Comment: Property rights under attack
http://www.theindependent.co.zw/
Friday, 01 April 2011 12:44
AFTER earlier unnerving markets with indigenisation regulations compelling
foreigners to dispose of controlling stakes in companies valued at US$500
000 to indigenous Zimbabweans, Youth Development, Indigenisation and
Empowerment minister Saviour Kasukuwere, as we report in more detail
elsewhere in this paper, is at it again.
He has amended the law governing indigenisation and economic empowerment so
that companies with a net asset value of US$1, yes, one dollar. shall now be
required to sell 51% of their stake to indigenous people.
Essentially, this means every mining company in the country will be forced
to dispose of shareholding to “designated” entities in the next six months.
Yes, six months.
Across the border, South African companies are required to sell a 23% stake
inside 10 years. Judging by the speed and overzealousness Kasukuwere is
pursuing with his narrow indigenisation plan, this exercise is no longer
about empowering ordinary Zimbabweans. Rather, it is now an exercise that
will simply see the state and state-affiliated entities and a handful of
so-called sovereign funds benefiting from the sale of mines.
Worse still, the new statutory instrument illustrates that valuation of the
targeted mines would not be fair. The minister has final say on what value
to be ascribed to the targeted company. Initially, the world had been made
to understand this would be an organised exercise. Now, it is apparent that
Zanu PF will seize any opportunity to steal or enrich themselves whenever
the opportunity arises under the guise of righting old wrongs.
The instrument is now silent on who an “indigenous” Zimbabwean is. Instead,
a new word — “designated” — has come into play. Forget “any person who,
before the 18th of April 1980, was disadvantaged by unfair discrimination on
the grounds of his or her race, and any descendent of such persons.”
Ill-equipped and broke National Indigenisation and Economic Empowerment
Fund, the Zimbabwe Mining Development Corporation, any company formed by the
Zimbabwe Mining Development Corporation, a statutory wealth fund, or an
employee share ownership scheme, or trust, or community share ownership
scheme are now said to be the only beneficiaries.
ZMDC has failed to create value for government since its formation. How many
viable mines owned by the corporation have been closed over the years? What
goodwill does ZMDC have?
President Robert Mugabe and Kasukuwere are now taking this noble need to
empower Zimbabweans as a petty and personal project to vilify and harass
foreign companies.
The duo needs to be reminded that foreign direct investment and capital is
crucial to any economy and should not take it for granted. They also need to
remember that capital always has a choice and is sensible.
Why will any foreigner invest in a mining venture now when one is forced to
sell the moment the business is worth a dollar?
Nestlé cannot be indigenised merely for Mugabe’s gratification and because
the company refused to buy the aged leader’s milk.
The instrument says the value of the shares or other interest required to be
disposed of shall be calculated on the basis of valuation agreed to between
the minister and the non-indigenous mining business concerned “ which shall
take into account the state’s sovereign ownership of the mineral or
minerals exploited or proposed to be exploited” by foreign investors.
The minister is not an expert on valuations.
Legal experts say the clause is meant to effectively lower the values of
mining companies.
Others feel that this is a direct attack on property rights.
The constitution also prescribes that where property is acquired for any
such reasons, “fair compensation” must be paid.
This clearly illustrates their continued contempt for the Global Political
Agreement that calls for consultation with their partners in government.
One would have thought that after the disastrous consequences of a poorly
implemented land reform programme, Mugabe and his cronies would have learnt
the need for adequately planning such programmes.
Alas Zanu PF, with each programme, seems hell bent on dragging the country
into poverty and turmoil.