Be wary of throwing away the baby with bath water

Joram Nyathi
IF there is one matter in which Zimbabwe is unique on the African continent, it must be its resolute pursuit of the policy of indigenisation and black economic empowerment. It is an initiative for which we shouldn’t feel we owe anyone an apology. But that doesn’t mean we shouldn’t rein in those who engage in what amounts to economic sabotage, those giving this noble government policy a bad name.

No to another Essar, this time by the name Bakhresa.

This is what President Mugabe said at the end of April 2014 on indigenisation. He said the country was open to investment and that the empowerment policy was not meant to expropriate shares held by foreign-owned companies.

Speaking at the official opening the 55th edition of the Zimbabwe International Trade Fair in Bulawayo on April 25, the President said indigenisation had been subjected to “misrepresentation and misinterpretation”, with some people claiming it was meant to seize foreign-owned businesses.

The President said the indigenisation policy was not cast in stone and that foreigners could hold majority shareholding in any enterprise, depending on the nature of their investment. Again in April this year President Mugabe assured South African investors that Zimbabwe was open for business.

And we know how passionate he is about the programme, which has led to spirited efforts to have him “isolated” from the “international community”.

Taking cue from the President, Finance and Economic Development Minister Patrick Chinamasa has been on a crusade to attract investors into various sectors of the economy. The latest was an engagement with IMF and World Bank teams on Zimbabwe’s debt clearance strategy in Lima, Peru last month.

Followers of the Spectrum would be fully aware that I am as suspicious of World Bank and International Monetary Fund prescriptions as some Zimbabweans are of the Reserve Bank of Zimbabwe since the infamous raid of FCAs in 2008. So at first I felt uneasy about Minister Chinamasa’s dalliance with the Bretton Woods’ evil twins.

I have, however, since been convinced that we have to pay what we owe. Then we can reassert ourselves as a sovereign nation. That is what Chinamasa is trying to do. We need to clear our debt arrears. But most importantly, Zimbabwe needs investors from everywhere to grow the economy. That doesn’t mean the country has to kowtow to the whims of prospective investors, but simply that it must make its policies clear to those potential investors.

When President Mugabe said the indigenisation policy had been subjected to “misrepresentation and misinterpretation”, he touched on a rampant reality. While it is possible that foreigners may “misinterpret” the policy, it is known that indigenisation and economic empowerment policies have been deliberately “misrepresented” by Zimbabweans more than by foreigners, after all we filter the sentiments for them.

We have been the biggest cause of foreigners’ misinterpretation of the indigenisation policy because of the wider opposition in some political circles to the land reform programme itself. The media has been complicit, glibly talking about “land invasions” and “company grabs”.

The Bakhresa deal.

It is Zimbabweans who have done more to try and criminalise the land reform programme than the few white commercial farmers who only found sturdy Trojan horses among black opposition political parties desperate for funding, grieving more than the dispossessed. Fortunately the policy has a greater appeal among the rural folk whose personal sacrifices in the liberation struggle make them better custodians of the victory. They could have better promoted the programme with sufficient funding and training.

But there seems to be some discordance within, or conduct by organisations seemingly aligned to the ruling party and using that alignment to pursue agendas which imply that indigenisation is in fact about “appropriating shares held by foreign-owned companies” or that the “policy is cast in stone”. Organisations which seem to want to fortify a view that Zimbabwe is not open for business or that all foreign investments are under threat of appropriation by a hoggish ruling elite. I am talking here about conduct by some organisations which seems to undermine everything Minister Chinamasa is doing to allay investor fears and to get them to come to Zimbabwe by working to improve so-called ease of doing business.

The government policy on indigenisation is clear: the shareholding is 51/49 percent in favour of Zimbabweans on natural resources. In all other areas, foreigners and locals are allowed to negotiate acceptable terms and conditions. This apparently has been extended to partnerships in contract farming.

This is my story for this week. The Herald Business reported this week a sad tale of a local firm, Blue Ribbon Industries and Bakhresa, a Tanzanian milling company. Blue Ribbon has been crippled by liabilities of almost $30 million. It was facing closure and is currently under judicial management.

Blue Ribbon recently managed to negotiate an investment deal with Bakhresa. The new investor promised to immediately put in $20 million for recapitalisation of Blue Ribbon Industries, clearing of liabilities, including arrears on workers’ salaries and to replace obsolete equipment.

The government has approved the deal, and Bakhresa planned to invest an additional $20 million over the next five years.

From the report, Bakhresa only made one request: that it appoints a foreign chief executive officer for Blue Ribbon Industries. That has raised the hackles of the combative Affirmative Action Group. They are ready to see the deal collapse in the name of “indigenisation”.

This is their argument, according to the Herald Business article: they say milling is among sectors reserved for locals. It would therefore be a violation of that “cast-in-stone” policy to allow a foreigner to be appointed chief executive officer of Blue Ribbon Industries. What’s more, the AAG claims, there is abundant human capital in the country to run Blue Ribbon.

On any other day, we should be happy to turn a blind eye to a story like this; but not under current straited circumstances where the government is trying to attract investors from all over the globe to give a stimulus to Zim-Asset.

Let’s face the facts: Bakhresa plans to invest $40 million in a company facing liquidation. It is taking a risk after due diligence. The least it can ask for is an overseer it can trust to turn around Blue Ribbon and ensure a return on its investment. What’s wrong with that? Perchance they have noted deficiencies in our work ethic.

Secondly, why is the AAG raising its head now after Blue Ribbon has managed to negotiate foreign funding on its own? Where were the local investors all along? Are we not running the risk of providing grist to those who argue, often cynically and maliciously, that indigenisation is about “grabbing” foreign-owned companies? How does the country attract foreign investors when we seek to strip them of the power which the government has given them, that they can negotiate partnerships and agree on terms and conditions of those partnerships?

Thirdly, the argument about abundant talent in Zimbabwe is misleading. It is the kind of argument which implies that all underperforming companies or all those which have shut down are victims of Western-imposed economic sanctions.

This amounts to a denial that there could be other internal factors, like poor or lack of strategy, cronyism, corruption, failure to adapt to the changed and fast changing economic environment, or the demands of new technologies to achieve competitiveness, or sheer incompetence and ignorance on the part of management?

Now the AAG is fighting and lobbying that Bakhresa’s chosen foreign CEO be denied a work permit. This is presumably an African and Zimbabwe itself is chair of the African Union and Sadc and pushing a regional integration agenda. More than that, we are talking about exporting excess labour because our own economy cannot, at the moment, absorb most of our graduates.

AAG must tread carefully the thin line between discrediting and advocating indigenisation. It is not cast in stone, President Mugabe said. We must distinguish between policy and opportunism.