Opinion / Columnist
Of Chinamasa and an 'Inconsistent' Problem
08 May 2014 at 16:20hrs | Views
When Finance Minister Patrick Chinamasa spoke at a conference that I attended on Monday, he said something that was supposed to be good news to foreign investors; something designed to allay their fears and cause comfort in so far as the indigenisation policy is concerned.
Except that I fear it only made things murky and worse - a word that I must invent given the inadequacy of the usual choice. I will explain why and seek your comments, if any.
Chinamasa said with great emphasis that henceforth the government would not insist on a 51/49 percent local ownership model of businesses; that the blanket approach on this policy would be abandoned and that government would adopt a sector by sector approach to indigenisation. "We will not take 51% of anyone's money" he declared.
All nice and good, one has to say. Finally, some sense has prevailed. Some of us have always thought a blanket policy across all sectors does not and cannot work; that this policy, however noble in intent, makes our economic environment less competitive and less attractive to investors. A Damascene moment perhaps. A turning point. All nice and good. Except that is exactly where the problem lies.
And here is the problem. The Minister signals a policy change without a change in the law. He says in effect, we will ignore the law. The law that says you must give 51% of your business to locals can be broken. Come, don't worry about the law. We will break it. We will ignore it. It doesn't matter. We are government and we do what we want. We set the rules but we can ignore them when we want.
The law of indigenisation was once convenient - for campaign purposes. But now it is not. It is an albatross on the economy, so we will ignore it. But we will keep it - just in case it becomes convenient again. That is the message.
These mixed signals cannot allay investors' fears. The inconsistency between policy statements and the law cannot be helpful. If anything, they demonstrate confusion and at worst arbitrariness. When you are arbitrary you just do what you like, the rules notwithstanding. But business needs certainty of rules and regulations. Business demands secure property rights. Not arbitrary conduct. Not where one can wake up in the middle of a dark Monday night and declare that the next day will be a Saturday. It doesn't work like that. It can't. Policy and legal consistency are necessary.
It is the business of the opposition to monitor government and perhaps make political capital out of its weaknesses. But unfortunately, the opposition is too busy with itself. No wonder then that a whole Finance Minister of a crumbling economy can make such statements and do so with great comfort and confidence.
Except that I fear it only made things murky and worse - a word that I must invent given the inadequacy of the usual choice. I will explain why and seek your comments, if any.
Chinamasa said with great emphasis that henceforth the government would not insist on a 51/49 percent local ownership model of businesses; that the blanket approach on this policy would be abandoned and that government would adopt a sector by sector approach to indigenisation. "We will not take 51% of anyone's money" he declared.
All nice and good, one has to say. Finally, some sense has prevailed. Some of us have always thought a blanket policy across all sectors does not and cannot work; that this policy, however noble in intent, makes our economic environment less competitive and less attractive to investors. A Damascene moment perhaps. A turning point. All nice and good. Except that is exactly where the problem lies.
The law of indigenisation was once convenient - for campaign purposes. But now it is not. It is an albatross on the economy, so we will ignore it. But we will keep it - just in case it becomes convenient again. That is the message.
These mixed signals cannot allay investors' fears. The inconsistency between policy statements and the law cannot be helpful. If anything, they demonstrate confusion and at worst arbitrariness. When you are arbitrary you just do what you like, the rules notwithstanding. But business needs certainty of rules and regulations. Business demands secure property rights. Not arbitrary conduct. Not where one can wake up in the middle of a dark Monday night and declare that the next day will be a Saturday. It doesn't work like that. It can't. Policy and legal consistency are necessary.
It is the business of the opposition to monitor government and perhaps make political capital out of its weaknesses. But unfortunately, the opposition is too busy with itself. No wonder then that a whole Finance Minister of a crumbling economy can make such statements and do so with great comfort and confidence.
Source - Alex Magaisa
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