On Thursday, 31 March, Zimbabwe will cancel licences of firms that have failed to comply with the country’s controversial indigenisation law, a move likely to end hopes for many living on the edge.
Zimbabwe’s President Robert Mugabe’s nephew and the country’s Indigenisation and Youth Empowerment Minister, Patrick Zhuwao, says “It’s either you comply or you close shop.”
Some of the companies that could lose their operating licences include South African giants; Tongaat Hulett, PPC, Standard Bank, Impala Platinum, and Aquarius Platinum.
Other than driving the few Zimbabweans employed by these companies into poverty and unemployment, the actions could strain political relations between the two countries.
The main opposition party has reacted to the move saying, basic economics teaches us that capital is a coward.
“It doesn’t flow to markets where it is under threat. The whole essence of this indigenisation deadline is to scare away both domestic and foreign investors. The Zanu-PF regime cannot talk about the need to grow and expand the economy whilst in the same breath, the regime is coming up with spurious and scary economic policies such as this indigenisation law,” says Obert Gutu, MDC-T’s spokesperson.
“No serious investor will put their money into an economy that is run on the basis of cowboy economic policies that have the effect of eating away one’s investment by forcing all foreign investors to only hold 49 per cent equity in their firms and companies. This simply doesn’t and will not work. This is a recipe for thwarting investor confidence and literally driving away investors to more attractive markets within the region.”
Maxwell Saungweme, a development economist, says the move is unnecessary and uncalled for.
“It is a clear sign that we have a clueless regime. How can you try to close the few remaining firms in a country where unemployment is over 80 per cent and poverty is grinding, with over 60 per cent of the people living in acute poverty,” we have hunger at our door step due to drought, says Saungweme.
“The last thing Zimbabwe needs is to destabilise the few firms that have remained in the country in the midst of adverse policies and unfavourable social and economic environment. It seems the people heading the indigenisation ministry are clueless on what they need to do to attract foreign direct investment needed to kick start our ailing economy,” he adds.
Political analyst, Rashweat Mukundu, says the deadlines and indigenisation policy in general are a clear example of misplaced priorities and economic policy akin to shooting oneself in the foot.
“More than making demands on foreign companies Zimbabwe needs FDI (foreign direct investment). While indigenisation is noble its implementation cannot be arbitrarily and negative as is the current case. The policy appears oblivious to Zimbabwe’s economic needs and driven by greed, as the same policymakers will benefit from the spoils if any at all,” added Mukundu.
Many have accused the ruling party, Zanu-PF’s indigenisation law of benefiting only the politically connected at the expense of the suffering masses. Whether this policy yields anything for the country, which according to The 3rd Annual Africa Wealth Report is the poorest on the continent by wealth per capita, only time will tell.