Zimbabwe's Government of National Unity has suspended the recently Gazetted indigenisation regulations and its intention is to review these to arrive at a consensus before trying to bring the Indigenisation and Economic Empowerment Act into force.
The decision, reached in yesterday’s Cabinet meeting, came just in time to make unnecessary the submissions on how each company proposed to ensure that 51 percent of its shares would become the property of indigenous Zimbabweans during the next five years.
The statement issued by the government did not indicate the specific reasons for the suspension, but a considerable amount of adverse reaction had been generated at numerous public meetings on the subject. Government is likely to have been surprised that some of the harshest criticisms came from business organisations that receive most of their support from indigenous people. A common theme at the meetings was that a forced change of ownership of the businesses now in operation would do nothing to generate the investment needed to bring about the expansion of business activity. As investment could not take place without savings, and as Zimbabwe’s savings had been virtually wiped out by its recent economic experiences, the need to have inflows of investment funds from abroad had to be supported by policies that would promote confidence.
Unless steps can now be taken to repeal the Indigenisation and Economic Empowerment Act, the business sector and economic planners should remain conscious of the fact that the process has been suspended, not scrapped. With more time to consider the issues, those who can offer constructive thoughts on how real empowerment could best be brought about and whether indigenisation, as an affirmative action concept, has any part to play in the process, should now start offering their thoughts to those making the plans.
In this regard, the key issue that separates the rich from the poor is the existence of, and respect for, property rights. Where these have been properly created and the needed institutions have been created to support them, the people have prospered. Where ownership of all property is claimed by the State or by some political authority, prosperity has been enjoyed by only those who could claim privileges conferred upon them by those in authority. Efforts should now be made to steer the Zimbabwean debate into territory of this nature to ensure that any policies that resurface will work on real empowerment, not temporary enrichment through “legalised” confiscations of the assets of others.
I hope to have more on this development within the next few days.