adminGarikai Chengu claims authority on this subject from being “a research scholar at Harvard University” as he boldly signs off at the end, I honestly do not see the necessity of doing so. However he showed a lot of theoretical and conceptual indiscipline in how he treats the question of indigenisation vs FDI.
Empirical evidence shows that those countries that have a good balance between FDI and local investment are performing well in the current globalised economy. This is illustrated by the difference in economic performance of East Asian countries (large local firm influence) and Latin American countries than are mostly FDI-driven (extremely vulnerable to global cycles).
However, there is no conclusive evidence yet to show the ideal proportions in the mix but the point remains a country needs both, it’s not an either or choice, something Garikai overlooked or deliberately misrepresented. If you take a good reading of the various Global Entrepreneurship Monitor Reports (which I know you have easy access to), they discuss “growth oriented entrepreneurship” and the characteristics of such entrepreneurs.
These are mostly well educated, middle aged professionals who hold professional jobs and who transition into entrepreneurship for various reasons, among them self-actualisation. Basically, being an employee of a company has benefits in entrepreneurship, there are cultural and technical dimensions to the phenomenon both which can be easily learned experientially through being an employee.
Innovation does not fall from the sky, there is incremental innovation in technology and how can you learn this if you have not been an employee at some stage? Paradoxically you say we no longer need a focus on employment because we now need entrepreneurs, why should these be mutually exclusive?
In terms of industrial structure, developed economies show a healthy mix between, small, medium and large enterprises and data shows that the most innovative firms are the medium sized enterprises and not the start-ups as Garikai suggests – most of the Silicon Valley companies are really not start ups – they would have been trading for a while and some are medium-sized enterprises. Plainly in
Zimbabwe we have a skewed structure that of large and small enterprises with a visible missing middle resulting in a lack of integration in the structure and differences in standards and capabilities. So let me just debunk the notion that start-ups will bring innovation, they don’t, besides, in terms of the stage development theory (see Acz & Szerb 2009) the innovation stage is the most advanced stage in enterprise development and there is a difference between innovation new to a country and innovation, new to the world, both of which require various incentive schemes.
Please do not conflate ownership and entrepreneurship as the same thing. The Zanu-PF indigenisation policy does not mention the word “entrepreneurship” in any of its text but mentions “ownership” many times.
This policy encourages ownership and not entrepreneurship. If there is a theoretical and practical difference in these concepts, then I will argue that by encouraging ownership, Zanu-PF is reallocating entrepreneurial resources towards wealth redistribution instead of wealth creation. Entrepreneurship is about wealth creation and indigenisation is about attracting “the masses” that are inclined to expropriate wealth from productive entrepreneurs into unproductive and destructive entrepreneurs (see Baumol, 1990) as is evident in the “historic” land reform programme.
The 100 percent indigenisation and 100 percent FDI will not work for Zimbabwe so neither of these policies in their extreme versions are good for Zimbabwe but a mixture of the two. However, in the short-medium term, there is need to create jobs for people because the levels of unemployment in Zimbabwe are politically unsustainable. If Zimbabwe was not a police state, there would have been massive demonstrations already out of economic mismanagement so the need for jobs should not be rubbished as nonsense.
I, however, can give credit to Zanu-PF for raising the consciousness of Zimbabweans of the need for greater citizen participation in the economy through the indigenisation discourse although they tend to do it in a crude way. We need to invest our energies not in ownership but into entrepreneurship (entrepreneurship requires skills that are more than those of ownership), into our own abilities to create our own wealth.
Please note that for example European countries spend billions of euros funding their SME so that they innovate so it has become an industrial policy intervention of choice to actively encourage innovative entrepreneurship rather than expropriation and redistribution of other people’s wealth.
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