via ‘Paltry budget allocation threatens indigenisation’ – DailyNews Live 24 JANUARY 2014
The paltry cash allocated to the National Indigenisation and Economic Empowerment Fund threatens the government drive to force foreign firms to give 51 percent of their shareholding to locals, a Zanu PF lawmaker has said.
The National Indigenisation and Economic Empowerment Fund was allocated $2 249 000 by Finance minister Patrick Chinamasa in the 2014 spending plan against a budget request of $10 million, Zanu PF Gokwe-Nembudziya MP Justice Mayor Wadyajena told Parliament on Wednesday.
The Indigenisation and Economic Empowerment regulations — Statutory Instrument 21, gazetted by former Empowerment minister Savior Kasukuwere in 2010, requires foreign companies to localise or indigenise “51 percent of their shares or interests therein” within five years in all business sectors.
The drive targeted foreign mines first, and has now moved to the banking sector.
“The huge shortfall between the request and the actual amount released is set to have a negative impact on the implementation of the indigenisation programme,” Wadyajena said.
“Out of the $2,2 million allocated to the Fund in 2013, only $637 989 was released by Treasury, resulting in the organisation accumulating debts of over $1 million which have been carried over to this financial year. In effect, this means that only $1,2 million will be available for this year’s operations.
“This must be considered against the background that the focus in 2014 is to enhance economic empowerment opportunities for indigenous Zimbabwean citizens through the provision of project financing to achieve 51 percent indigenous shareholding in most of our economic sectors with full compliance in the reserved sectors.”
Wadyajena said the small allocation provided to the Fund, coupled with the absence of the requisite approval from the minister of Finance to authorise National Indigenisation and Economic Empowerment Fund (NIEEF) to collect an ‘Empowerment Levy’ will negatively impact on National Indigenisation Economic Empowerment Board (NIEEB)’s empowerment programmes for 2014.
“The absence of the empowerment levy will make it impossible for NIEEF to mobilise funds for economic empowerment as a robust and well capitalised NIEEF is vital for the full realisation of the indigenisation and economic empowerment agenda,” he said.
He said the Youth Development and Employment Creation Funds were also allocated insufficient funds.
The two funds were allocated a combined total of $1,2 million.
“The funds will be distributed equally among the 10 provinces translating to $120 000 per province, to be distributed evenly to their respective districts,” Wadyajena said.
“Each district will eventually receive less than $20 000. Considering the amount of interest from the applicants, and the burgeoning demand for the funds from promising entrepreneurs, the allocation is likely to have a low impact, resulting in many youth projects remaining unfunded.”
The Zimbabwe Youth Council and National Youth Service were provided with $988 000 and $700 000 respectively, yet the two institutions were saddled with a burden of “accumulated debts” carried over from 2013 and emanating from the non release of voted funds from Treasury.
“The National Youth Service also has additional debts from bills charged for utilities like water and electricity. It owes various creditors $250 000 while the Zimbabwe Youth Council owes $90 000. The outstanding bills have to be paid from the current budget, thereby affecting programmes,” he said.