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Indigenisation not new

President Robert Mugabe is allegedly trying to use indigenisation to lure votes in the country’s next elections. If that is true, then it is nothing new because Mugabe announced nearly 10 years ago that his government was introducing a new indigenisation bill that would require companies to allocate a minimum of 20 percent shareholding to their workers.

The only thing that was supposed to make Zimbabwe cringe, according to the United States embassy was that Mugabe’s policies had already produced farms with no crops, gas stations with no gas (fuel) and banks with no money.

Zimbabwe has now upped the stake to 51 percent.

 

Full cable:

 

Viewing cable 03HARARE1605, Industry Braces for Forced Indigenization

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Reference ID

Created

Released

Classification

Origin

03HARARE1605

2003-08-13 09:57

2011-08-30 01:44

UNCLASSIFIED

Embassy Harare

This record is a partial extract of the original cable. The full text of the original cable is not available.

 

130957Z Aug 03

UNCLAS HARARE 001605

 

SIPDIS

 

STATE FOR AF/S

NSC FOR SENIOR AFRICA DIRECTOR JFRAZER

USDOC FOR 2037 DIEMOND

PASS USTR FLORIZELLE LISER

STATE PASS USAID FOR MARJORIE COPSON

 

E. O. 12958: N/A

TAGS: ECON EINV PGOV ELAB ZI

SUBJECT: Industry Braces for Forced Indigenization

 

 

1. Summary: Zimbabweans reflexively cringe when their

near-octogenarian president boasts of a new economic

initiative. Robert Mugabe’s policies have already

produced farms with no crops, gas stations with no gas

and banks with no money. Although still just an idea

percolating in ZANU-PF circles, Mugabe might next use

corporate indigenization to justify a ZANU-PF grab of

certain remaining Asian- and white-owned businesses. End

Summary.

 

2. In his July 22 address to Parliament, Mugabe said a

new Indigenization Bill would ensure that “companies

allocate a minimum 20 per cent shareholding to their

workers.” At first glance, Mugabe appeared to advocate

an employee profit-sharing plan for all businesses

operating here. Based on initial deliberations in

Parliament, however, it seems that the ruling ZANU-PF

party seeks to limit the proposed law to minority (i.e.,

Asian- and white-owned) businesses. Furthermore, the

measure would require these businesses to accept twenty

percent black ownership, but not necessarily by workers.

 

CZI’s waning credibility

————————

3. Following up on Mugabe’s address, the Confederation of

Zimbabwe Industries angered member companies by asking

them to complete a questionnaire about black

participation on their boards. Minority business-owners

accuse CZI President Anthony Mandiwanza of deserting

their interests and colluding with the Government trying

to expand his own holdings. (Takepart Enterprises, co-

owned by Mandiwanza and three other ZANU-PF heavyweights,

has recently acquired stakes in various firms.) Because

Mandiwanza earned accolades throughout the business

community for standing up to the GOZ on price controls,

this recent turn of events is unfortunate.

 

4. While it is too early to tell what form the new law

might take, minority business-owners fear the fervor of

fast-track land reform swinging toward them. Mugabe’s

controversial land redistribution resettled many small-

scale black farmers, but also enabled ZANU-PF higher-ups

to extrajudicially seize many commercial farms. Business-

owners dread being pressured to accept these political

strongmen as co-owners, especially in non-listed family

operations.

 

Comment

——-

5. To be sure, indigenization of the private sector is a

worthy post-colonial objective. Blacks comprise 99

percent of Zimbabwe’s population. In fact, Zimbabwe has

made admirable strides to foster black business-owners

and CEOs over the past 10 years, so much so that Asian-

and white-company heads are an increasing rarity. Still,

after the GOZ policy of political favoritism in land

redistribution, concern that the Indigenization Bill

could degenerate into political cronyism is not

unwarranted. As chances for talks with the opposition

Movement for Democratic Change mount, the GOZ also seems

to be accelerating its seizure of remaining white-owned

farms. In the worst scenario, leaders might regard the

next months as their last chance to pilfer.

 

Whitehead

 

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