Block failed farmers from mines: Gono
01/08/2011 00:00:00
by Gilbert Nyambabvu
CENTRAL bank chief, Gideon Gono has said failed farmers must not benefit
from the takeover of foreign companies under the country’s indigenisation
programme and warned the government against a rushed and wholesale transfer
of equity to locals.
In a statement on indigenisation accompanying his monetary policy review
last week, Gono – who has previously stated that the current approach would
only benefit the well-connected few — dismissed suggestions that he was
against the programme.
“It has been suggested that the Reserve Bank of Zimbabwe, in particular this
Governor, is against the indigenization and economic empowerment
legislation,” Gono said.
“This of course is absolutely nonsensical. To begin with, the Governor is
not a Member of Parliament, and, therefore, has no jurisdiction or powers to
reverse legislation formulated, debated and passed by the country’s August
House.”
Gono urged a review of the current approach to indigenisation and insisted
that beneficiaries of the country’s land reforms should be kept away from
companies acquired under the programme.
“There ought to be a deliberate bias towards or in favour of those who have
not benefited from other Government programmes before, so that a broad-based
empowerment
model can be achieved,” he said.
“It would be wrong to continue to concentrate new and scarce resources and
opportunities on a few individuals, some of whom are even struggling to
utilize what they already have to the economy’s advantage.”
The RBZ chief said government must especially ensure that failed farmers are
blocked from the country’s mines and other economic assets targeted for
indigenisation.
“This economy is littered with cases of productive farms lying idle, farms
which have been turned … Our view is that it is time we became tough with
economic non-performers in whatever field they are,” he said.
“Where an individual has benefited from the historic Land Reform Programme,
and was allocated a farm(s) which they are not making full use of, those
people, in our view, should not be allowed to go and multiply that failure
into other sectors such as mining, manufacturing and many others, unless
that beneficiary is starting his or her own entity afresh!”
Gono also repeated his criticism of the equity-based approach being pursued
by the government arguing it would only benefit the privileged few and
potentially harm the country’s economy.
Under current indigenisation laws, foreign companies are required to
transfer at least 51 percent of their shareholding to locals.
However, Gono expressed reservations over the approach.
“Recognizing the fact that that only a few can fit or benefit from the
equity-ownership model (currently) being pushed the Central Bank is
advocating for an (alternative) which is premised on the participation of a
broad spectrum of the population, through the supply and distribution chain
of the country’s economy, as opposed to primarily focusing on equity
holdings,” he said.
“The model also envisages a gradual approach to attainment of the company
ownership thresholds by indigenous Zimbabweans, in a manner that ensures
sustainable empowerment, inflows of much-needed foreign capital and minimal
disruption to economic activity.”
The RBZ governor added that the equity transfer model was also not suitable
under Zimbabwe’s current economic situation.
“Equity or shareholder benefits also only when dividends are declared, which
is normally annually, bi-annually or even at longer intervals, thus
depriving indigenous people of much-needed immediate and basic
requirements,” he said.
“The situation is worse in an environment like ours, where most companies
are making losses or insignificant profit levels.”