(NEWZIMBABWE) Indigenisation: an enrichment exercise for ordinary Zimbabweans

Friday, December 30, 2011

(NEWZIMBABWE) Indigenisation: an enrichment exercise for ordinary Zimbabweans

Indigenisation: an enrichment exercise for ordinary Zimbabweans
30/12/2011 00:00:00
by Garikai Chengu

THE brave men and women who fought and died for Zimbabwe did so not only to establish a free democracy, but also to democratise the economy. The Indigenisation and Economic Empowerment Act is not merely a moral initiative designed to redress the wrongs of the past. It serves as both a pragmatic growth strategy that is designed to realise the nation’s full economic potential and a means to strengthen the nation's democracy.

However, when all is said and done, the success or failure of the indigenisation programme will depend on the answer to one simple question: Will I, the ordinary Zimbabwean, benefit from indigenisation? The short answer is yes. The long answer is that indigenisation will benefit Zimbabweans both directly and indirectly.

The three clear ways that an ordinary Zimbabwean can benefit directly include as an investor, employee or a member of a community in which a company operates. The term investor is not reserved for the rich and politically well-connected. For the ordinary Zimbabwean the benefits of buying shares can be illustrated by taking a brief look at Econet Wireless’ rise.

Before Econet listed on the Zimbabwe Stock Exchange in 1998 the company's shares were worth roughly $0,12c. These shares are now worth around $4,50 per share. Therefore, if an ordinary farmer or farm worker, miner or mine worker, senior government official or junior civil servant had invested say $1,000 in 1998 their shares would now be worth a staggering $37,500. Not to mention the thousands of dollars in dividend payments that would have been made over the years.

Therefore indigenisation is not just about the rich getting richer, it is about everyone else having the chance to get rich. A look at the mining sector will illustrate two more ways in which ordinary Zimbabweans can enrich themselves and their communities.

Youth Development, Indigenisation and Empowerment Minister, Saviour Kasukuwere said that last year mines had export receipts of over US$1 billion, but only US$44 million accrued to the State in taxes and royalties.

The vast majority of the remaining hundreds of millions of dollars in profit was repatriated oversees by foreign shareholders. Precious little of that money was channelled towards mine workers or indeed the local communities by way of investment in housing, roads, schools, clinics etc.

Opting to raise levels of corporate tax and mining royalties would merely stifle production. Enter the advent of the Employee Share Ownership Plan (ESOP) and the Community Trust, both of which shall become the epitome of how Indigenisation will benefit the masses. The Community Trusts will provide local communities with over $2billion for, among other things, roads, schools, agriculture and development.

An ESOP is a means through which employees can own a share of the company they work for. It is widely accepted that employee company shareholding increases production and profitability, and improves employees' dedication and sense of ownership.

The Zimbabwe Stock Exchange's total market capitalisation is $4,1billion and 5 percent is essentially reserved for employees through ESOPs. Therefore ESOPs will put $205million dollars directly into Zimbabwean workers' pockets in the form of shares, which they can slowly pay back through rising share prices and dividends.

Crucially, officials spearheading the indigenisation programme have said that ESOPs will also be used to prioritise youth and women. This is vital because under colonial misrule black women suffered double-edged discrimination and dis-empowerment as women and as black people. The colonial economic system created conditions for the exploitation of women's labour and dependence on men.

Since Independence this imbalance has not been adequately redressed. Therefore, the economic independence that the democratisation of the Zimbabwean economy seeks to attain is incomplete and thus unattainable without prioritising women's economic empowerment.

Historically, when brute strength mattered more than brains, men had an inherent advantage. Now that brainpower has triumphed, the two sexes are evenly matched. However, gains in women's economic opportunities in Zimbabwe lag behind these gains in women's comparative capabilities. A growing body of developmental research shows this to be inefficient, since increased women's labour force participation and shareholding is associated with faster economic growth and reduced poverty; women will benefit from their economic empowerment, but so too will men, children and society as a whole.

In sum, the business case for ESOPs prioritising the expansion of women's economic opportunities is becoming increasingly evident; this is nothing more than smart economics. On the other hand, the targeting of ESOPs towards youths is less about the systemic prejudices created in the past that still effect women today. It is more about creating conditions for the nation's youth to contribute to the nation's future.

Youths make up the vast majority of the workforce in corporations, but neither the past wrongs nor future’s promise can be addressed without prioritising youth economic empowerment. As a matter of fact the energy, innovative capacity and aspirations of youth constitute a capital that no society can afford to waste.

For instance, as it stands, the young woman who devotes her entire life to working for Unki Platinum mine will retire with just her pension to show for her devotion. In retirement she will then suffer the indignity of knowing that despite her previous employer being in operation for many years and earning a quarter of a billion dollars in revenue every year, the area surrounding the mine has seen little by way of new schools, housing, clinics and basic infrastructure.

She will also have to watch her grandchildren use clinics and grow up in schools that are as underfunded as the ones she attended as a young girl. Despite her birthplace's mineral riches, she will only have monthly pension payments to show for her efforts.

But now, thanks to the ongoing indigenisation and democratisation of the economy, as a retiree she will own a share of one of the world's most renowned platinum mines. These shares are likely to be worth several thousands of dollars upon retirement and will pay her a handsome quarterly dividend. She can bequeath these shares to her children and grandchildren; grandchildren that will eventually grow up in a village that - thanks to the years and years of developmental investment from the local Community Trust - looks nothing like the village their grandmother remembers.

Apart from righting the wrongs of the past, the ongoing democratisation of the Zimbabwean economy is nothing short of a revolution; a revolution that will promote economic growth by enriching and empowering the ordinary Zimbabwean, developing his or her community and thereby strengthening the nation's democracy.

Garikai Chengu is a research scholar at Harvard University's Faculty of Arts and Sciences. Visit his website: http://www.garikaichengu.com

Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), SAVIOUR KASUKUWERE