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(ZIMBABWE GUARDIAN) Empowerment is our sovereign and divine right

Empowerment is our sovereign and divine right
By: Tafadzwa Musarara
Posted: Wednesday, March 17, 2010 7:17 pm

THE Affirmative Action Group has never, is not and will not contemplate to seize foreign owned companies outside the premises of the law. The Zimbabwe indigenization agenda has been hijacked by alarmists who nicodemously seek international sympathy without adjudicating on the true facts.

During the last successfully held KFM CEO roundtable, Mr. David Govere asked delegates whether they had seen the S.I. 21 of 2010. The results shocked the panel as only less than 5% of the participants had read the new law. For goodness sake, this was a congregation of the country’s top business executives.

Regrettably, these executives rely heavily on press reports which most of them carry the opinion of the journalist to make critical decisions. Such level of apathy within high echelons of conglomerates is very unfortunate.

The genesis of the empowerment crusade was started with the formation of the Indigenous Business Development Center (IBDC) led by Mapondera, Strive Masiyiwa and other native business icons. Later on IBWO, AAG, ZIEE0 were later established.

Most of the founding figures of these agents of the empowerment crusade went ahead and negotiated their own empowerment deals on an individual basis.

By the turn of the century, there was nationwide outcry that they was now an elitist black class that sought to own every wealth at the exclusion of the black majority.

Drafting of the Indigenization Bill commenced soon after which sought to forge and create a broad based black economic empowerment program for all interested indigenous Zimbabweans. The Bill became law in 2008 and was heavily publicized.

Inherent in the law was the provision that a statutory instrument was going to be gazetted to trigger the operalisation of this Act.

In January 2010, two years later, The Hon Minister of Indigenization dutifully gazzeted the statutory instrument.

ZNCC, CZI, Chamber of Mines, GALZ and others embarked on ferocious attack against the act demanding its reapeallement.

It is apparent that they were and are still serving dominantly the interest of multinational conglomerates.

In a constitutional democracy like Zimbabwe, laws are subjected to criticism. Since 2008 to date, no business organizations ever approached government with a better indigenization template than the one contained in the Act.

AAG has been thoroughly studying all opinion pieces penned by some of our leading economists namely Messrs Eric Bloch, John Robertson, Professor Tony Hawkins and many others.

We recognize their constitutional right to freely express themselves and provide their guidance on matters of national importance. Discounting the vitriol in these articles, they are four major issues cited by these gentlemen. These are investor flight, liquidity challenges, skills scarcity and cronyism. These concerns are also shared by CZI, Chamber of Mines and ZNCC. We now attempt to respond to these pertinent matters.

It should be noted that the law is directing that only non-indigenous owned companies that have a net value of USD500,000 comply. Given the events of the last ten years where little if any retooling occurred aggravated by continued depreciation of the current antiquated plant and machinery, many non-indigenous businesses are excluded. For instance, this will exclude the white lady who owns a boutique, the Indian family who owns a clothing shop, the Italian man who owns a coffee shop.

Firstly, the mischief that law seeks to arrest is the continued total ownership and control of the country’s resources by foreign-owned entities. International law provides that each country has right to control and manage its own resources. No country in the civilized world would allow foreign companies to dominate key and strategic industries like petroleum, energy, food processing, pharmaceuticals, etc. It is feared that these foreign companies can manipulate and interfere with the sovereignty of the host country.

In Zimbabwe, in the last ten years, we saw Mobil, Johnson & Johnson, Colgate, Coca Cola and many others pulling out unceremonously. If these companies were owned locally, they would have not disinvested. Thanks to the ingenuity of the indigenous businessmen and women who moved in, in their small way, to fill in the void created in the market.

Also most of these foreign companies, some members of CZI and ZNCC never had planned and deliberate schemes to empower their own employees through equity participation and profit-sharing.

The mandate of CZI and ZNCC is to represent the interests of the shareholders of the large companies and not of the generality of the down-trodden. They have been disturbing press reports of racism in some companies led by some CZI black leaders and they remain silent.

Why?

Our brethren after working for more than 25 years were given wheelbarrows, scotch carts and bicycle as a token for the long and loyal service to many large companies. Cases of racial segregation and unfair treatment severely affected indigenous employees.

All these ills can be treated by allowing employees to acquire equity using 'sweat capital'.

Section 3 (a) of the Act provides non-indigenous companies to sell, not surrender, 51% of their equity to indigenous people and retain at most 49%. Let’s put this into perspective, a Mr. A who is non-indigenous person can dispose, for example, 20% to his shop floor staff and another 15% to his management team. Effectively he and his other friendly indigenous partners control 84% of the company.

Employees may use their equity as security to access funding for housing construction, school fees, etc which will be paid back by dividends.

However, the S.I provides for Minister to vary this provision should the investor request so, citing reasonable and acceptable grounds. If this law is scrapped today, the need to empower our people will not die.

The investor flight argument is overdramatized. Compulsory equity participation of local people in foreign owned companies is common worldwide. The practice is found in Malaysia (Bumiputra), South Africa (BBBEE), Zambia, Far East, etc.

The 51/49 rule just needs good packaging and be saved the demonisation.

We propose that all future mining rights must be exclusively granted to indigenous people who then partner with foreign owned entities who will provide additional funding, skills and equipment. India and China economies grew tremendously by looking inside rather than outside. Yes, foreign investment is good, but indigenous investors must be given a launch pad because they will be there forever.

It is true that the country is facing liquidity challenges and so is the entire globe. No father would fail to send his child to school because he is between jobs. There is need to have unity of purpose as a country to mobilize funding within and outside our borders.

If you may recall, most foreign companies were funded by foreign banks to establish operation in this country. We can as a country, pursue the same route to obtain foreign funding to pay for the equity acquired and use those companies as security.

There is also need to effectively leverage our natural resources e.g. gold, platinum, diamond to obtain funding for this exercise.

Mr. Robertson argues that if some of these companies are acquired, there are no available skills to run them. That is very contempful. By implication this gentleman is suggesting the black Zimbabwean is unable to own and manage businesses. To the contrary, we have scored success in this regard in the areas of tourism, banking, industry, telecoms and commerce.

The essence of coming with an Act is to openly announce the rules of engagement. The act is providing for the empowerment of employees, management, youths and women groups. These groups have been at the periphery of empowerment for a long time.

In fact, this is the best way to fight cronyism because the economic cake is now availed to all and sundry who are keen to participate.

The S.I provides for many areas where the Minister may be allowed to grant waivers. It’s imperative that those who feel affected approach the minister in that regard, rather than host seminars that seek to ridicule the black minister and other organs of the state. If you ask a former white farmer today on what he would have done differently, he will tell that with hindsight, he would have co-operated in sharing the land. Megaphone criticism without proposing better empowerment programs is self-defeating.

In his book, why we can’t wait, Martin Luther King wrote, “The struggle for rights is, at bottom, a struggle for opportunities. In asking for something special, the Negro is not seeking charity. He does not want to be given a job he cannot handle…So, with equal opportunity must come the practical, realistic aid which will equip him to seize it.”

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Tafadzwa Musarara is the Secretary General of the Affirmative Action Group. he can be contacted via: sg@aag.co.zw

Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), INDIGENOUS BUSINESS EMPOWERMENT CENTER

posted by MrK @ 12:18 AM