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We're taking white-owned companies!

What are the pros and cons of transferring majority share ownership into the hands of black Zimbabweans?

Last modified: 28 Feb 2010 18:35
Photo from AFP

I attended President Robert Mugabe's birthday celebrations over the weekend – and heard him speak passionately about transferring majority share ownership into the hands of black Zimbabweans, part of the indigenisation law which takes effect on Monday March 1.

Companies will be legally obliged to transfer a majority of their shares into the hands of black Zimbabweans. Companies worth more than half a million US dollars have until mid-April to show how they are going to comply with the share-transfer scheme.

Those who don't comply could face up to five years in jail.

He got a raucous applause from those who support his idea – and Monday March 1 is the day companies have to show how they plan to achieve this. By mid April they must have outlined the roadmap to empowerment in their respective companies.

Any reports of this law being squashed are clearly wrong. From what I saw the plan to takeover white-owned companies is in motion.

I already knew what Prime Minister Tsvangirai's party, the Movement for Democratic Change, thought, I was more interested in hearing the opinions of Mugabe's party, Zanu PF.

Political analysts and independent economists seem mainly cautious about this Indigenisation law. Some say economically the timing isn't right. Zimbabwe is trying to recover from a decade of economic decline, scaring away investors who could help resuscitate this country's ailing economy may not be a wise move.

Some fear a repeat of the farm invasions saga – when mainly white commercial farms were seized by supporters aligned to Mugabe – war veterans and war collaborators as they are popularly known here.

Ten years since the invasions started some new black owners have tried to make a success of their new possessions – but many farms are either lying idle or operating at a bare minimum.

So here I was mingling with the most senior Zanu PF officials and I put these concerns to them. There is a perception in Zimbabwe that most of these companies will be given to army generals, Zanu PF loyalists and anyone who President Mugabe needs to help him stay firmly in power.

The responses I got were predictable. Some laughed at me, others dismissed me and some accused me of being anti-nationalistic. I was given a history lesson of how many black people died for Zimbabwe and it’s about time the majority started reaping the benefits of the country's abundant natural and very lucrative resources.

But some had very convincing arguments:

1) Shares have to be bought by prospective black business people, ie anyone who wants shares in white owned establishments have to buy them at the market price. "There will be no grabbing," said the indigenisation minister.

2) Government is willing to look at special cases and give them more time to comply, ie if a white owned business feels transferring ownership to blacks is too soon and will jepordise profits of the company and the country as a whole, they have to outline how they plan to equip black Zimbabweans with necessary skills needed to one day take over.

3) It's not just the elites who will benefit – it's a programme for the workers, ie some companies implement schemes where the workers end up owning shares within the organisation. That way even the lowest paid factory worker will have shares he can invest in and benefit from them.

It all sounded good on paper – and as a black African myself empowering the black majority, who are often the poorest, needs to be addressed.

But I had concerns:

1) The law appears racist, ie the term indigenous applies to people who were previously disadvantaged during colonial rule. Non-whites were subjected to racist and often oppressive laws where they weren't allowed to participate actively in the country's economy. So technically this law implies if one is white, one is not indigenous and white Zimbabweans have to give over 51 per cent of their shares to black Zimbabweans. Is this fair?

2) Only the elite will benefit – South Africa's Black Economic Empowerment programme saw the rise and rise of the black diamonds, ie  the super wealthy black upper class mainly aligned to the ruling party the African National Congress. The poor haven't seen the rewards of empowerment yet. It could happen in Zimbabwe. It did with the farms – why would this latest move be different? There are reports of senior Zanu PF officials fighting for diamond mines, farms and other assets – resources many it seems expect to be given rather than pay for.

3) Is President Mugabe trying to keep those around him happy, so he stays in power – reward the army generals and influential players within the party – some of whom wouldn't mind taking over from Mugabe one day? They flatly denied this theory understandably – and I was advised not to pursue such a line of thought so "I lived to see the fruits of the country's empowerment process". They may have been dismissed, but it is a theory some analysts are peddling.

The reality is indigenisation is going to happen – the wheels are in motion. Those trying to stop, stall or disrupt the process are wasting their time in my opinion.

I've met both black and white Zimbabweans who agree the process needs and should happen - it just shouldn't be haphazard like the farm invasions were.

What people should be asking perhaps is how to ensure the process is not abused by a few individuals?

The next few months in Zimbabwe are going to be interesting. Zanu PF is in a weakened position as the MDC seemingly gains ground with the masses largely because of the slight positive turnaround in the economy.

If free and fair elections were held tomorrow some analysts say the MDC would win hands down. Those who follow the Zimbabwe story know President Mugabe and his party officials Zanu PF won't go down without a fight – is taking over ownership of companies perhaps the latest phase of the battle for control of Zimbabwe?