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.
COMMENTS
yet another dim journalist who knows nothing about business or economics giving advice.
There is investment and a difference between foreign ownership and foreign investment which a number of dim locals find hard to grasp.
Companies that invest in Germany don’t necessarily expect to own the business, there is really insufficient space to try and educate the journalist.
Seems like you have been posted here by CIO.
Nobody will believe this rubbish you write.
@apolitical – You want to sound knowledgeable but you are the dim one. We understand what the journalist is saying – the country needs foreign companies to invest, create jobs etc, SIMPLE. Don’t know why you bring up issues about ‘ownership’
ah, I get what you mean about ‘ownership’. Well, the answer that addresses what you want to complicate is this – let he or she who invests more own or control the business. If the foreigners have the money to do so,(through good policies) let us encourage them to do so, in order to create jobs and have taxes for the state coffers. Addresses both foreign ‘investment’ and ‘ownership’ you wanted to complicate.
OMG did you really write all that by yourself. What a plonker! The difference is that foreign investment in Zimbabwe means 51% is owned by a Zanu PF thief who has contributed nothing. GET IT???
No you’re the dim one apo, though I suspect it is on purpose. the article is a true reflection of the last several years, the quotes are accurate and to say otherwise is dishonest. I tend to dismiss your comments hence why I didnt respond to your justification that sanctions were illegal. But please continue I’m sure it gives us a good laugh…..there’s not much else to smile about!!!
@ Jongwe
Why were the sanctions illegal? They were targeted at people who violated human rights and stole elections. Is that not illegal?
@Will the Doctor
Several weeks ago I asked what was illegal about the restrictions some countries have applied certain people and companies in Zimbabwe……Apo gave me the most preposperous reasons I didn’t bother to respond.As you missed it perhaps he would like to enlighten us again!!!! its real funny.
Foreign companies that establish branches in Britain, or buy British companies, certainly do expect to own and control the business.
Ford, Honda, Nestle are examples. There are hundreds.
This is quite different from buying a few shares in a foreign company on a stock exchange.
The key point is control over the company’s policies. With only a 49% share, you do not control business decisions.
@ apo I am amazed how you seem to be the first person to respond to these articles .Why waste your time apo… the herald seems to be the paper for you.Read it and be stimulated for a change.
Mugabe seems to be getting revenge only on Zimbabweans. His activities are less than a flea bite to the British and not even that to the Americans.
ZANU and its supporters are truly from a different planet. Unfortunately for us ,they had to land on Zimbabwe.
What do you expect from a band of terrorists . All they know is the power of the gun. That’s all they have ever known. You can’t sit and a demon
Soon, there won’t be anyhting to indigenise!!!
Nothing said on the failure of land ‘reform’ I notice. Where’s the wealth? What nothing? Just like every other African country?
“APO THE DIM”.
Handei narwo. Indigenise everything even the Chinese we now see all over the place. Ndezvedu zvese, hapana chinosara