ECONOMIC analysts say the best way for President Emmerson Mnangagwa’s government to attract serious and long-term investment into the country is to scrap the controversial indigenisation law that has scared away foreign investors.
By Cyril Zenda
Analysts who spoke to The Financial Gazette this week urged the new leader — who replaced long time ruler Robert Mugabe — to be pragmatic by repealing the law that is viewed by foreign investors as a smash and grab piece of legislation.
The Indigenisation and Economic Empowerment Act, which came into effect in March 2008, requires that locals control at least a 51 percent stake in businesses.
Economist John Robertson said the law should be repealed without delay.
“The indigenisation laws arrested development. By passing an Act of Parliament empowering government to demand the surrender of assets in the form of company shares, government was trying to legalise theft,” Robertson said this week.
“Far from empowering indigenous Zimbabweans, this Act destroyed thousands of jobs and removed the prospects of finding employment for perhaps hundreds of thousands more. As this was done in the hope that some people would get shares for nothing. It was selfish, short-sighted and destructive.
“The Act achieved nothing useful at all, but it effectively isolated Zimbabwe from any prospect of benefiting from technological and other business developments that are taking place all over the world.”
Tapiwa Mashakada, who was minister of economic planning and investment promotion during the inclusive government that ran between 2009 and 2013, said the Indigenisation Act has no place in a modern society.
“(We should) scrap that law. It is outdated and not necessary in this day and age of globalisation. Zimbabwe must truly be open for business so government has to open the one-stop-shop without any further ado for purposes of investment facilitation. The ease of doing business must be deepened.”
Zimbabwe, which is known internationally for violently taking away land from former white commercial farmers, is struggling with perception issues and one sure way of calming the nerves of investors is to repeal the law.
In his inaugural speech, Mnangagwa indicated readiness to put in place policies that would make the country an attractive destination for foreign capital.
“The fabulous natural resources we have must now be exploited for national good through mutually gainful partnerships with international investors whose presence in our midst must be valued and secured,” he said.
“The bottom line is an economy which is back on its feet and in which a variety of players make choices and fulfil roles without doubts and in an environment shorn of fickle policy shifts and unpredictability,” Mnangagwa added.
Two years ago, when Mnangagwa was on a visit to China, he granted an interview to that country’s television channel CCTV in which he appeared to be keenly aware of the sources of Zimbabwe’s economic woes.
“In fact, capital will go where it finds comfort, so we need to do that, create an ease of doing business environment. We have to see how we can create an investment environment which will attract the flow of capital,” Mnangagwa said in July 2015. – FinGaz