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(HERALD) Indigenisation a success: Chapfika

Indigenisation a success: Chapfika
Thursday, 29 September 2011 02:00
Golden Sibanda Senior Business Reporter

NATIONAL Indigenisation and Economic Empowerment Board chairman Mr David Chapfika says the indigenisation process has largely been a success, three years after the law setting it up came into effect. But he told Herald Business in an interview the initiative was "a process" that would span generations.

The fact that the process of ensuring participation of local people in the mainstream economy had started was in itself "a resounding success", he said. Mr Chapfika said the fact that Government moved to enact the Indigenisation and Economic Empowerment Act of 2008 was a milestone.

Under the law all foreign-owned firms in Zimbabwe or wishing to invest here are required to sell at least 51 percent of their equity to indigenous people.

There has been general consensus among stakeholders in Government, the private sector, the investment community and the general populace that locals should take ownership of the means of production.

Apart from squabbling over the form and model the indigenisation process should take, Mr Chapfika said everyone conceded that the initiative was noble.

"In terms of indigenisation, a number of major mining companies have submitted their indigenisation plans. Whether we have accepted, rejected or are discussing them, the concept has been agreed and no one has rejected it," he said.

Zimbabwe's biggest platinum producers, Zimplats and Mimosa, lead the list of major mining firms that have since submitted plans to indigenise ownership.

Acquisition deals involving Masawara Plc and BP and Shell, Engen Corporation and Chevron Zimbabwe, Schweppes Zimbabwe and Coca-Cola Africa, Costain Zimbabwe Incorporated and Costain Africa and Old Mutual Zimbabwe largely had an indigenisation influence to them.

He cited community share ownership trusts and employee share schemes as cases in point that reflect the successes of the indigenisation process.

Under these schemes, communities in which mining firms operate will have a 10 percent stake, while the workers of these companies will own at least five percent equity.

The Ministry of Youth Development, Indigenisation and Empowerment has visited some of the mining communities to educate them on how they stand to benefit under community and employee share ownership schemes.

Government has directed that no foreign investor should be allowed to operate in certain specific economic sectors, which are reserved for indigenous people.

Such areas include retail and wholesale, real estate, dry cleaning, hair salons, commuter transport, grinding mills, tobacco grading and processing among others unless granted a special dispensation by the State.

All foreign-owned companies are required, in terms of the law, to procure 50 percent of the consumables through local firms.

Mr Chapfika said locals were already benefiting in this regard. It was up to locals to ensure foreign-owned firms list them among their suppliers. These factors rank as benchmarks of the success of indigenisation, he said.

There has been serious concern among investors regarding the implications of indigenisation.

There is a perception that the drive was designed to grab foreign-owned assets. The suspicion was that the intention was not a sincere plan at a broad-based economic empowerment of Zimbabweans..

The suspicion has affected trading on the Zimbabwe Stock Exchange, which has mostly traded through low due to investor apprehension.
In recent weeks foreign investors have been quitting the bourse.

There is also a general sentiment of uncertainty among foreign investors on indigenisation and empowerment in relation to the Government's final position.

This has resulted in limited foreign direct investment into Zimbabwe.

Most of this has been inspired by the general uncertainty in the ultimate political direction of the country.

The commitment to democracy, for instance, has not been established solidly, even with the creation of the unity government, in whch Zanu PF and the two opposition parties are assumed to wield wequz power.

The process has also faced major challenges in terms of funding to support Government's broad-based economic empowerment.

Out of the US$5 million allocated for indigenisation under the 2011 National Budget only US$810 000 has so far been released for the programmes.

"We appreciate the fiscal challenges that Government is facing," he said. "But we feel it is not giving the indigenisation process the priority it deserves."

To address the challenges around funding NIEEB was pushing for legislation that allows it to borrow from the markets through prescribed asset pape, he said.

NIEEB is also advocating legislation that allows it to pool funding resources by effecting an indigenisation levy to fund the empowerment initiative.

Labels: DAVID CHAPFIKA, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), NIEEB

posted by MrK @ 2:58 PM