Comrades, you`ve got it all wrong on indigenization

Indigenisation Minister Patrick Zhuwawo

If the Zimbabwean government earned a buck every time the word indigenization was mentioned, the government probably wouldn’t be struggling to pay civil service salaries. That is just how prominent the issue of indigenizing the economy has grown in Zimbabwe over the years. From the time of minister Saviour Kasukuwere vociferously pushing for the nationalization of banks and mines, to the somewhat toned down era of Francis Nhema, it appears we are headed for exciting times, with new indigenization minister Patrick Zhuwawo. His recent showdown with finance minister, Patrick Chinamasa over the implementation of the policy shows how crucial this policy is in the broader national context, but  even more, how incoherent the government`s stance on this issue is.

A logical look at the issue reveals truths that may be unpalatable to some. I put it to you that, indigenization and empowerment is not taking what someone else has worked hard to build in the past and simply giving it to someone else to run.  That simply would promote ‘patrimonial capitalism’ and do the economy a disservice. The issue of indigenization is a thorny issue and evokes a great deal of emotion. However, indigenization and empowerment must be approached with a forward looking lens, and be seen as being a means for enabling people, particularly the youth to start  and efficiently run future businesses in various economic sectors, with the sufficient skills-set. This runs counter of to the current unsustainable model of simply transferring ownership.

Currently, the minerals sector has been the primary target of this policy. But looking at recent trends in this sector – commodity prices are down, it is highly capital intensive and prospects for wide-scale job creation in this sector are low, as technology means that machines will replace human labour – shows that the outlook for this sector in the long term is not that promising. Earnings reports of Zimbabwean mining companies illustrate this point ever so elegantly. Say we indigenize all the mines now and we own them, in the context of the economy, 10-15 years down the line, it will not be surprising to see an economy with high unemployment, low economic output and citizens in an even poorer state of welfare. The point is; policy makers are looking at indigenization incorrectly.

Former South African Reserve Bank governor, Tito Mboweni left tongues wagging even in his own party, the ANC when he publicly said that those calling for the nationalization of mines and banks in South Africa were engaged in the wrong debate altogether. The fact is, sooner or later, Zimbabwe like other states have done, will undergo a structural economic shift that will see the economy turn from its traditional reliance on agriculture and mines to being a more tertiary-leaning economy. And dare I say that this structural change is already underway. So presently, it would appear we are focused on seizing sectors of the economy that, quite frankly will not be all that important in the long term. Imagine Dubai, contending with all its political might to have a tight leash on its oil industry, when its oil reserves are forecast to run out in the next 10 years as they are now… ludicrous right?

Granted, local ownership of the means of production is essential, particularly as efforts are made to redress systems created by Zimbabwe`s colonial past. However, the way the authorities are approaching the issue might need revision.  Instead of maintaining a hardline stance which has evidently impeded smooth capital flows, a futuristic approach to indigenization would do us plenty good.  Revisions of the law itself would allow more foreign capital inflows, which by the way, contrary to minister Zhuwawo`s opinion, the country badly needs. This would enable more economic output in the medium term, all else being equal. The growth would avail even more funds to truly empower small and new businesses of the future, in diversified areas such as alternative power generation, and other modern services by availing capital for growth. This is just but one of the ways the country would stand to benefit from a more rational approach to the indigenization policy. The long and the short of it, is that the government`s current approach of the indigenization policy is myopic and fraught with inconsistencies that will not see the economy benefit at all. One only has to look at Zimbabwe`s economic stalled progress since 2009 to see the merit to this point. While countries such as Mozambique are seeing record capital flows, our indigenization law in its current form, and the way it is being implemented, is hurting the economy.