Monday, April 29, 2013

Indigenisation an elitist transfer of wealth: Biti
26/04/2013 00:00:00
by Staff Reporter

MDC-T secretary general and Finance Minister, Tendai Biti, has dismissed the indigenisation programme as an “elitist transfer” of wealth which will not create any “new value” or achieve broad-based economic empowerment.

Under the programme, which is being driven by President Robert Mugabe and his Zanu PF party, foreign companies must cede control and ownership of at least 51 percent of their Zimbabwe operations to locals.

Biti’s MDC-T party – which has been in an uneasy coalition with Zanu PF since 2009 - says while it backs the principle of economic empowerment, it was opposed to the model being implemented by Zanu PF.

And speaking in London this week as he returned from meetings with the International Monetary Fund (IMF) in Washington, the Treasury chief said the approach taken by Zanu PF would not work.

He said: “What method and formula are you using? This is where, from a purely scientific view, the Indigenisation Act is found wanting … The law obliges the indigenous entity the duty to buy [51% equity in existing firms].

“It is a model that is not creating new value. Secondly it is a programme that is elitist in nature; now, which ordinary person has that kind of money?

Biti said Zanu PF’s equity transfer approach does not take into account the fact that Zimbabwe is a small economy with a budget of $4 billion and in need of capital in the form of foreign direct investment, overseas development assistance and savings.

“In short, it’s a programme that needs to be revisited. But despite that, indigenisation on the ground has not been a hindrance to any serious investor in Zimbabwe,” he said.

“That’s why there’s been no capital flight. In fact, to those that are adopting a wait and see attitude, the train is moving”.

Meanwhile, Biti also revealed that he had been granted Cabinet approval to levy new taxes on the mining sector as the government scrambles for cash to fund elections due this year.

He however, assured miners that he would not be raiding their pockets for the US$132 million needed for the polls which will elect a successor to the coalition government.

Zanu PF and the MDC formations have still to reach a deal over the exact timing of the polls but Biti said working together in the coalition government had helped ease distrust between the parties and anxieties about political transition in the country.

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