
Economic observers have called on the government to follow up on its softened tone with legislation that would provide assurance to foreign investors.
Eric Bloch, a senior partner at H&E Bloch Consultancy, said a government with enough willpower could change the indigenisation law.
"The trouble is that our government knows how to work at three speeds and that is slow, very slow and stop," said Bloch. "They can change the indigenisation law fairly rapidly, as some of the sections do not need Parliament’s approval. Because of the urgent economic issues that the government is faced with, it can prioritise this and push through for changes.
"I, however, suspect that the indigenisation minister may be playing down the changes for the indigenisation thresholds for now, as he does not want to stir up more confusion over the issue, or may genuinely have missed Cabinet meetings where the issue has been brought up."
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