via Indigenisation a ‘losing policy’ – DailyNews Live by Conrad Nyamutata 6 MAY 2014
President Mugabe and his Zanu PF party have been bad for foreign investment to this country over the past 14 years.
To Mugabe and his party, foreign investment did not seem to matter much.
Once land was redistributed, Zimbabwe would be self-sufficient. The discovery of one of the world’s largest deposits of diamonds enhanced the thinking that Zimbabwe did not need the rest of the world.
Former Mines minister Obert Mpofu once said Zimbabwe would be self-sufficient because the country expected $2 billion from diamonds to boost to its annual budget.
So far, this has proved overly optimistic. Even when the benefits of diamonds are fully realised, foreign investment would be significant for job creation and taxes as it has been to rich economies.
In 2012, Britain appealed to and celebrated when General Motors announced it would produce the next version of its best-selling European compact car in the UK, choosing it over Germany.
As such, developed countries still recognise the importance of foreign investment.
Here, however, poor an economy as we are, Mugabe and Zanu PF have historically shown antipathy to foreign investment as illustrated by hostile policies and threats to foreign-owned companies.
In December 2010, Mugabe stated: “Why should we continue having companies and organisations that are supported by Britain and America without hitting back? Time has come for us to take revenge.”
In March 2011, during the tenure of the coalition, he repeated the threat. Addressing a rally in Harare, Mugabe said: “It is time now to take action and to start looking at these companies we must take over.”
A spokesperson for the British Foreign Office responded then: “This action is irresponsible. It will damage Zimbabwean livelihoods and deter much-needed foreign investment at a time when the Zimbabwean economy is starting to recover from the disastrous effects of Mugabe’s earlier economic policy.”
But Mugabe made similar threats when launching the Mashonaland Central Community Share Ownership Scheme in November 2012, and at the burial of former freedom fighter Mike Karakadzai in August last year. These statements would not have helped to encourage any potential investor.
The “policy” of indigenisation has proved hostile to foreign direct investment. Direct or personal violence through farm invasions and political clashes has played a part in discouraging investors.
Indigenisation brings another form — “structural violence”, “the cause of the avoidable difference between the potential and theactual, between what could have been and what is.”
Here, the “actual” is widespread unemployment, poverty and other negative effects on vital institutions. The “potential” is what foreign investment could bring.
Mugabe, however, now seems to recognise the significance of foreign investment. After outlining the purposes of indigenisation at the ZITF recently, he said: “With this clarification, let me take this opportunity to invite potential investors to come and do business in Zimbabwe in which there is huge potential for joint venture partnerships between investors, manufacturers, industrialist and the public sector. We want investment from abroad.”
Nonetheless, indigenisation still lacks the clarity he claims. To speak of a “policy” is lending a sense of coherence to a project with no policy document.
Mugabe and his ministers have been making different statements resulting in contradictions and ultimately confusion.
Information minister Jonathan Moyo says indigenisation is a “winning policy” which should not be changed. It may have won Zanu PF votes in the last election. But the country is not winning any investment or finance to lift the economy from the doldrums.
Finance minister Patrick Chinamasa has struggled to secure finance from International Financial Institutions (IFIs) because lenders want to see clear policies with potential to revive the economy so Zimbabwe is able to pay back the IFIs.
In whatever form it is currently, indigenisation has proved a “losing policy,” at least to the country.
Zanu PF needs to understand that changing course when something is not working is not a sign of weakness.
There is honour in admitting mistakes.