Eric Bloch: Kasukuwere’s policies destructive
http://www.theindependent.co.zw/
Thursday, 10 February 2011 16:55
Eric Bloch
THE Minister of Youth Development, Indigenisation and Empowerment has not
been living up to his first name as far as the economy is concerned for, if
anything, he has been acting more like a destroyer than a saviour. That must
be so when one observes how steadfastly he is determined not only to prevent
the economic recovery critically needed by Zimbabwe, but also to destroy
almost all substance of such economy as does exist.
When in February last year he gazetted the Indigenisation and Economic
Empowerment Regulations, he was immediately confronted with a flood of
authoritative representations as to the grievous consequences and
repercussions of those provisions. The representations flowed not only from
those who would be obliged to part with control of the enterprises they had
established and developed, but also from many in the indigenous population.
They were aware that the method of implementation of the critically needed
indigenisation and economic empowerment would have a deleterious impact upon
the economy, and therefore upon the population.
Like inputs were forthcoming from many international monetary and economic
organisations who sought to give unbiased, constructive advice for the
achievement of a viable, virile economy which would be supportive of the
restoration of wellbeing to an impoverished, suffering, populace.
Similarly, the many who were contemplating substantial investment in
Zimbabwe made it categorically known that pursuit of the minister’s policies
would create an impeachable barrier to such investment.
However, the minister (strongly supported by the president, the politburo,
war veteran organisations, and activist groups) was resolutely deaf to all
such representations for a very considerable period of time. Ultimately, as
the pressures intensified, he created a façade of 13 sectoral boards (the
composition thereof being wholly his appointees, albeit with a pro forma
inclusion of some private sector representatives). Those boards were
mandated to:
* Consult with respective sectors and make appropriate recommendations
regarding aminimum net asset value above which businesses would have to
comply with the regulations;
* Recommend prescribed levels of indigenised equity participation,
maximum time periods for compliance, and allied issues; and
* Recommend policy strategies to overcome specified barriers and
challenges.
Last week the minister announced that the sectorial boards had completed and
submitted their reports, which his ministry had analysed and submitted to
cabinet. Amplifying, he specifically addressed the mining sector, deferring
statements on other sectors. In contemptuous disregard for all private
sector representations, and in particular wholly ignoring all submissions of
the Chamber of Mines, he announced that:
* It is required that 100% of alluvial diamond mining shall be held by
indigenous shareholders, and a minimum of 51% of all other mining operations
must be so held;
* Share ownership trusts operating for community benefit shall be
entitled to 10% of pre-tax profits of all mines;
* At this stage no credit would be given for offset against prescribed
indigenous shareholdings in respect of expenditures on community development
and services;
* A sovereign fund is to be created (undoubtedly by levies on mining
entities!);
* Timeframes for compliance will be prescribed.
Save for anyone intentionally oblivious to the consequences of those
draconian regulations (in other words, the minister and his myopic cronies),
it was immediately abundantly clear that the cabinet in general, and the
minister in particular, have rung the death knell for the Zimbabwean mining
sector.
Realistically, there can be no expectation that any non-indigenous, whether
Zimbabwean resident or otherwise, will invest into mining development or
operations and provide essential technology-transfer if they are obligated
to be minority equity participants, with absolute subordination of control
to the majority shareholders.
Expecting investors to provide substantial capital and expertise without any
authority over its usage is naught but foolhardy. Effectively, the minister
and cabinet have declared that Zimbabwe does not wish for investment, save
and except if by indigenous investors.
That declaration is particularly appalling as the extent to which indigenous
Zimbabweans have the resources to invest is miniscule.
Whilst there are some with real wealth, they are very few and far between,
out of the more than 11 million of Zimbabwe’s indigenous population. (It is
probably wholly coincidental that many of those few who are endowed with
investment resources are politicians, or connected to the politicians!).
One must unavoidably ponder whether the real motivations for the stance on
indigenisation evidenced by the minister and his colleagues is not primarily
driven by avaricious desires to enhance the wealth of the few, concurrently
with creating a perceived vote-gathering inducement for the next elections.
Already one can envisage the forthcoming recurrent political posturing and
statements that Zimbabwe’s immense economic ills, and the pronounced
national poverty and suffering, is exclusively a consequence of evil and
malicious machinations of the former colonialists and their friends.
This, it is claimed, is evidenced by the “illegal international sanctions”,
but the caring government is compensating the oppressed and distressed
Zimbabweans by giving them the businesses!
Unless and until the cabinet thinks again (if it is able to do so), the
considerable investments that are a prerequisite for economic recovery will
not be forthcoming.
Instead, the positive but very tentative moves towards that recovery
achieved over the last two years will be reversed, poverty will become ever
greater, and such economy as does exist will be considerably destroyed. By
obdurately disregarding the constructive inputs of the Chamber of Mines, and
presumably of other private sector representations to the other sectoral
boards, the “destroyer” has struck again!