A few weeks ago this Zanu PF government carried out a major
concession to its indigenisation law; instead of selling the 51% shares the
foreign investors will be allowed to apply for exemption in which they can sell
reduced shares down to zero and pay instead the empowerment levy. The Levy will
be worked out on sliding scale in inverse proportion to the shares sold.
To the Zanu PF hardliners empowerment levy was a major climb
down for them but even they had to admit that since the passing of the
indigenisation law in 2008 foreign investors have definitely shied away from
Zimbabwe – we must let the numbers speak for themselves.
“Zimbabwe’s Foreign Direct Investment (FDI) inflows were a
measly $105 million (2009), $166 million (2010) $387 million (2011), $400
million (2012), $410 million (2013) and $545 million (2014),” reported Ken
Yamamoto, Japanese researcher on Africa, in a recent article.
“Compare this with Mozambique which got FDI as follows in the
same period: $898 million (2009), $1 billion (2010), 3.5 billion (2011), 5.6
billion (2012), $6.1 billion (2013) and $4.9 billion in 2014. The average FDI
that has gone into Mozambique during this period is roughly equal to Zimbabwe’s
entire annual budget.
“Zambia has also fared far better than its southern
neighbour, receiving in the same period the following FDI amounts: $426 million
(2009), $634 million (2010), $1.1 billion (2011), $2.4 billion (2012), $1.8
billion (2013) and $2.5 billion (2014).”
The most notable difference between Zimbabwe and its two
close neighbours is that they, like almost all other countries in the world,
they do not have obnoxious indigenisation laws forcing the would-be investor take
on a parasitic local partner (s).
Of course all the local partners were going to be Zanu PF
loyalists given it was the regime who would allocate the local partners. No
doubt Zanu PF hardliners considered themselves front runners in the selection
of local partners. Naturally they were disappointed that the foreign investors
would now be paying an empowerment levy which would be paid to government over
which they, as the potential local partner would have no special claim to.
Still they will have a better chance to a share of the
empowerment levy than if the foreign investors paid it all as tax!
Most, if not all, the FDI stated above would have been is
government related projects, parastatals or special projects in which
government could not force the investor to sell 51% shares as required by law.
So since the passing of the law very few local partners would have benefited
from the passing of the law. The hardliners now hope the concession would
finally open the flood gate of FDI!
"I have not received any (requests of firms seeking exemptions),
these are issues dealt by the various line ministries, but so far I have
not heard of any companies that have requested exemptions," Minister for
Youth and Indigenisation, Patrick Zhuwao admitted.
The Minister and Zanu PF hardliners were being naïve if they
really expected investors to be impressed by the meaningless concession. The
empowerment levy is an unknown tax and the fact that it is being imposed as
some form of punishment for refusing to take on a local partners makes it
worse; it will always be the sword of Damocles hanging over the investor’s
head. Considering one is dealing with a regime renowned for disregarding its
own laws and treaties the risk of losing one’s business and investment become unacceptably
high.
The only area where Zimbabwe’s indigenisation law has worked
is in the mining of alluvial diamonds in Marange and Chiadzwa but only because
the business is unique in that it is low investment with a high value product
that can be sold on the black market. The local partner who owns the mining
concession and the foreign investor doing the mining share the spoils and do
not pay any other taxes or levies and no one else, not even government
authorities know the quantity, quality, value of the mined diamonds or where
they being sold.
The indigenisation law was passed to placate Zanu PF
hardliners who know the huge fortunes being made in Marange and are naturally
bitter they have been left out. Of all people Mugabe would know that if
Zimbabwe had attracted the same level of FDI as Mozambique or Zambia had done
since 2008 when the indigenisation law was passed then Zimbabwe’s unemployment
rate would not be the nauseating 90% plus they are today and collected revenue would
be a lot better than the measly $3.8 billion. Mugabe has forgone the new jobs,
increased revenue, etc. to press foreign investors to take on his hardliner
friends as partners.
Zimbabwe’s 2008 indigenisation law was passed to placate Zanu
PF hardliners who were left out of the looting in Marange but because no
foreign investor is willing to take on these parasitic hardliners as partners
the whole nation is now being held hostage to this law. Millions are being denied
employment opportunities FDI would bring because the investors are refusing to
take Zanu PF hardliners as local partners!
No doubt Mugabe, in his own good time, will have to revisit
the indigenisation law as a result of increased pressure from his hardliners
who have not been spared the hardship of the worsening economic situations with
a view of making further concession to attract more FDI.
Even if Mugabe finally conceded to having the obnoxious
indigenisation law scrapped no foreign investor would be daft enough to trust
him to keep his word especially after all the hype that accompanied the passing
of this law and all the palaver, dodging and weaving resisting it scrapping.
The only way Zimbabwe is going to convince the sceptic world
that the indigenisation law an act of madness by a madman and not the way
Zimbabweans would ever want to do business is for the nation to implement the
democratic reforms necessary for free, fair and credible elections. In the
elections the good people of Zimbabwe will demonstrate their disapproval of
Mugabe and all he stands for by rejecting him and his party with a resounding
electoral defeat.
The indigenisation law is now a mile stone round Mugabe’s
neck, he is disparate for FDI to revive the economy by will not get any as long
as he remains in office. It does not have to be a mile stone round the nation’s
neck too; we only need to vote him out and he and his mile-stone can sink alone.
So according to Yamamoto's figures above Zimbabwe got a total of $2.013 billion FDI in the six year period 2009 to 2014 compared to Mozambique's $ 21.998 billion in the same period. Zimbabwe got less than 10% or 9.15% to be exact of the FDI Mozambique received. This is a lot of ground and it may take a generation, 50 years, or more to catch up.
ReplyDeleteWhat makes this even more painful to swallow is that we have lagged behind for selfish reasons. Why should the whole nation suffer because no foreign investors will be allowed in the country unless they agree to take on a Zanu PF parasite? Until President Mugabe has secured a steady income for his corrupt and wasteful cronies we are all to be denied any hope of a normal job and a stable future. This is not right!
President Mugabe passed the indigenisation law to please his cronies, to assure them that they too can have a rich harvest where they have neither sown nor laboured just as he and a few select other are doing in Marange. Those hardliners are now very hungry and angry and they are circling him like hyenas; he must deliver or they will have him for dinner!
Yes Mugabe's indigenisation law now hangs round his neck like a mile stone he cannot dare take it off because his hardliners cronies will not let him but has to take it off because it is destroying the national economy. The nation has no choice but to cast him and his mile stone necklace over board.
Why indeed should the whole nation sink to gratify the folly and greed of one man and his cronies? Indigenisation law is unworkable and since Mugabe will not throw it out then we must throw him and his law out!
It is bad enough that Zimbabwe has lagged behind other nations in terms of reduced FDI and development ever since Mugabe started his violent seizures of white owned farms, which is the forerunner of the indigenisation law. It is tragic that Zimbabweans have said very little about this for all these years. It is heartbreaking that this situation is being allowed to continue for even one more day!
DeleteIt is going to take a generation, at least, to catch up with Mozambique on the ground we lost these six years alone. Some people have never had a formal job for ten years or more. The longer it is going to take to recover the greater the number of people who will NEVER EVER have a formal job. They are condemned to kiya-kiya all their lives!
What will it take to finally spur this nation into action?
20 ministers snubbed an indigenization indaba that was convened by the National Indigenization Economic Empowerment Board to engage them on the implementation of the controversial In-digenization Act.
ReplyDeleteThe obnoxious law should have never been passed the more Mugabe tries to pretend there will ever be any foreign investors dumb enough to accept a Zanu PF “blood sucking parasite” partner the more he will only look stupid.