adminGatsha Mazithulela
IN this series of articles, I have discussed the need to translate national policy into industry specific drives, the need for singular focus within a very wide choice of industries that can be revived or created and moaned about some rather weak or interest-driven interventions that have been suggested by some think tanks.
On the latter observation, I have noticed the sprouting of more than six different interest groups that are all lobbying for initiatives around industrialisation of Bulawayo in particular. What is rather interesting is that many of these initiatives are clearly driven by the need to extract their own operations from collapse.
Whilst there is nothing wrong with like-minded businesses meeting to lobby for certain interventions, the bigger picture should be a lobby that asks government for very long term or permanent solutions to various problems. It is with this in mind that I think that all the different proposed interventions that government is receiving from various think tanks should rather be dealt with at once by an enabling piece of legislation, rather than a dizzying array of requests, and rightly so, from different special interest groups. Granted, there are some urgent matters that to be solved yesterday but the majority of issues can be dealt with in a different way.
I fear to imagine how many times Ministers of Provincial Affairs have received visitors with specific matters that need “urgent interventions”. However, all on the common thread that everybody knows and accepts —that industry must be revived.
Alas, there is something special about Bulawayo then. There is no doubt about that. From my regular writings in this column and other colleagues saying similar things, up to His Excellency the President’s declarations on the same matter suggests that a special status is required.
I therefore join the march for Bulawayo to be declared a Special Economic Zone (SEZ). So what is a special economic zone and how can it be a catch-all for problems of industrialisation?
My own definition is that an SEZ is nothing more than a special area demarcated for development and which development must be accelerated by enabling special advantages for businesses that operate in it. The special advantages which can be granted may be different from one SEZ to another depending on what is required in each area and I suppose the list can be as long as you want it to be. The advantage of doing it in this way is that a single Act of Parliament or regulations covering separate or different geographic areas can enable a legal framework under which Ministers of Provincial Affairs can work. The special conditions for the SEZs can then be the list of those demands that that everyone has very strong opinions on in the special area.
I have seen a list of issues about labour dynamics which require amendment of the Labour Relations Act. I have seen issues on lending practices and interest rates which require modification of the Banking Act and the Reserve Bank Act. I have seen issues around human capital development which would require new Acts of Parliament on retention of skills, repatriations, immigration and so on. There are property investment matters which require changes in Acts related to land ownership and title.
There are changes required in the proceedings of the civil court, powers of sheriffs and proscription of old cases. Now, if we ask our parliamentarians to enact all this legislation in different Acts of Parliament so that there is a legal basis for all these things that we are asking our government to do, the next elections will be upon us before that work is completed.
There is need for a super piece of legislation that enables a quicker and legally-sound framework to deal with many of these matters. Super laws do exist (other than the constitution), wherein if two or more Acts of Parliament are read together and there is a conflict, the dictates of one of the Acts prevails over others. Lawyers can give us examples of these but my suggestion is that legislation establishing SEZs be crafted to become that super law to put into motion the legal framework for special interventions in economic development.
It is important to guide readers towards real life examples of the things I write about here and in this case, the most dramatic example is the Chinese model of SEZs as in 1979, much of China was in the same or situations worse than Bulawayo. According to Jin Wang of the London School of Economics, the Chinese State Council approved the creation of small SEZs in then underdeveloped cities of Shen Zhen, Zhuhai and Shantou in Guangdong Province, as well as Xiamen in Fujian Province. In August 1980 the People’s Congress passed the first legal rule on the SEZs: “The Regulation for Guangdong SEZs”.
This regional law was the first of its kind to be tested and had several clauses which either contradicted laws for the rest of China or created totally new economic frameworks but nevertheless were superior when read with other legislation.
Specifically and quoted from Jin Wang, there was to be;
● Private Property Rights Protection: The SEZs encouraged foreign citizens, overseas Chinese, compatriots from Hong Kong and Macau and their companies and enterprises (hereinafter referred to as “investors”) to open factories and set up enterprises and other establishments with their own investment or in joint ventures with Chinese. The SEZs guarantee to protect their assets, accruing profits and other rights in accordance with the law.
This was a very important commitment by the Chinese government since there was no constitutional protection of private property rights outside SEZs until recently (the Chinese 2004 constitutional amendment). This situation is similar to Zimbabwe, where most land is currently in the hands of the State and property rights have been cited as a hindrance to development.
● Tax incentives: SEZ investors can enjoy a reduced rate of corporate income tax compared to other firms. They bear virtually zero custom duties and can enjoy duty-free allowances for production materials. There are income tax exemptions for certain types of workers employed in the SEZs as well.
Amongst many other clauses, there were others related to land use fees (rates) and those related to labour laws for example but all intended to make the investment decision very obvious for investors. The Chinese government had declared boldly that, “Construction of new industries primarily relies on attracting and utilising foreign capital; primary economic forms are Sino-foreign joint ventures and partnerships as well as wholly foreign-owned enterprises; products are primarily export-oriented; economic activities are primarily driven by market forces”.
This wisdom has prevailed as the Chinese SEZ experiment has produced a wonderful economy from absolutely nothing, comparatively.
There are many ways to get the job done but we must take an example from those who have won the race to the top. The three arms of government cannot deal with dozens of initiatives each seeking decisions that have an impact on the law without any legislative framework.
For urgent things, there are of course the powers of the President and some enabling clauses in different current laws but the solution is identifying the major special economic issues that need to be solved and we have done that. The next step should be establishment of SEZs whence the enabling legislation paves the way for all the special economic issues to be attended from one legal focus. Some work for parliamentarians then?
● Dr Gatsha Mazithulela is a scientist with international experience and holds a PhD in Genetic Engineering and Molecular Virology. Among other posts, he has served as innovation manager and executive director of the Council of Scientific and Industrial Research and vice-president of the Research Infrastructure and National Research Facilities in South Africa.
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