Spectre of indigenisation casts pall over Zimbabwe – in the short term

Zimbabwean business leaders possess an amazing – and somewhat humbling – resilience that has carried them through nearly a decade of gross economic mismanagement as the ruling party stumbles from one disastrous decision to another in a bid to hold on to power. It is that resilience that has kept freight flowing even during the worst of times – and will keep the economy on life support as Mugabe’s ministers push through the indigenisation regulations which require all companies valued at more than $500 000 to sell 51% of the company to black Zimbabweans. The main targets have been the banks and mines. Prime minister Morgan Tsvangirai has been critical of the policy, which he says threatens Zimbabwe’s economic recovery. Briefing journalists about a trip to the United States to woo investors, the prime minister said the message he heard was that the indigenisation programme had created great uncertainty among international business people. FTW has seen the effects first-hand. Freight forwarders and clearing houses reported an immediate slow-down in the importation of spares and equipment for the mining houses last year when president Robert Mugabe’s ministers announced that the law would be implemented. This year, there seemed to be a wait-and-see approach, with most business plans on hold until the ailing president Robert Mugabe is no longer president, and greater clarity emerges about the future political and economic direction to be pursued by his successor – whoever that may be. By the deadline on Sunday, October 1, more than 700 companies had failed to register their indigenisation plans, according to government officials. In September, indigenisation minister Saviour Kasukuwere told journalists that most major foreign mining companies had complied. Chinese-owned mines were not exempt, he is reported as saying – contrary to the belief on the streets. However, the banking sector has been critical of the law, saying that the country’s 26 licensed banking institutions are mainly locally owned. Foreign-owned banks include Barclays, Standard Chartered Bank, Stanbic Bank, MBCA and Eco Bank. Foreign banks have a combined deposit base of more than $1 billion. Although majority locally owned, CBZ Bank, the biggest bank by balance sheet size, is partly owned by SA’s Absa. Foreign firms deemed noncompliant could be fined or have their operating licences cancelled. There is much interest in the future of a massive US$600- million ethanol plant at Chisumbanje, which already has a million litres of fuel in its tanks and is expected to meet 70% of Zimbabwe’s fuel needs. The project is a joint venture between the Agriculture and Rural Development Authority (Arda) and Green Fuel Private Limited. However, the residents of Chisumbanje have sent a petition to the government in which it is claimed that the project does not comply with the indigenisation regulations. Zimbabwean business will, however, continue to resolutely keep the economy ticking over until there is the political will to unleash the country’s incredible potential.