via Indigenisation – the how and not the what | The Zimbabwean by Vince Musewe 04.06.14
Most countries have some protection of their strategic economic assets or sectors; our problem is the how – not the what.
I am happy to see the dialogue about indigenisation is beginning to take a new direction and I suspect it has dawned on Zanu (PF) that, although it was a powerful message during elections, the economic realities require a different strategy. That has always been the case with politicians. Election campaigns are not necessarily based on what will happen once they are in power. Slogans are mere tools, a means to political power – and that’s where they stop.
It was Winston Churchill who said that criticism may not be agreeable, but it is necessary. It fulfils the same function as pain in the human body. It calls attention to an unhealthy state of things.
In that vein, we must continue to look critically at what the government says and does because ultimately, if our country is to develop and live up to its full potential, it can only do so based on taking into consideration our collective views – not only those of politicians.
There have been calls to completely repeal the indigenisation laws. I do not agree with that view. Most countries have some protection of their strategic assets or economic sectors. Our problem is the how – not the what.
In my opinion, it is the responsibility of any government to promote equitable economic growth and opportunity. It is also their responsibility to ensure that the country benefits most from its natural assets. This can be achieved in many ways that do not stifle foreign investment.
As I have said before, indigenisation can be an important tool to facilitate equitable economic opportunity and growth so that we can avoid skewed income distribution and the existence of a first economy where economic power is concentrated, and a second economy characterised by poverty. But it is not the only tool. This means we need a cocktail of complementary economic tools and policies that ensure that our country develops to the benefit of all our people.
Given the high employment and low investment levels prevailing now, our priority must surely be to increase investment, localise production of what we consume, add value to primary products, increase tax revenues, rehabilitate our infrastructure and generate employment. Local ownership can only be pursued where this does not contradict our economic imperatives.
We have to sacrifice something in order to kick start our economic revival. That sacrifice requires us to be pragmatic about localisation of ownership – especially where most people can hardly afford to pay fair value.
This is now beginning to happen in the financial services sector, where we have seen several indigenous banks selling majority equity stakes to foreigners. The thinking behind this is that it is more beneficial to the economy as a whole to be liquid, than to insist that a few of us own majority equity stakes in non-viable institutions.
We must extend this same thinking to agriculture. There is just too much emotional baggage and vested interests about land and I am anxiously waiting to see some sense prevail there. We must pursue food security first. This requires that we utilise all our human and natural assets. From there, we must give title to all land owners, but only after removing the conflict around certain properties.
The “new” indigenisation model being touted by Jonathan Moyo still leaves too much room for manoeuvre and corruption. My basic questions are: who determines the appropriate return on investment? Who determines the ceiling of operating costs and for how long? Who makes the major management decisions?
I still need to examine this “new” model. From the outset, it appears we have a case of government coming up with another “solution” without anticipating the unintended consequences. A government must never be allowed to prescribe investment returns or operating costs. This goes against the whole idea of free enterprise and investment practice.
Conflicting vested economic interests of ministers and other government officials – and the public sector in general – will continue to lead to inconsistent and opaque policies and encourage corruption.
Our government interferes too much in business and the economy and it has become a spoil sport as opposed to being a facilitator.
In the Zimbabwe we want to create, you are either in government or in business. We cannot have civil servants masquerading or moonlighting as businessmen while claiming to represent the interest of the people.
The struggle continues! – Vince Musewe is an economist and author based in Harare. You may contact him on email@example.com