Indigenisation has failed the poor

Why indigenisation has failed the poor


December 20, 2012 in Columnists, Opinion

THE Oxford Dictionary defines indigenous as a people or plant that has always lived in a place.

Opinion by Tulo Makwati

The thesaurus defines indigenous as a native or original. The Indigenisation and Economic Empowerment Act defines indigenisation as a deliberate involvement of indigenous Zimbabweans in the economic activities of the country, to which they had no access before, so as to ensure equitable ownership of the country’s rich resources.

Economic participation for indigenes is envisaged as possible through transferring ownership,  control and management of foreign-dominated business.

The advent of political independence in Africa has given impetus to calls for economic indigenisation. This is because successive colonial governments instituted laws that effectively excluded Africans from engaging in meaningful business activity.

As a result of this legacy, most indigenous economic activities were, and still are, concentrated in the informal, small and medium scale sectors.

Indigenisation, in a sense, was born to promote small to medium scale organisations to grow through acquisition of stakes and shares in well established, locally based multi-national companies.

Proponents of indigenisation believe that enabling indigenous people to share in ownership and control of their resources creates conditions of existence of peace and stability, and that true independence can only be realised through economic independence.

The most important economic benefit for small to medium businesses is employment creation. Employment creation is of high priority in economic policies of most African nations. High rates of population growth and the accompanying increases in the labour force have not been matched with corresponding increases in the creation of jobs.

The civil service and multinational companies only absorb a limited fraction of the labour force.

The promotion of small to medium scale enterprises in Zimbabwe through the indigenisation programme was anticipated to be a way of generating employment and stimulating general economic development. Asian countries like Singapore, Taiwan, and Hong Kong have had successes in stimulating economic development through the development of small to medium scale enterprises.

When the indigenisation policy was tabled before the august House in 2009, the nation then had hoped that the policy will adopt job creation and poverty alleviation as the major drivers to indigenise the economy. At face value, the policy is juicy as it seeks to empower blacks who were previously economically marginalised by suppressive white governments.

Although consultative meetings were held across the country by policymakers to explain the aims of the indigenisation programme, it did not bear any fruit. The programme is tailor made to benefit the rich and the literate.

The indigenisation policy has been used and continues to be used by the elite in order to commit or justify acts of economic banditry, expropriation and, or unfair practices that suggest that we are not a law abiding nation.

The law has been used to parcel out pieces of the economic cake and opportunities to a few connected cliques of people while the majority of intended beneficiaries remain with nothing, as  has happened in the past with other empowerment schemes.

This economy is littered with cases of productive farms lying idle, farms which have been turned into grasslands instead of maize lands, soya lands and so forth. If the nation is not careful, history will repeat itself — only that this time it will be the indigenised companies that will be scrapped of their assets and slowly slide into oblivion.

The results of indigenisation in its current form and content are dire to the economy. Instead of creating jobs, the indigenisation programme has seen massive capital flight from investors, downscaling of operations by companies who are refusing to comply with the law.

The very few working class citizens may soon find themselves out of their jobs as multinational companies choose to close shop.

Prime Minister Morgan Tsvangirai was quoted by the Press bemoaning the indigenisation policy. Tsvangirai, according to media reports said the country’s laws that force foreign firms to cede majority shares to locals drives away desperately needed foreign investment. This proves once again that the policy has magnificently failed to empower its citizens.

However, for the programme to be wholly embraced by the grassroots, there ought to be a deliberate bias in favour of those who have not benefited from other government programmes before.

The implementation of the economic empowerment strategy should be done in a manner that immediately reduces poverty for the majority of the people, and enhance societal welfare.

The programme should ensure equitable re-distribution of wealth across a broad-spectrum of societal groups notably, women, youth, and the physically handicapped.

lTulo Makwati is a graduate of Africa University having studied Bachelors of Social Sciences majoring in Economics.