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The deadline by which foreign-owned businesses were expected to have submitted their indigenisation plans expired yesterday.
Today the government is expected to start cancelling operating licences of non-compliant businesses, in what must be a defining moment for our struggling economy.
The government promulgated the Indigenisation and Economic Empowerment Act in March 2008. The piece of legislation advances the government’s policy since 2000 of creating conditions for formerly marginalised blacks to assume greater control of the economy and its natural resources. It came as the implementation of the land reform programme, launched eight years earlier, was in full swing.
Under that programme up to 380,000 indigenous blacks have been resettled on 14,5 million hectares of land that used to be in white farmers’ hands.
In terms of the Indigenisation and Economic Empowerment Act, foreign-owned companies with assets of $500,000 and above must sell 51 percent of their shareholdings to indigenous people or to the government and remain with 49 percent.
We commend that.
Zimbabwe needed a deliberate government policy to bring blacks into the mainstream of the economy because their social and economic marginalisation was a result of systematic policies by successive settler regimes to ensure that they didn’t own assets of economic value.
In 2011, we saw much activity with respect to the launch of community share ownership trusts, mainly funded by mining companies.
There were a number of employee share ownership schemes as well, prominent ones being the BAT and Schweppes ones.
However, between September 2013 and September last year when incumbent Minister of Youth, Indigenisation and Economic Empowerment, Patrick Zhuwao was appointed, we did not see as much leadership on indigenisation as we would want.
Yet Zanu-PF resoundingly won the July 2013 elections on the back of the promise of economic indigenisation and empowerment. Post-election repudiation of that policy and programme would have meant taking the two million people who voted for Zanu-PF for granted. We have a law in place and the masses voted for it. Therefore, we demand that business obeys the law.
From today, all line ministries are expected to invoke Section 5 of the Act (Chapter 14:33) that empowers them to revoke trading licences of foreign-owned companies that failed to submit their indigenisation plans by yesterday.
Minister Zhuwao is not too happy with the overall response of the companies. He is happy though with the financial services and mining sectors not with members of the Confederation of Zimbabwe Industries and Zimbabwe National Chamber of Commerce.
“Certain individuals are still trying to threaten the government but it will not work and everyone serious about running a business in Zimbabwe will comply with the law,” said Minister Zhuwao Wednesday.
“Further to that I have received representations from worker organisations saying that they are concerned and I told them that it is the fiduciary responsibility of directors of such companies to make sure that they look after their stakeholders including shareholders.
“The legal advice I’m getting is, it is the fiduciary responsibility of directors to make sure that laws in the country that they are operating in are complied with. So if they then willfully disobey the law, workers have a right to go after them.”
Companies have an obligation to respect the laws of the country. We certainly don’t understand why they are reluctant to only submit their indigenisation plans which they will not be asked to implement immediately anyway. Also, the government is not demanding that they cede shares to anyone. This indeed was a point of much contestation around 2011 for “ceding” amounts to expropriation of privately-owned assets. That was clarified to say that indigenous persons had to buy shareholding in a foreign-owned company.
Those who have read the law — and we expect serious companies to have done so by now — will know that it is justifiably strict with respect to the natural resources sector, and very flexible with non-extractive industries. It is thus ironic that, as Minister Zhuwao said, mining companies are forthcoming yet it is they that must be angry with the toughness of the law on them.
Defiant companies need to know that by refusing to obey the law, they risk losing credibility in the eyes of not only the market and the ordinary person, but also of the law itself.
They cannot trash the law today and possibly expect that same law to protect their investments tomorrow when, as expected, the government goes ahead to actually cancel their licences according to the enabling Act. Therefore, we demand the foreign-owned companies to submit to the law.
In the same vein we look forward to a nuanced approach from the government to achieve that fine balance between the demands of the law and our collective aspirations to indigenise our economy on one hand, and on the other, not to destroy what remains of that economy after 16 years of ruinous western sanctions.
Online Reporter