-Indigenisation: finding middle ground

- Post-colonial southern Africa has grappled with the question of how to emancipate and empower the previously disadvantaged. Like the rest of the continent the region is endowed with an array of vital natural resources; from gold to platinum, iron ore to chrome, diamonds the list is endless. DeBeers, Rio Tinto, Anglo-American are some of the mining that not only control these minerals on the regional front but they actually dominate at the global stage and perhaps it is this power and influence that may have prompted sudden clamour for the transfer of ownership these to previously disadvantaged.  During the colonial rule blacks were systematically excluded from economic activity and now they have to become active in business because of the mere fact that they are the so called indigenous people something everyone seems agrees with. It is the formula for achieving this transfer that is causing much consternation between these two sides, the foreign owners of businesses earmarked for this empowerment, who are unfortunately are mostly whites and the previously disadvantaged who in most cases are black. There is no easy way to navigate this contentious issue without falling foul to venom of extremists on either side of the divide however the steps taken by authorities in Zimbabwe appear to have taken a new thrust to this problem and potentially this could be a death knell to the mining industry. The government has apparently gazetted the new ownership structures for the mining industry, asking these multinational companies operating mines to cede 51% shares to designated entities, in other words this essentially forces these mining houses to give up control of their investment to a third party .  This is being done despite protest from business leaders, political parties and one arm of the government and this could be its worst decision yet because this could potentially spark the massive disinvestment from the country and in the process undoing the economic gains made since the start of the GNU. The country is in need of foreign direct investment (FDI) yet by gazetting this piece of legislation the government is sending message that  FDI is not a priority at this point yet a few months back there was an investment conference here where business executives from around the world were encouraged invest. These contradictions have only worked to dissuade investors who had adopted a wait and see attitude from coming on board and the tone now being used by fervent supporters of this drive clearly shows little regard to what happens in the aftermath.   Racist rhetoric, racist innuendos and the inflammatory language that has characterised debate on this issue seem to have prevailed in the diverting attention from real issues to racist demagoguery and sentimental reasons. It has become a racially charged and emotive issue with organisations like the AAG unrelenting on their stance that indigenisation has to happen as a matter of urgency, however the hard facts point to the failure of the indigenisation effort. When we carried out the land reform apparently we used the same rash approach, where the desire to carry out the reforms quickly was aided by political expediency and we all know what happened. Those reforms may have been carried almost a decade ago yet the country still has not bridged the expertise gap as shortfalls in cereal production still persist with FEWSNET estimating that 1.7 million people will need food aid this year and this apparently has been happening since the land reforms. 

The first fact is that we do not have the capital to see through this process. The government is still struggling to meet its obligations with respect to the civil wages, it has not been able to secure funding from multilateral lenders as well as to secure lines of credit to fund its own short falls. The economy is generally undercapitalised clearly there is no way funding can be secured for the sovereign wealth fund which has clarity issues not to mention the risks associated with it. Apparently we never had the wherewithal in the first place when these multinational corporations came to set up operations here and nearly a century later we still do not have the capital or access to capital due many other factors. For instance there are a number of people who have registered a number mining claims along the Great Dyke area but they do not have funds to start operations worse still some do not even wish to start mining operations, instead they surf the internet for potential partners. Once identifying potential suitors they lease their rights to them for periods ranging from 3 to 5 years and receive royalties during the period, certainly this is not the intention of the indigenisation effort.   Secondly and perhaps the most important one, we do not have the expertise and know how to successfully run these mines and no matter how we may want to gloss over this, it is the painful truth.


Over years the ZMDC a government mining house has failed run mines even when international prices for the minerals were high and this has been attributed to corruption and incompetence. This is essentially why the SA government has resisted calls for nationalisation of mines and prefers the broad based economic empowerment (BBEE) because it understands that no matter how emotional the issue, common sense dictates for a gradual takeover of mines. The current BBEE requires not only mining houses but all non-black owned business to sell shares to previously disadvantaged groups at market value or agreed values and to incorporate these into major decision making bodies. At least this way, a process is initiated that will in the long term bring these previously disadvantaged at par with their white counterparts readying them for eventual takeover as well as running their own start-up businesses successfully. The BBEE apparently has its own flaws but it is less brazen and at least it takes into account the concerns of the present owners while ensuring that empowerment is actually carried out. The SA BBEE uses the old method, the carrot and stick approach and apparently it is working: companies that attain the BBEE certification will be eligible for government tenders and others benefits thus motivating white owned businesses to look for black partners. Zambia which has huge deposits of copper and cobalt deposits once nationalised all these and production dropped dramatically in the ensuing years however production has been on a steady rise because that government eventually allowed these foreign companies back. 

We could go on with this proof and ultimately we will be compelled to acknowledge the unique advantage these multinational corporations possess that no one country has, that is expertise and the capital. Certainly borrowing a leaf from SA’s BBEE could work to ensure the successfully indigenisation of the mining industry let alone the entire economy while mindful of creating black oligarchies as has happened in SA.     Terence Zimwara is a freelance writer  Contact him on +263 733406743