Zimbabwe’s Indigenization Minister Patrick Zhuwao has reiterated that Harare will from April 1st cancel licenses of foreign-owned firms that have not complied with the black empowerment law that compels them to sell a 51% stake of their shares to locals.
President Robert Mugabe signed the Indigenization and Economic Empowerment Bill into law in 2008 after it passed through parliament in September 2007 despite stiff resistance from the opposition Movement for Democratic Change.
Under Zimbabwean law, foreign and white-owned companies with assets of more than $500,000 must cede or sell a controlling stake to black nationals.
Zanu-PF insiders say the cash-strapped government took the hard line stance after foreign-owned companies spurned government's offer to contribute 10 percent of their annual earnings to the empowerment levy set up by Zhuwao.
The move by Harare to cancel licenses is likely to torpedo plans by the country to re-engage the Bretton Woods institutions: the International Monetary Fund and the World Bank.
Locally, the Zimbabwe Congress of Trade Unions has petitioned Zhuwao complaining about the threat to seize companies’ licenses and the negative impact it will have on workers. Chairman of the Zimbabwe National Liberation War Veterans Association, Chris Mutsvangwa, has also joined the chorus of those condemning the government move.
Mutsvangwa told the daily newspaper, NewsDay, that the former fighters would oppose government’s move to “nationalize” companies. Said Mutsvangwa: “It is a plan to loot the country’s resources and we will not fold our hands. War veterans want a country that is open to business, that is attractive to investment from anyone and there is no need for us to slam doors in the faces of those who want to bring in new money,” But Zhuwao, in an exclusive interview with VOA Studio 7’s Blessing Zulu, said that Harare is not backing down from local and international pressure.
BLESSING ZULU (B.Z): First Honorable Zhuwao are companies complying with what you said is a cabinet directive to give your ministry their indigenization proposal plans?
PATRICK ZHUWAO (P.Z) Companies go to their line ministries in terms of their proposals. So, I have not even bothered to check with line ministries what the progress is. But however, what then has been transpiring is that there have been a number of companies that have been seeking clarity on a lot of issues some of which are downright lies in terms of what they have been told about the Indigenization and Economic Empowerment Act Chapter 14:33. Some of those lies have actually come from institutions such as yours which are the media that have been misleading companies. I was requested by one of the companies to conduct an indigenization compliance clinic where companies that feel they are affected come in to get just a few pointers directly from me the minister responsible for administering that Act to say look this is what the Act says and these are the options available to each and every company in terms of the legislation.
B.Z: So when is this proposed indigenization clinic taking place?
P.Z: We will begin tomorrow (Wednesday) at 8.00 am at the Jacaranda room, Rainbow Towers Hotel in Harare.
B.Z: How many companies have registered so far (to attend the clinic?)
P.Z: No it’s like a walk in clinic my brother, you know if you have a tooth ache, you go to the clinic and say I have a tooth ache and the Doctor says you need aspirin or whatever it is that you need and if your ailment is of a bigger nature then the doctor says look I can’t really assist you, you need to go to a specialist. So there are some companies that really do not fall within the threshold of indigenization in terms of capital requirements, and or those companies it’s just a matter of letting them understand that this is what the law says and then they can go home and relax and have a good night sleep. For those that fall within the threshold we say, look you fall within the threshold, these are the various options that are available to you. If you are still confused as to how you will be able to put together an indigenization plan, it is quite possible that they can then go to some of the advisory companies that are dotted around Zimbabwe. We have quite a number of fairly good advisers. But we also observed that there are some legal practitioners that instead of explaining to their clients the provisions of the law are busy telling their clients that government is not serious about implementing the law and those people are lying to whoever it is that they are giving advice to. And you know if I was a manager of any business, I would simply make sure that I go on my own to understand what the law requires and I make sure that I am compliant.
B.Z: You said there are certain companies that fall within the threshold, if you can give us some examples?
P.Z: My brother, you have got General Notice 114 of 2011, General Notice 459 0f 2011 and the General Notice 280 of 2012. Those set the threshold sector by sector.
B.Z: And talking about tomorrow (Wednesday’s) compliance clinic, is there a likelihood that you will extend the deadline or timeline to submit compliance plans?
P.Z: No. No. The timeline by which companies should have complied is the 1st of March 2015. So companies that have not complied are already one year and one month beyond the time they should have complied. However, I need to point out that the processes of the revocation of the licenses involves the line minister notifying the non-compliant company of the line ministers’ intention to order the licensing authority to revoke the license. Thereafter, the line minister also requires the non-compliant company to show just cause as to why they have not complied and the minister then asseses if there is just cause.
B.Z: We have had serious concern being raised first by the Zimbabwe Congress of Trade Unions that has already petitioned you and the Zimbabwe National Liberation War Veterans Association led by Chris Mutsvangwa saying the government has veered off the road and is headed for the ditch.
P.Z : (Laughs) Sorry with all due respect to the Zimbabwe Congress of Trade Unions. It is not them that I am laughing at … eeh … the Zimbabwe Congress of Trade Unions, I have just had an interview with a journalist who showed me the letter that was written by the Zimbabwe Congress of Trade Unions. I will engage the Zimbabwe Congress of Trade Unions. But I do not want to engage with the Zimbabwe Congress of Trade Unions in the media.
B.Z: Turning to Mr. Mutsvangwa?
P.Z: Mr. Mutsvangwa … Honorable Mutsvangwa let’s use his title appropriately. Honorable Mutsvangwa was a member of the cabinet and having been a member of the cabinet he knows the processes of cabinet. And over and above knowing the processes of cabinet I am struggling to understand where he is coming from because I have not received any letter from the war veterans. I am struggling to believe that Honorable Mutsvangwa is going against a resolution that was passed by a cabinet that is chaired by his patron. (President Robert Mugabe is the patron of the Zimbabwe National Liberation War Veterans Association). A cabinet that consists of members of his association who are also the two vice presidents of the country. (vice presidents Phelekezela Mphoko and Emmerson Mnangagwa) A cabinet that has got the secretary responsible for war veterans in the Zanu-PF party as a member. (Defense Minister Sydney Sekeramai) A cabinet that has got the minister responsible for war veterans in that cabinet as a member. (Tshinga Dube) and a cabinet that has no less than four other ministers who are war veterans. So I have not seen any letter from Honorable Mutsvangwa. So I do not believe what is in the media because it is impossible to contemplate that . .. eeh … (laughs) … Honorable Mutsvangwa could be saying that his patron is wrong. What it would mean is that he is now actually going against the campaign manifesto (ruling Zanu-PF 2013 election manifesto) that he also used to become a Member of Parliament for Norton because Zanu-PF went on a campaign of indigenize, empower and develop and create employment. So I don’t believe it. It is impossible. No sane person would actually turn around and say I was voted on this platform, now I do not believe in it. If he no longer believes in it, he should resign as a member of parliament.
B.Z: Capital is a coward Hon. Zhuwao, don’t you think that this law is causing problems for Zimbabwe when it comes to investment.
P.Z: It’s not a matter of whether I think indigenization is scaring away investors. I know it is not indigenization, if there is anything called scaring away investors, because there are territories that have similar pieces of legislation where investment goes in. So the evidence is there that it is not around issues of indigenization or whichever way you want to label such a piece of legislation. There are other political considerations which include sanctions and certain narratives that are then propagated that then talk to this. But more importantly, my view is that there is need to put finality to this issue. So that people know that when the government of Zimbabwe puts in place a law, it will abide by that law. Now if we do not abide by the indigenization law, then how can any other investor believe that we are serious about abiding by any other law? And this is really my perspective and I give this perspective from the perspective of a person that has actually started business. You see, I did not start off my professional life as a minister of government or as a politician. I had my professional life as a business person. I have started businesses. I have run businesses and I still have some shares in some businesses. So I know what it takes to make a business decision and I know it very, very well. So you know, izvi zvekunzi munhu atanga kupinda mu Mercedes Benz apinda muhurumende aiwa ini yangu ndakatanga kupinda hangu iri 123 series in 1994. (I did not start driving a Mercedese Benz when I was appointed a cabinet minister, I bought the first one for myself in 1994, a 123 series.)
B.Z: There are serious concerns minister that the indigenization programs benefit only a few elites and for the majority of Zimbabweans, independence remains flag and anthem.
P.Z: Unfortunately some of these concerns are misplaced. These are the very same concerns that came around the issue of the land reform programme and these very same concerns then got some Zimbabweans that ought to have benefited from the land reform programme taking very, very drastic and unfortunate hard line positions saying I am not going to be part of that and they have failed to benefit. But you know paranoia is a disease. There is nothing you can do when someone is mentally afflicted like that.
B.Z: But even with that land reform programme you are alluding to, there are multiple farm owners who happen to be the elite and the majority of Zimbabweans are bitter they have been left out.
P.Z. I do not know of any multiple farm owners. Can you tell me of some and if there are any I think you should raise your concerns with the minister of lands. There is a minister of lands who you are supposed to raise those issues with.
B.Z : But successive government land reform audits have concluded that there are multiple farm owners.
P.Z: Well let the minister of lands respond to that. I am the minister for Youth, Indigenization and Economic Empowerment. You know division of labor my brother. Division of labor.