Thursday, January 17, 2013

(SUNDAY MAIL ZW) Indigenisation’s mega deal

Indigenisation’s mega deal
Sunday, 13 January 2013 00:00

Last Friday, the Minister of Youth Development, Indigenisation and Economic Empowerment, Saviour Kasukuwere, signed one of the country’s biggest indigenisation deals with Impala Platinum and Zimplats mining company after protracted negotiations. Below is the speech that Minister Kasukuwere gave after signing the deal.

It gives me great pleasure to announce yet another milestone in the indigenisation and empowerment programme. Following our agreement with Anglo Platinum and Mimosa Mines late last year pertaining to their indigenisation plans, today we conclude what is undoubtedly the biggest indigenisation transaction with Impala Platinum and Zimplats mining company. The latter is the biggest mining company in the country and a very significant global player in the international platinum market.

Policy background

As such the transaction being concluded today is a flagship achievement of the policy objectives of our Government pertaining to the empowerment of indigenous Zimbabweans. This policy imperative seeks to involve the indigenous person in the mainstream economic activity of the country largely centred on the exploitation of natural resources.

It also seeks to ensure the equitable ownership of the country’s resources and full participation of indigenous Zimbabweans in other sectors of the economy to guarantee social and economic justice for all. The main goal of this policy imperative is to reverse the pre-1980 policy effects that sought to marginalise indigenous Zimbabweans from mainstream economic activity to the periphery.

The programme of indigenisation and economic empowerment is a national approach designed to benefit all indigenous Zimbabweans on a broad basis by guaranteeing broad participation in economic activities. The legal instruments implementing the policy decisions of Government direct that where exploitation of natural resources is involved communities, employees and the nation at large must participate as key indigenous shareholders.

As such, all indigenisation transactions in the mining sector seek to dispose shares to community share ownership trusts, employee share ownership trusts, pension funds and the National Indigenisation and Economic Empowerment Fund as designated entities.

Our emphasis on broad-based participation has clearly shown that the indigenisation programme in the main does not benefit elite indigenous persons but rather broad groups of indigenous Zimbabweans. To date, my ministry has achieved for communities around the country value in the form of shares in mining companies in excess of US$1 billion.

Apart from this capital value due to communities, the trusts will henceforth begin to benefit from annual dividends declared by mining companies.

In addition, more than US$110 million has either been pledged or paid out to community share trusts by mining companies as seed capital for initial community projects.

In addition to the above, more than 800 companies in our database have proposed to dispose shares to employees through employee share ownership schemes.

This in itself will benefit hundreds of thousands of workers throughout the country as part owners of the business. It is therefore apparent that the greatest beneficiaries of the programme to date are not well-to-do individuals but broad-based masses.

This is in line with keeping our international obligations as a State to eradicate poverty within the framework of the Millennium Development Goals by harnessing resource exploitation for the good of communities, employees and Zimbabweans at large. Key international and regional instruments governing the responsibilities and conduct of states require that we implement measures to promote and protect the rights of all peoples to benefit from their natural resources and both the Africa Union and the United Nations instruments are emphatic about these entitlements.

The policy objectives and measures of our indigenisation and empowerment programme in part enable us to achieve these binding obligations for the betterment of our people and the eradication of poverty and want.

Policy misconceptions and distortions

When we embarked on this historic programme many critics subjected our Government’s intentions to distortions and misrepresentations. This unfortunate trend still persists to date. Initially it was said that the indigenisation law amounted to compulsory acquisition of shares by Government in non-indigenous businesses and a number of people criticised us on the basis of misinterpreting the word “cede” in the indigenisation regulations. The regulations were amended to provide that shares in companies were to be disposed through a sale on fair terms.

As a result, shares in non-indigenous businesses, as in this transaction, are acquired under the programme for full value and this has been demonstrated through a series of transactions that have been concluded with major foreign investors. Some of our colleagues in Government have been peddling falsehoods that the law will be amended to make exemptions for investments in certain areas of the economy. The law will not be amended and not the least because there is no need to do so.

The triple Ps policy by Government envisages the promotion of strategic investments in key economic drivers. Further to this, Parliament in its wisdom in crafting the Indigenisation Act providing for a regime of lesser shares in order to promote strategic interests.

We have shown that the provisions of the law allow Government to lower the threshold of indigenisation in areas such as massive infrastructure investments for a certain period of time. Unfortunately, despite our overtures to implement this regime our colleagues have continued to engage in cheap politicking and unnecessarily confusing the investors.

The implementation of the indigenisation policy has always been tempered with reason and sound advice and at every turn we have sought to explain its basis to foreign investors in order to allay their fears and create an atmosphere of certainty.

Our track record in implementing this policy is borne in testimony by the support and understanding of important foreign investors who have committed to remain operating in the country.

Some of the notable transactions concluded to date are Zimplats, Mimosa, Unki Mine, PPC and Blanket Mine in the mining sector, Schweppes and BAT in the manufacturing sector, Meikles Africa in hospitality sector, Old Mutual and Ecobank Zimbabwe in the financial services sector.

All of the above transactions have displayed remarkable investor confidence in our country, an area which is pivotal in the implementation of our indigenisation and empowerment policy. Some of these companies, soon after indigenising, have gone on to commit to expansion and growth, with PPC taking a decision to set up an additional US$200 million plant in the country.

The platinum companies are at an advanced stage of considering a multi-billion-dollar refinery and companies such as Blanket Mine intend to make an extra US$37 million investment over the next four years. We believe that we have a clear policy and in instances where there has been ambiguity we have always sought to clarify and explain it.
Our measure of investor confidence is thus demonstrated by the successful partnerships we have sustained and will continue to grow with reputable international investors such as Implats, Aquarius Platinum, Anglo Platinum, Ecobank, Caledonia, PPC, BAT, Schweppes and Old Mutual, among others.

As Government we are cognisant of the need for foreign investment in successfully turning around our economy and supporting development in our economy. However, we believe that foreign investment should be attracted in a sustainable manner and we do not believe in foreign investment that does not promote the development of our people and our country.

Historically we have seen foreign investors come and exploit our resources and our people while taking all the profits away in the form of dividends. This is not a sustainable model of doing business.

What we have achieved with Implats in this transaction is a sustainable model of partnering with foreign investors for the development of our country and our people. We believe that this model not only will serve to promote economic growth through expansion in partnership, but create employment as well.

Such employment creation is critical to the upliftment of our people’s lives and this is what the policy of indigenisation and empowerment ensures by building strong sustainable companies with investors like Implats that recognise the importance of locals as key stakeholders.

Moreover, and in order to consolidate the policy objectives of Government, my ministry is currently developing a robust and comprehensive Economic Empowerment Policy which will usher in a new paradigm in our country. Among other things, this new policy will focus on creating new businesses largely owned by indigenous Zimbabweans, propose new ways of accelerating rural development and growing the economy to levels never seen before.

In conclusion, I would like to acknowledge and appreciate the effort by Impala to comply with our national laws. This effort will by no means go unnoticed and going forward in this newly established strategic win-win partnership we feel confident that both our expectations will be met in a sustainable way.

The business is no longer theirs but ours and as Government and people of this country we will endeavour at every turn to promote and protect this investment.

I would like to encourage other companies, particularly in the banking sector, to comply with our national laws as non-compliance will no longer be tolerated. Uncalled for defiance and arrogance will not be tolerated as all companies must respect the law and desist from provoking the State. There will be no sacred cows and no stone will remain unturned to ensure that the policy is fully implemented.

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