Indigenisation hijacked: Gono
By Thelma Chikwanha, Community Affairs Editor
Thursday, 28 July 2011 16:02
HARARE – Reserve Bank Governor Gideon Gono still stands by his 2007
statement on indigenisation saying the there was need to strike a balance
between the objectives of indigenisation and the need to attract investment,
a development which could set him for a collision course with Zanu PF
officials.
He said a few greedy well connected officials were making the most noise on
indigenisation to grab so that they grab the wealth on their own.
Gono has in the past clashed with the Minister of Indigenisation Saviour
Kasukuwere while several Zanu PF hawks, who are eying to grab companies
through the controversial indigenisation law, have also been at odds with
the central bank governor over the issue.
The central bank maintains that senior government officials and well
connected individuals were already positioning themselves to muscle into
certain mining, manufacturing, financial and other entities that are
performing well and contributing to foreign currency inflows of the country.
Speaking to the Daily News yesterday Gono said he still stands by “every
word” of what he said in the statement but reiterated that since the law had
already been approved by Parliament and ascended to by President Robert
Mugabe, the law had to be followed.
“The law must be complied with but my advice of 2007 still stands. Our
advice is still valid. Our advice on the banking sector remains that those
who want banks must come to us and we give them banking licences,” said
Gono.
This comes amid reports that Zimbabwe is losing huge sums of money with
investors transferring millions of dollars from the country as they are not
sure if their investments are safe.
Gono said while the policy is “noble” as it is aimed to empower the majority
of Zimbabweans, it is being done in the wrong way and therefore benefitting
a small clique who wanted to amass wealth in a “starkly greedy but
irresponsible manner.”
An advisor to government on economic policies, Gono said: “ We should ensure
that the empowerment drive was not derailed by a few well-connected cliques,
some who are already making the most noise in ostensible support of this
initiative, who would want to amass wealth to themselves in a starkly greedy
but irresponsible manner whilst the intended majority remain with nothing as
happened in the past with respect to government empowerment schemes such as
the land reform programme.”
The monetary policy document of the October 1, 2007 states that
indigenisation should be implemented in a manner which would enable the
investors to plough back while at the same time getting a return on their
investment.
“Specifically, the local foreign-ownership thresholds must be taken and
implemented as down the horizon targets as opposed to excitable but
impractical overnight conversion events.”
He recommended that for organisations worth over $500 million, the degree of
indigenisation should be 20 percent over a period of five years and 45
percent from the sixth to the 10th year and that full compliance of the 51
percent could only be possible after 15 years.
This approach he said, would not only promote fair valuation and
reasonable return of initial investment outlays but would go a long way in
ensuring a smooth transition from old to new shareholders.
“Where foreign investors bring in clear long-term benefits to the country, a
reasonable degree of flexibility ought to be exercised in allowing investors
to hold at least in the initial stages, majority shareholding so as to
deliberately accord them escalated dividends that enable them to plough back
their initial investments outlays.”
“Beyond pre-agreed time thresholds, foreign shareholding can then be diluted
on a gradual win-win basis, in line with the otherwise noble objectives of
indigenisation and empowerment.
Turning to the issue of foreign-owned banks Gono said: “Of particular
concern to us as monetary authorities would be attempts to forcibly push the
envelop of indigenisation into the delicate area of banking and finance.
“To this end, we call upon those with interests in the financial sector to
approach the central bank with their applications for new banking licences.
Generally, we believe that 27 years down the road, there should be no free
lunches,” said Gono in the 2007 statement which he said is still valid
advice.
Government, however insists that indigenisation should take place at 51
percent across the board but the flip side is that at this rate only a few
will benefit from the national programme.