Mugabe exposes Kasukuwere

As the economic crisis in Zimbabwe reaches boiling point, President Robert Mugabe's move to push for amendments to the controversial indigenisation policy has left former minister of Indigenisation, Savior Kasukuwere with egg on his face.

Diverging from Kasukuwere's hard stance on the implementation of the policy, compelling foreigners to cede at least 51 percent shareholding to indigenous Zimbabweans, government is revisiting the indigenisation law to allow sector-specific implementation.

According to State media reports, the policy rethink will allow investors to realise their initial capital investment, get appropriate return on investment and recover operational costs.

The new arrangement will see the empowerment policy being implemented through two models; the Production Sharing Model and a Joint Empowerment Investment Model.

During his tenure, Kasukuwere was aggressively pursuing the policy, in a wayward manner viewed as trying to curry favour with Mugabe, disregarding experts' advice on the implementation of the controversial empowerment programme.

Consequently, his move resulted in massive investor flight and dampened foreign direct investment.

The Zanu PF minister — now in charge of the Environment ministry — pushed for the takeover of controlling stakes in foreign-owned companies, refusing to exempt sensitive sectors like banking.

He even threatened to kick out foreign banks which failed to comply with the policy.

But his successor, Francis Nhema, like former Reserve Bank of Zimbabwe governor Gideon Gono, ruled out the "one-size-fits-all" policy that Kasukuwere wrongly pushed for.

Recently, Mugabe ruled out a one-size-fits-all indigenisation approach, saying only companies utilising the country's natural resources will be required to immediately give up majority stakes to indigenous Zimbabweans.

"In the implementation of the indigenisation programme, there has been some confusion," Mugabe said during celebrations marking 34 years of independence from colonial rule.

"We have said where the companies have been established mainly on the basis of natural resources, mining, agriculture, manufacturing, we demand that Zimbabwe either through government or through our people should have 51 percent and not less than 51 percent.

"But if a company establishes itself and is getting raw materials from outside and the raw materials are not from here in Zimbabwe, take the case of aluminium, we don't have raw materials of it; if the raw material comes let's say from Tanzania, which has it, and the company establishes itself here in Willowvale, we cannot demand 51 percent, we can negotiate with the company on what percent we shall have.

"If a company establishes itself using raw materials sourced from outside the country, we will share.

"We cannot demand 51 percent because we don't have materials. These materials have come from outside and the machinery is also coming from outside and therefore we don't have a basis to demand 51 percent."

During his era, Gono maintained his stance on the indigenisation of foreign-owned banks insisting government should be cautious in dealing with the "delicate" institutions.

He argued that while the banks should observe the laws of the country, "the process… should, however, take cognisance of the sensitiveness around the operation of the banks to restore confidence, trust and stability in the sector."

"One-size-fits- all does not work," the former central bank boss insisted.

He said the central bank was working together with the Indigenisation ministry "to ensure that compliance with appropriate laws is done in an orderly manner."

"Any pronouncements that encroach into the financial sector will remain pronouncements until they know who to consult," Gono said adding that, he would not keep quiet or fold hands while there were "frequent and flagrant attacks by some who are not as knowledgeable as us."

For his arguments, Gono was labelled a sell-out and a house nigger especially after he refused to endorse deals involving indigenisation of major companies and the community share ownership schemes.

Following Mugabe's shift in the implementation of the empowerment policy, widely viewed as a step in the right direction for the investment-starved Zimbabwe, there have been calls for his government to amend the law to incorporate the changes.

Ulrich Klockner, German ambassador to Zimbabwe, said investors from his nation are still sceptical of the piece of legislation, unless Mugabe's word was put in writing.

"We are very excited about the new clarifications that are coming up, but we feel the government of Zimbabwe should at least put these into writing for reference," he said.

Eric Bloch, an economist, said government has only made statements and promises, but has not moved to amend the laws.

"The law was an obvious infringement on property rights. If government is serious about these utterances, I say they move quickly to boost investor confidence and just put all this in writing," he said.

Australia also said investing in Zimbabwe is extremely risky, likening the move to swimming in the dangerous crocodile-infested Zambezi River.

Matthew Neuhaus, the country's ambassador to Zimbabwe, told a Sapes Trust conference recently that the African nation has a long way to go in attracting foreign direct investment (FDI).

"Investing in Zimbabwe is like swimming in the Zambezi between crocodiles and hippos," he said, adding that "instead of policies to encourage FDI, you have chosen indigenisation especially in the mining sector".

He said Australian investors have found it easier to do business in Zambia and Mozambique, injecting billions of dollars in investment in the economies.

"Because of the uncertain political and economic environment, investors have skirted this country," said Neuhaus.

However, early this month, Finance minister Patrick Chinamasa reassured investors that Zimbabwe is a safe investment destination, if they comply with the country's laws.

This comes as foreign investors have been skirting the investment-starved country, labelling its policies hostile, particularly the empowerment law.

Chinamasa said government plans to put in place "a flexible policy framework that attracts investment while at the same time ensuring that the people of Zimbabwe also benefit".

He said the Zimbabwe Investment Authority will have full authority to determine investment conditions and approve foreign direct investment.