Editorial Comment: Policy review will unlock Zim-Asset potential

By IAfrica
In Zimbabwe
May 26th, 2014
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THE proposed amendments of the Indigenisation and Economic Empowerment Act to facilitate sector-specific implementation is providential and is a boon to the successful implementation of Zim-Asset, Government’s five-year economic blueprint for the period 2013 to 2018. After the review, which is already underway, the progressive indigenisation and empowerment policy will be implemented through the Production Sharing Model (PSM) and the Joint Empowerment Investment Model (JEIM).

The former (PSM) is a broad cover for an assortment of production sharing agreements signed between governments and extraction companies concerning how much of a resource extracted from the country each will receive.

Under the new model, Zimbabweans will retain 100 percent ownership of mineral resources and agricultural land; while under the latter, outside mining, agriculture and particular tourism investments, indigenous Zimbabweans will be encouraged to enter into joint venture partnerships to generate capital to build wholly Zimbabwean-owned enterprises.

As such investors will be in a position to recover their initial capital investment, an appropriate return on investment and operational costs before the sharing of production outputs or profits.

The proposed amendments are a significant departure from the previous Government position that saw some ministers insist on a blanket approach in which foreign companies would have ceded controlling stakes to indigenous Zimbabweans, regardless of the sector they were operating in, i.e. whether their businesses were extractive or service-based.

The beauty of the new approach, which is not a climbdown by the way, but rather a refinement of the policy to remove grey areas, is that Zimbabweans will retain 100 percent ownership of their resources with investors getting returns on their investment is progressive.
This creates a win-win situation that bodes well for the successful implementation of Zim-Asset.

The amendments should remove some of the confusion that saw Government ministers contradict each other on the noble policy, a development that prompted President Mugabe to clarify it on numerous occasions.

The President has long made it clear that the indigenisation and economic empowerment laws were not cast in stone.
For instance, in his address during the 34th independence anniversary celebrations at the National Sports Stadium last month, the President said the indigenisation and economic empowerment policy was not cast in stone and foreigners could hold majority shareholding in any enterprise depending on the nature of their investment.

“Now in implementing the indigenisation programme, there has been some confusion. We have said where big companies have been established mainly on the basis of our natural resources, in mining, in agriculture, manufacturing, we demand that Zimbabweans — either through the Government or through our people — should have 51 percent or not less than 51 percent.

“But if a company is established and is getting raw materials from outside and the raw materials are not Zimbabwean, take the case of aluminium, we don’t have raw materials for it; if the raw materials come from Tanzania, which has it and if a company establishes itself here in Willowvale, we cannot demand 51 percent.

“You can negotiate with the company in the usual way what percentage we should have and it’s up to the company and yourselves establishing the percentages respectively you should share.

“But we cannot demand 51 percent (where) we don’t have materials. These materials are coming from outside and the machines are also coming from outside and we have no basis on which we can demand 51 percent except to say the locality of the company is ours,” he said.

The clarification should put paid to the attempts by some reactionary forces to use indigenisation and economic empowerment as bogeys to “scare’’ away investors.

It is time investors and indigenous Zimbabweans create win-win partnerships in line with the new models.

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