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Zimbabwe's Black Empowerment Scheme Haunts Unity Govt

Bulawayo central business district
Zimbabwe rolled out its controversial indigenization program two years ago, compelling foreign-owned companies to sell a 51 percent stake to black Zimbabweans.

So far, several firms have transferred ownership stakes and millions of dollars into community share ownership trusts.

President Robert Mugabe and his supporters say more still needs to be done to put control of the Zimbabwe economy into the hands of local people.

Critics say the indigenization program is little more than a pet project for the president’s party as the country prepares for general elections this year.

Zanu-PF embarked on a land re-distribution program in 2000, following its defeat in a constitutional referendum which could have consolidated President Mugabe’s 31-year tenure in office.

Beneficiaries of the program were mainly Zanu-PF supporters, most of whom had no experience in commercial farming.

Over 4,000 white commercial farmers lost control of their farms. Twelve years on, the productivity of Zimbabwe’s agriculture sector has plummeted, but that did not deter Zanu-PF from extending indigenization beyond the farming industry.

Opponents, including both formations of the Movement for Democratic Change (MDC) in the unity government, say Zanu-PF is using indigenization to buy support as the country prepares for presidential, parliamentary and local government elections later this year, to prevent a repeat of the 2008 elections, when the party lost control of almost all urban areas.

But beyond the politics, indigenization has been the target of much criticism.

According to the Ministry of Investment Promotion and Development, many potential foreign investors are scared of the black economic empowerment scheme, as it makes it very difficult to anticipate costs and revenue streams that are a part of the foundation of any new business.

But Zanu-PF spokesman Rugare Gumbo says his party is happy with the progress made so far in indigenizing the Zimbabwean economy. Mr. Gumbo dismisses critics who say the initiative is meant only to entice voters in the forthcoming elections.

Deputy Indigenization Minister Tongai Matutu disagrees, saying the program is currently in a state of confusion.

Mr. Matutu adds that he is never consulted even when Indigenization Minister Saviour Kasukuwere launches community share ownership schemes and other projects related to the black empowerment program.

Nhlanhla Dube of the MDC formation of Industry Minister Professor Welshman Ncube says his party also believes that the black economic empowerment program is riddled with inconsistencies as Zanu-PF is using the ministry of indigenization to further its political interests.
There is need to come up with a black empowerment model which will create jobs for poor Zimbabweans"
Some political analysts say Zanu-PF members, especially top officials, also want to amass a lot of wealth without taking into account the negative impact of the indigenization program on the Zimbabwe economy.

For independent economist John Robertson, Zimbabwe’s black economic empowerment program is designed to benefit the ruling elite.

Harare-based economist Daniel Ndlela also says the Indigenization and Economic Empowerment Act, which compels foreign-owned companies with investments in Zimbabwe to part with majority shares, discourages foreign direct investment.

Mr. Ndlela argues that the majority of people are waiting for a new law that will respect property rights and take into account the needs of industries and citizens - black or white.

Bulawayo Agenda director Thabani Nyoni adds that the black economic empowerment program will again plunge Zimbabwe into another economic crisis if foreign-owned companies are forced to parcel out shares to blacks.

Mr. Nyoni believes that the program will not economically empower black Zimbabweans currently struggling to make ends meet.

Bulawayo-based human rights lawyer Kucaca Phulu agrees, saying that the indigenization law violates private property rights.

Mr. Dube concurs, noting that the current indigenization program is a non-starter. He says there is need to come up with a black empowerment model which will create jobs for poor Zimbabweans.

So far, some mining companies including Zimbabwe Platinum Holdings, a subsidiary of South Africa’s Impala Platinum Holdings, insurer Old Mutual and hotel operator Meikles Africa Limited are in the process of selling 51 percent of their shares to black Zimbabweans.

Some of them have set up community share trusts and workers’ ownership schemes as a form of empowerment credits instead of parting with shares.
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They have also contributed a combined $40 million towards the setting up of a sovereign wealth fund for purchasing shares in private firms targeted for indigenization.

The fund is administered by a national indigenization board and Minister Kasukuwere, Zanu-PF’s front man in driving the black economic empowerment agenda.

Zanu-PF says this is a crucial struggle in the liberation of Zimbabwe from foreign domination.

It remains to be seen whether Zimbabweans will raise the required funds to buy equity stakes in foreign-owned companies. The majority of Zimbabweans are currently living below the poverty datum line of $590 per month for an urban family of six.