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(THE DAILY NEWS) Mugabe defends indigenisation at forum

Mugabe defends indigenisation at forum
By Our Correspondent
May 6, 2010

HARARE – President Robert Mugabe made a surprise showing at Africa’s biggest business meeting on Thursday in Dar es Salaam,Tanzania, where he defended the government’s controversial indigenization law.

Mugabe and Prime Minister Morgan Tsvangirai travelled on separate flights to the Tanzanian capital. The MDC issued a statement on Wednesday suggesting the two would attend separate meetings, with Tsvangirai attending the World Economic Forum for Africa, while Mugabe would attend a meeting on combating neo-colonialism.

However, Mugabe turned up at the economic forum where he told delegates that Zimbabwe’s indigenisation law, which requires foreign companies to cede at least 51 percent of their equity to locals in a lopsided dollarized economy was not contradictory or dangerously pretentious as reported by the Western media.

Tsvangirai, who was at the same podium with Mugabe, listened as the Zanu-PF leader vehemently defended the recently promulgated Indigenization and Empowerment Act.

Tsvangirai is on record as speaking against the law, saying it would scare off investors. The MDC was quoted as saying the law was still under discussion within the fragile power-sharing government. But Mugabe remained bullish.

“The proposed law will not deter investors,” he said.

“We want to empower our people economically, to have a stake in the economy. Our people remain poor. We want to see our people share in the ownership of resources.

“While people have said the legislation will drive away investors. We say no.”

“Companies have been forthcoming I don’t think it’s a painful thing for them. Forty-nine percent is a lot.”

One investment analyst said the indigenization law sadly revealed the ineptitude of vacuous economic policies.

“Fewer would be convinced that an almost bankrupt country, recently on the verge of an economic implosion and barely admitted into the international community for failure to pay its obligations would need to prioritise an equalization law under the guise of indigenous empowerment,” said Lance Mambondiani of Coronation Financial Services.

“The benefits of a South African-style BEE empowerment law are unquestionable but Zimbabwe does not have the economic stability that our neighbours had when they implemented theirs.”

Almost 30 years after independence, the Zimbabwean economy was not exactly emblematic of white domination, he said. The critical question was whether it was the right time to introduce the law in light of the obvious limitations and disintermediation an economy still recovering from a state of near collapse, Mambondiani said.

The problem with the indigenization law soon after a controversial land grab which resulted in chaotic violations of property rights and multiple farm ownership by the elite, he said, was that the outcome was unlikely to be different.

“An independent indigenization commission constituted by industry experts should be set up to manage implementation and monitor compliance,” said Mambondiani.

“The threshold for companies that fall within the bill could also be raised to avoid bureaucratic bungling and the concentration of power into the central government.”

He suggested that some sensitive or capital intensive sectors such as banking would perhaps be exempt; a blanket application would be unsustainable.

Much like the land reform program, not many would argue against the importance of the indigenization bill. The devil, however, could be in its implementation, he said.

Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), MUGABE

posted by MrK @ 4:48 PM