Revisiting Indigenization

　　Since 1980 when Zimbabwe gained its independence，its politicians and the majority of the population have pressedfor substantive indigenous ownership of commerce， industry，mining and other economic sectors. “Indigenous” is definedas any Zimbabwean citizen who has been the victim， or whoseancestors were victims， of discrimination on grounds of race.None can credibly say that there should not be facilitationof significant indigenous economic activity， encompassing ameaningful majority of the populace. The contemptible， unjustand inhuman barriers to the indigenous population duringthe decades preceding 1980 were highly unjust， and morallywrong. However， on both political and moral grounds， thepost-independence governments have progressively pursuedeconomic indigenization， but toward minimal， if any， economicor popular benefit. Instead， for some considerable time， thefocus was confined to powerful industrial and commercial enterprisesand all too often， the equity that was indigenized waseither acquired by government controlled community-servicetrusts， by the politicians themselves， or by those well-connectedto such politicians.

　　The initial legislation prescribed that not less than 51percent of the equity of any enterprises with net assets inexcess of $500，000 had to be possessed by indigenousZimbabweans， but subsequently the prescribed net assetbase was legislatively reduced to $1， resulting in each businessbeing subject to majority indigenous ownership. Not onlywas this economically negative， but in many instances therewere no assurances that non-indigenous stakeholders forciblydisinvested of their equity would receive fair and reasonablecompensation. As a result， the non-indigenous in Zimbabweand prospective foreign direct investors were put off. Thisprecluded Zimbabwe from achieving its very critical economicrecovery and growth. Almost no investor was willing to provide100 percent of funding， effect technology， trademarksand patents transfers， only to be reduced to minorityownership and become virtually voicelessin the control and management of the enterprisesin which they would have invested.

　　Then， in late 2013， instead of the legislationbeing confined to specific economic fields， it wasextended to include any enterprises whatsoever，including all retail operations， such as grocerystores， laundries， small clothing outlets and the like.However， not only has that indigenization requirementnot， as yet， been enforced， but progressivelythe National Indigenization and Economic EmpowermentBoard (NIEEB) has granted partial or total exemptions tolevels less than 51 percent， and this applies not only to therecent small enterprise legislation， but also to many otherenterprises.

　　While significant exemptions are increasingly common，the influence the government and certain wellconnectedindividuals carry over the business environmentcontinues to dissuade business-owners and would-beinvestors. The majority of whole or partial exemptions aregranted to ventures that are owned by investors from Asiain general， and China， India， Singapore and Malaysia inparticular， motivated by the strong diplomatic relationshipsbetween Zimbabwe and those countries.

　　Although indigenization legislation will remain on thestatute books， there are clear indications that much ofthe content was motivated as a vote-gathering motivatorahead of last year’s presidential and parliamentary elections，with an undisclosed intent that subsequently therewould be some revision and easing of the legislation. That isoccurring， but only progressively over a period of time， forgovernment is fearful that if it granted all modifications tothe legislation in one fell swoop， that would be interpretedby the populace as governmental admission of error. Toachieve far ranging， viable， and economically beneficial economicindigenization， the state must abandon its unreasonable，forced provisions， thereby reassuring non-indigenousinvestors of investment security.

　　Concurrently， the state must re-establish a medium-tolong-term loan funding facility， providing requisite start-upcapital to those of the indigenous populationwho desire to establish constructive， viable businessenterprises， as well as offering tax-based incentivesto do so. Fortunately， there are signs thatthe government is beginning to recognize thisneed. FDI is a foremost key to Zimbabwean economicwellbeing， and， as the government slowlymodifies and adapts its indigenization laws andpolicies， such investment is likely to be progressivelyforthcoming， especially so from Asia in lightof the sound diplomatic relationship betweenmany Asian countries and Zimbabwe.