Opinion / Columnist
Indigenisation laws to be enforced from January 2016 insists Mugabe - economy will sink even deeper!
14 Dec 2015 at 06:46hrs | Views
Mugabe tells his Zanu PF conference delegates, the ruling elite who stand to be economically empowered by buying shares from foreign owned business, his regime will start forcing companies to comply with the indigenisation laws.
"Come January and its 2016, that stubbornness and resistance we say should end in 2015…2016, we will not accept a company which refuses and rejects our policy of indigenisation and empowerment. "
The trouble with tyrants like Mugabe, who are not accountable to anyone and so they never listen to anyone, is that they see what is not there and then plough on regardless.
In 2008, Mugabe passed his new indigenisation laws designed to "economically empower" blacks by forcing foreign owned companies, both existing and new, to sell as much as 51% of their shares to local black Zimbabweans. It should be said here that companies will economically empower the local people is which they operate in three ways:
- Companies pay tax, levies, etc. to central government or local governments and the money is then used to build roads, schools, hospitals, etc. In a country whose revenue base has been shrinking to the point where 83% of the collected revenue going into paying wages when the norm should be half that; increasing the revenue is very important.
- Companies create employment opportunities for locals directly or indirectly. Unemployment in 2008, when the indigenisation laws were passed, was 90%; it dropped to 80% during the GNU but has surged up again to 90% plus today.
- Companies can sell company shares on the stock exchange or directly to individuals. Only Mugabe cronies could ever hope to buy these shares just as it was them who benefited from the white farm seizures which inspired the indigenisation laws.
Mugabe's indigenisation laws are primarily targeting foreign own companies and force them to sell shares to local individuals regardless of whether they wanted any local partner or not needed to raise additional funds or not. The law stipulates that government or some authority will approve the deal and, it is common knowledge that, means the regime will appoint the local partner. This is what has made these laws so obnoxious and unacceptable; who would want to be forced to have a business partner they never asked for!
The economic reality is that since the passing of the indigenisation laws Direct Foreign Investment (DFI) has dries up. Zimbabwe has as little as 4% of the DFI Mozambique received in 2012. Existing companies have continued to close, especially since the rigged 2013 elections when it was clear the return of Zanu PF will mean the return of such oppressive laws like indigenisation laws.
If Zimbabwe had been a healthy and functioning democracy then Mugabe will have got the message loudly and clearly by now: the indigenisation laws have scarred away DFI and the price the nation has paid in lost revenue and employment opportunities is unacceptably high particularly when the laws is nothing more than the ruling elite holding the nation to ransom.
But Zimbabwe is not a democracy and so Mugabe is not even concerned that millions are out of work and million now live in total abject poverty the ruling elite will holdout with their demand of forcing foreigners to sell shares to his cronies even if even more of the few remaining companies are forced to close down. So Mugabe will force the implementation of the indigenisation laws forcing taxes and revenue to drop even further, unemployment and economic meltdown to get even worse for the sake of a handful of his cronies who will be empowered by buying the very few shares from the tiny number of foreign owned companies still remaining in the country.
Some people have been hoping that Mugabe and Zanu PF can be talked into scrapping its obnoxious indigenisation laws, end corruption, etc. this ultimatum as to when the laws must be ruthlessly applies has put those hopes to bed. There will never be any meaningful economic reforms without the political reforms designed to restore the people's power to hold Mugabe or whoever is elected to form the next government accountable to them.
We need to implement all the democratic reforms agreed in the 2008 GPA and then hold free and fair elections!
In 2008, Mugabe passed his new indigenisation laws designed to "economically empower" blacks by forcing foreign owned companies, both existing and new, to sell as much as 51% of their shares to local black Zimbabweans. It should be said here that companies will economically empower the local people is which they operate in three ways:
- Companies pay tax, levies, etc. to central government or local governments and the money is then used to build roads, schools, hospitals, etc. In a country whose revenue base has been shrinking to the point where 83% of the collected revenue going into paying wages when the norm should be half that; increasing the revenue is very important.
- Companies create employment opportunities for locals directly or indirectly. Unemployment in 2008, when the indigenisation laws were passed, was 90%; it dropped to 80% during the GNU but has surged up again to 90% plus today.
- Companies can sell company shares on the stock exchange or directly to individuals. Only Mugabe cronies could ever hope to buy these shares just as it was them who benefited from the white farm seizures which inspired the indigenisation laws.
Mugabe's indigenisation laws are primarily targeting foreign own companies and force them to sell shares to local individuals regardless of whether they wanted any local partner or not needed to raise additional funds or not. The law stipulates that government or some authority will approve the deal and, it is common knowledge that, means the regime will appoint the local partner. This is what has made these laws so obnoxious and unacceptable; who would want to be forced to have a business partner they never asked for!
The economic reality is that since the passing of the indigenisation laws Direct Foreign Investment (DFI) has dries up. Zimbabwe has as little as 4% of the DFI Mozambique received in 2012. Existing companies have continued to close, especially since the rigged 2013 elections when it was clear the return of Zanu PF will mean the return of such oppressive laws like indigenisation laws.
If Zimbabwe had been a healthy and functioning democracy then Mugabe will have got the message loudly and clearly by now: the indigenisation laws have scarred away DFI and the price the nation has paid in lost revenue and employment opportunities is unacceptably high particularly when the laws is nothing more than the ruling elite holding the nation to ransom.
But Zimbabwe is not a democracy and so Mugabe is not even concerned that millions are out of work and million now live in total abject poverty the ruling elite will holdout with their demand of forcing foreigners to sell shares to his cronies even if even more of the few remaining companies are forced to close down. So Mugabe will force the implementation of the indigenisation laws forcing taxes and revenue to drop even further, unemployment and economic meltdown to get even worse for the sake of a handful of his cronies who will be empowered by buying the very few shares from the tiny number of foreign owned companies still remaining in the country.
Some people have been hoping that Mugabe and Zanu PF can be talked into scrapping its obnoxious indigenisation laws, end corruption, etc. this ultimatum as to when the laws must be ruthlessly applies has put those hopes to bed. There will never be any meaningful economic reforms without the political reforms designed to restore the people's power to hold Mugabe or whoever is elected to form the next government accountable to them.
We need to implement all the democratic reforms agreed in the 2008 GPA and then hold free and fair elections!
Source - Wilbert Mukori
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