Chronicle Editor
Business Reporter
THE Affirmative Action Group (AAG) has expressed reservations over the sweeping amendments to the Indigenisation and Economic Empowerment Act as presented in the 2018 National Budget Statement by Finance and Economic Development Minister Patrick Chinamasa.
In a letter addressed to the minister dated 12 December 2017, seen by Business Chronicle, the AAG Matabeleland Chapter said the proposed amendments have an effect of reversing the gains made under the empowerment drive and disadvantaging young entrepreneurs in favour of foreigners.
In his budget statement last week, Minister Chinamasa announced that the 51/49 percent shareholding threshold under the indigenisation law would now be limited to diamonds and platinum mining operations only with flexibility on reserved sectors.
“We would like to commend you (Minister Chinamasa) and your team for presenting a great and progressive budget. As an empowerment organisation whose main thrust is just affirmative action, as is enshrined in our constitution, we hereby voice our discontent on the aforementioned,” reads part of the letter.
“The current proposal of limiting the Indigenisation Act to just the mining sector, specifically diamonds and platinum, is disempowering to the young entreprenuers of this nation. It is also a quick fix for short term gains, which will distort the future of the same Zimbabwean youth as it guarantees their limited involvement in their own economy.
“We strongly suggest a review of this step as we would be shooting ourselves in the foot and handing our nation over to foreigners thus, putting a huge dent on our sovereignty and socio-economic development.”
The empowerment lobby group implored Government to reconsider and introduce minimum local participation.
“Allow these companies to at least shed off 10-35 percent shareholding with 5-10 years to implement. A robust system of board representation quota, senior management ratios and employment mix ratios that include local communities, gender and youth is ideal. Procurement should also be capped with at least 65 percent content acquired locally, creating a ripple effect of great promise,” said AAG.
It urged the Government to hold consultations on the matter.
“As much as it is believed that this Act was a thorn in our flesh, limiting FDI and economic growth, we all know for a fact it was a necessary evil for the advancement of the Zimbabwean people. It is, therefore, discouraging to note that the proposal has been tabled without the necessary stakeholders’ involvement,” said AAG.
“The organisation strongly suggests you reconsider this issue for the autonomous development of our nation. We are looking forward to your collaboration in building a rapport on this regard.”
Concern over indigenisation law review also came to the fore during the 2018 National Budget review hosted by The Chronicle on Tuesday. While a majority of participants felt the 51/49 percent shareholding structure was a huge impediment to foreign direct investment, those in the mining sector felt the move would disadvantage locals.
“We understand that platinum and diamonds are high capital minerals, which need state of the art equipment to extract but we still need to protect gold, quarry and the rest of the minerals.
“We don’t want a situation where Chinese companies come here to explore minerals and supply them at 100 percent,” said one participant.
“That’s totally wrong. I agree that there are a lot of claims with potential that are lying idle, but this is the source of income for small scale miners because industries have shut down, especially in the gold sector. People have no choice.
“We’ve 40 strategic minerals and the Government decides to focus on two. We’re not saying the 51/49 percent should remain but small scale miners should at least have at least 20 percent so that there’s sense of ownership.”
Online Reporter