The Zimbabwe National Chamber of Commerce (ZNCC) says indigenisation of manufacturing entities should not have been prioritised as the industry is currently ailing and requires recapitalisation before reins can be handed over to locals.
The sentiments follow Youth Development, Indigenisation and Empowerment minister Saviour Kasukuwere gazetting sector specific notice (General Notice 459) for the manufacturing sector on October 28.
The notice outlined the minimum requirements for indigenisation of business outfits in the manufacturing sector.
These include complicity with the empowerment policy for businesses with at least $100 000 net asset value, compliance with the 51% indigenous shareholding requirement over four years and submission of indigenisation implementation plans within 45 days from October 28 2011.
“The indigenisation and economic empowerment programme seeks to create opportunities for increased participation by indigenous Zimbabweans in the mainstream economy,” Kasukuwere said.
ZNCC president Oswell Binha, however, told NewsDay Business last week that instead of distributing “sick company” shares, there was need to ensure companies were cured first through financial injection.
“Indigenisation in manufacturing industries should not have been a priority given the plethora of challenges the industry is facing, principal of which is the need to recapitalise the ailing firms. There is need to grow the existing industries rather than to distribute shares,” Binha said.
Binha said while they had thrown their weight behind the need to empower locals, economic growth should have been given first priority.
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He said a period exceeding fours years would have been ideal to give incumbent owners of companies adequate time to recapitalise the industry. In their current state, he observed, the regulations were likely to further cripple the ailing sector.
“These regulations may harm the manufacturing sector as it (the Act) can force investors to relocate to neighbouring countries where there are no hostile ownership regulations,” he said.
He said unlike mining, manufacturing is a high-risk sector because the threat of capital flight is real.
Stirring the industry’s still waters at the moment, he said, “can actually render the indigenous manufacturers uncompetitive in the region due to lack of capital” and this would further condemn the industry to the scrapheap.
He added the indigenisation policy may, by default, fail to help the intended beneficiaries, who are most likely financially incapacitated and cannot afford to buy shares in foreign–owned manufacturing firms.
