Indigenisation: Let’s embrace redistribution of our heritage

indigenisation is merely an exercise in redistributing wealth rather than creating wealth. However, this argument doesn’t hold water for two reasons.
Firstly, in any given economy the first segment of a person’s income goes to necessities such as food, clothing and shelter. The next segment or “wealth segment” of income goes to “higher activities” including leisure, educating oneself, saving, investment and democratic participation. An individual has wealth if they can engage in activities beyond life’s necessities.

What Mr Nyakuwa fails to recognise is that, paradoxical though it seems, it is none the less true that the more evenly the economic pie is divided the more people have access to this wealth segment of income. Thus, redistributing wealth creates wealth.
Picture if you will, one society with a certain Gross Domestic Product. This society has a handful of wealthy millionaires and many poor people. Now envisage another society with the same number of people and the same Gross Domestic Product but there are fewer millionaires and fewer poor people.

Both societies have the same amount of money but clearly the second one is wealthier because more people are empowered to partake in higher activities such as education, intellectualism, travel, sport, leisure and so on and so forth.

By narrowing the gap between the haves and the have-nots indigenisation seeks to create a wealthier society more akin to the second one.
The top 10 percent of businesspeople in Zimbabwe – a great deal of whom are foreigners or minorities – own 40,3 percent of the nation’s wealth according to the World Bank. Trickle-down economics simply doesn’t work. If it did then there wouldn’t be so many ordinary Zimbabweans waiting in vain for wealth to seep down to them.

The nation’s wealth disparity and skewed foreign ownership is resulting in Zimbabwe continuously haemorrhaging disproportionate amounts of “rent, dividends and profits” to bank accounts in far away lands.
Having a society with many rich foreigners and minorities does not make Zimbabwe or Zimbabweans wealthy. However, redistributing ownership of productive assets so that more local people have access to the flow of rent, dividends and profit does make Zimbabwe wealthy.

Disproportionate foreign ownership and income disparity is not only morally bankrupt it is also economically flawed too. Excessive wealth produces waste as the rich spend their money on items which are economically inefficient.
Buying chalets in Kariba instead of investing in new enterprises. Excessive poverty results in fewer people with purchasing power to drive productive industries.

When the ordinary Zimbabwean has more time to think about matters other than obtaining food, clothing and shelter they become economically liberated, truly free.
However, this freedom is jeopardised when a wealthy minority has disproportionate riches. Not least because this leads to the rich exerting disproportionate influence on the political system and results in policies less favourable to the disadvantaged.

Mr Nyakuwa also claims that indigenisation does not address entrepreneurship and only focuses on ownership and redistribution. “The Zanu-PF indigenisation policy does not mention the word ‘entrepreneurship’ in any of its text but mentions ‘ownership’ many times,” asserts Mr Nyakuwa.
Admittedly, it is true that “indigenisation” through employee, community and direct share ownership is aimed at redistribution. However, the “empowerment” aspect of the programme – through the

Indigenisation Fund – is aimed squarely at entrepreneurship and creating new wealth.
Local banks and venture capitalists fund only a small fraction of entrepreneurs wanting to start or expand a small business in Zimbabwe. Funding mainly comes from personal debt or from the “three fs” – friends, fools and families. The Indigenisation Fund is positioning itself to be the fourth “f”.

Mr Nyakuwa agrees with most economists and a recent report by the United Nations’ trade body that local entrepreneurs and not foreign investment have created the most net new jobs on the African continent.

Government’s indigenisation and empowerment programme clearly prioritises entrepreneurship.
Therefore, hopefully Mr Nyakuwa can explain how the MDC-T’s “investment, jobs and upliftment” that prioritises FDI and does not address entrepreneurship is a better plan to create jobs?

Mr Nyakuwa also suggests that both the indigenisation and land democratisation programmes are about “expropriating wealth from productive entrepreneurs (presumably white commercial farmers or foreign companies) into unproductive and destructive entrepreneurs (presumably new black farmers and businesspeople)”

This assessment could hardly be further from the truth. The significance of agrarian indigenisation is nothing to scoff at because land is a place to be born; a place to raise a family and call home; a store and generator of wealth; a place to be buried and an asset to bequeath to the next generation.

The redistribution has been largely egalitarian and broad-based. Land previously owned by 4 000 white commercial farmers is now shared between 300 000 families. Infact, 70 percent of the redistributed land has benefited 220 000 poor rural families and their urban counterparts, who on average have acquired 20 hectares of land.

However, newly resettled farmer entrepreneurs have faced several obstacles since land democratisation began, including recurrent droughts and dry spells, shortages of inputs, lack of capital and poor access to credit.

Despite these adverse conditions, land utilisation levels on newly resettled farms have already surpassed the 40 percent mark that prevailed on white farms after an entire century of State subsidies and racial privilege.

Put simply, agrarian indigenisation is now creating wealth for hundreds of thousands of Zimbabweans rather than just a historically privileged few.
Infact, more than 53 000 farmers have registered to grow tobacco this season. These registrants form the nucleus of an indigenous agrarian middle class.

A burgeoning class that will soon be demanding increasing banking, telecoms, retail and leisure services. This demand, even more than the nation’s raw mineral wealth or foreign investment will become the real driver of wealth creation – the emergence of under-leveraged middle-class consumers.

Small-scale black farming entrepreneurs, started with nothing but land, toiled through dry-spells, sanctions and hyperinflation, and are now the drive chain of the economic recovery.
Their success underscores the notion that indigenisation across the wider economy will not only redistribute wealth and democratise opportunity it will create new wealth as well.