31 Josiah Chinamano Avenue. P.O. Box 374 Harare, Zimbabwe
Tel: +263-4-251490/6 Email: [email protected]
18 February 2010
The Prime Minister
Republic of Zimbabwe
Right Honourable M R Tsvangirai
Munhumutapa Building
Samora Machel Avenue
Harare
Dear Sir
Business Council of Zimbabwe (BCZ) Response to Statutory Instrument 21 of 2010
As you know, the BCZ is made up of nine business umbrella organisations namely, Bankers Association of
Zimbabwe, Chamber of Mines of Zimbabwe, Commercial Farmers Union, Confederation of Zimbabwe
Industries, Employers Confederation of Zimbabwe, Zimbabwe Commercial Farmers Union, Zimbabwe
Council for Tourism, Zimbabwe Farmers Union, and the Zimbabwe National Chamber of Commerce.
The BCZ member organisations and their constituents have accepted the concept of indigenisation and
empowerment as a national imperative and consider it to be in the long term interests of Zimbabwe.
However, indigenisation and empowerment should be done in a way that will bring the following key
elements:
Ø Sustainable economic and social growth of the country so that there is a bigger cake to share;
Ø Employment creation and empowerment of the majority of the Zimbabwean people;
Ø Competitive investment environment which attracts capital from both international and domestic
investors;
Ø Respect for property rights and the rule of law;
As the business community, we have been deeply troubled by the recent gazetting of Statutory
Instrument (SI) 21 of 2010 Indigenisation and Economic Empowerment (General) Regulations, 2010 as in
its current form, this SI does not in any way help the country meet the above key elements. Business in
Zimbabwe is currently faced with challenges ranging from shortages of electricity, shortages of capital,
skills deficiencies, and unfavourable conditions of trade. The country is desperately trying to attract
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foreign investment into the country and with this SI, it’s unlikely that as a country we will be able to
attract any serious investment at all.
We have had various investment conferences at which the Principles and members of the GNU have
promised investors that an investor friendly environment will be created and that Zimbabwe respects
property rights. Its difficult to see how SI 21 will help create an investor friendly environment and
reinforce the assertion that the Zimbabwe Government respects property rights. If it’s accepted that the
indigenous players will have to buy their shareholding, how is the process proposed by the SI going to be
funded given the precarious state of our financial institutions as well as the low disposable income the
majority of the nation is experiencing? This alone suggests to existing and potential investors that this
process is legalised value transfer to a chosen few rather than empowerment of the majority.
We have also been concerned by the lack of coordination and failure to speak with one voice among the
members of the GNU. This is costing the country investment capital which we all badly need. A case in
point is the way SI was issued; there was no common consensus among members of the GNU itself and
the business community was not consulted on how the SI could have been worded and what could have
been included or excluded in order not to scare away investors. We worry that this lack of coordination
and sensitivity to the needs of our fragile economy does not bode well for the future.
In order to rescue the situation, we would suggest the following plan of action:
Ø Immediate suspension of SI 21 so that busi nesses are not prosecuted when the deadlines are not
met;
Ø More time being devoted to consultations with the different sectors of the economy as they have
different needs;
Ø Wide consultations with all sectors on the appropriate approach to indigenisation and
empowerment in each sector;
Some of the areas which will need to be addressed include the following:
Ø How the indigenous actors will pay for their shareholding;
Ø The 51% being a combination of equity and credits as invariably the credits bring more benefits
to the majority than equity which rewards the few;
Ø That we all accept that 51% of nothing is nothing therefore the focus ought not to be on just a
percentage number but rather on wealth creation;
Ø Listing on the Zimbabwe Stock Exchange as a method of achieving indigenisation as advised by
Minister Kasukuwere to investors at the Mining Indaba in September 2009;;
Ø Employee Share Ownership Schemes being recognised as genuine empowerment;
Ø Reviewing the US$500 000 to a more reasonable level like US$5million;
Ø Establishment of sector specific boards rather than just having one board to look at all sectors;
Ø Ensuring that more power is vested in the sector specific Boards rather than a single individual in
the form of a Minister;
Ø Ensuring that the lack of capital on the part of the indigenous actors does not hinder the growth
of the companies;
Ø Reviewing the criteria used to set aside certain areas exclusively for the indigenous;
Ø More emphasis on incentives which stimulate the local economy such as local procurement,
setting up of new businesses doing business with government etc;
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We urge you to consider the above proposals with your colleagues in Government and we stand ready to
play our part in this very important national imperative.
Yours faithfully
VR GAPARE
President