Zimbabwe is a small landlocked country formerly a British colony. It is endowed with a vast array of natural resources ranging from precious minerals to huge tracts of arable land coupled with the good farming climate. In addition the country has been blessed with hard working, intelligent and literate population making it possible for large international companies to set up operations here where quite frankly they have made profits. Anglo-American company has interests ranging from farming to mining, Unilever, Nestlé are just some of the big international corporations operating in Zimbabwe. Naturally over the last few years as they became better educated Zimbabweans have been complaining about the level of foreign ownership of most mines and indeed big companies. The ownership and management had remained in the hands of foreigners for a number of years after independence though there has been a shift on the management front where the majority of these multinational corporations now employ indigenous persons to positions of Chief executive officers, MDs and directorships in these organisations. However the pressure groups have been formed to lobby the government to force a redress of this apparent misnomer and consequently the government has come on board by announcing its proposed win-win scenario. The government position commits to foreign company ceding as much as 51% of their shareholding to locals for a fee or no fee at all and this is what has caused so much controversy because many argue this to be counter- productive especially in light of the fact that we are emerging from recession. The debate has in most cases degenerated into mudslinging contests between the two distinct camps to emerge from this controversy.
B. Debate- Is forcing to companies to cede 51% or more the right approach
While there has been little debate on the need to indigenise, there is however controversy on the proposed 51% takeover. Supporters believe it’s the best approach in the circumstance and its long overdue while on the other hand opponents believe it will ruinous to the country’s drive to attract foreign-direct investment and prefer a more gradual change in ownership to this hurried one.
C. Supporters -ceding 51% controlling
stake to blacks
Supporters of this policy believe that this is the best course of action because they feel these foreign companies are still reluctant to incorporate black people into the mainstream economy by employing what they term racist tactics to exclude blacks from participating in the economy.- Secondly by virtue of being the indigenous people, they are entitled to more than 51% shareholding because the resources these foreign companies are exploiting already belong to the local people.
- Others believe that these foreign companies carry out subversive activities on behalf of foreign government to effect what they term regime change. For instance Barclays and Standard Chartered have been accused of being used by foreign powers to instigate some kind of chaos in the country.
- Supporters of this believe that this will put to paid the negative stereotype of black person, his perceived inability to match the talents and aptitudes of whites.
D. Our position-Ceding 51% stake to blacks
While proponents of this empowerment drive in its current form often try to turn this into a black vs. white argument that has not done anything to camoflaouge the glaring problems associated with this approach in light of what has become the legacy of the land reform process and the spirited attempts to overlook fundamental questions on how the whole process is going to be financed. The land reform was carried out in almost a similar fashion where the sudden ‘desire’ to empower the landless black majority overrode all genuine questions about the farming ability of blacks and the funding for the reforms. Authorities thought that by giving land to black peasant farmers was enough to ensure the continuity in farming activities ignoring the obvious lack of expertise in commercial farming by these new farmers and the capital needed to sustain this kind of farming. No one will accuse the authorities of suffering from delusions of grandeur because the emergence of the MDC as a political force made the land reform the only viable option at the time. However the ramifications of the land reform continue to be felt to this day thus underlying of folly of attempting to empower people while ignoring the possible economic side effects of this.
There is a particularly absurd assertion that the yet be extracted minerals in the case of mines are already the sovereign property of the state therefore there can be no talk of the government or blacks being asked to pay for the 51%shares and that is according at least one senior government official. That’s ludicrous because by acquiring the mining claims the rights over the minerals underneath pass on to the claim owner and that is consistent with international as well as local laws. It’s quite baffling that some think this to be a reason at all because the knowledge that you have minerals is practically worlds apart with the actual extraction of those minerals. In fact world history will attest that being endowed with natural resources does not equate with economic prosperity as the example of these 2 countries will prove, DRC and Japan. Democratic Republic of Congo is a vast country endowed with rich deposits of the most sought after minerals such as diamonds, gold, uranium, copper to mention just a few and in addition to having a very good climate. However the DRC is not well known for being a major producer of diamonds or an agriculture hub, no. it has been plagued with unending conflicts between its various tribes for years and this continues even to this day and indeed some have remarked these resources could be the source of this country’s misfortunes and that it would be better off without these. There is generally no law and order in that country in addition to the volatile relations between the tribes. Now according to the CIA World fact book the DRC has a GDP of $12 billion with per capita income at just over $300 and these are estimates for 2010. Japan on the other hand is a tiny island nation especially when compared to the size of DRC yet Japan is recognised as the world’s second richest country with the a GDP $5.07trillion with per capita of about $34200 and again these are the estimates of 2010. In terms of resources endowed to it the DRC would easily be the richest country in the world while Japan will rank very low yet the opposite because Japan generally a pacifist country places greater emphasises on improving knowledge, technology and research & development. That is why a tiny country like Japan has created such a disproportionately large economy in relation to its country’s size while people in the DRC sit on what potentially could be diamond or gold mines because they do have the capital to extract the minerals and most importantly they do not have the required expertise to do this. This example only serves to highlight the enormous gap between blacks and their white counterparts the owners of these foreign companies and it is this gap that the government has to take into serious consideration before carrying out the empowerment drive.
In a volte-face the government actually wants to force this yet only a few months ago agreed to sell more 54% of its shareholding in Ziscosteel which has been making losses for years. This raises more questions than answers because it would seem companies like Zimplats are being targeted because they are profitable. While backers of this in government might want to appear benevolent by this, the truth is that greed appears to be the major motivator because the usual suspects are already waiting with glee to pounce once the order is given. And just like land reform only the elite, the politically connected will benefit while the general person will not. To this multiple farm owners have not been punished and it is this same cabal that now wants to enrich itself this time with companies of foreigners.
The other argument that blacks are incapable of running successfully companies. Unfortunately the people entrusted with running companies left behind by foreigners have in most cases failed resulting in these actually closing down. Again this is caused by the lack of passion for the business, lacking right mentality to run a business something mostly acquired when you’ve had the experience to start and run your own business successfully and this is of course in addition to lack of knowledge of the particular business. Fortunately we have had the blacks who have done justice to the cause of indigenisation, the likes Strive Masiyiwa, blacks that opened banks that shook established banks, Dairiboard formerly state owned now a well-known dairy products producer owned and run by blacks.
Conclusion
It is clear from what we have just discussed that the current proposal to take control of foreign owned companies smacks of greed and racism because there has not any sound economic reason for this except these purely sentimental reasons. Forcibly going ahead with the present status of the empowerment act only helps to worsen the country’s risk profile thus scaring the much needed foreign direct investment and there is a strong possibility that companies will actually disinvest
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