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Indigenisation from procurement viewpoint

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The inclusive government was reported to have brought material dividends which included overall business confidence building, policy consistency and predictability on key fundamentals, and re-engagement with the international community according to the 2012 Budget.

The focus for 2012 Budget was aimed at stabilisation, reconstruction and creation of a fair economy in the process stopping economic haemorrhage in order for Zimbabwe to catch up with the rest of Africa’s pace of economic development according to Finance minister Tendai Biti.

Of particular concern is the relationship of the 2012 Budget and the Indigenisation and Empowerment Policy. The two seem not to be singing from the same hymn book.

Indigenisation as it is known in Zimbabwe is “protectionism” internationally and “black empowerment” in South Africa.

The idea is the same, shifting economic activities to the economic minority. Developed countries use protectionism approach to promote their industries.

An example is donor aid that most African countries receive that limits use of the funds to a selected few. If the aid is intended to support health sector, donor funds are only spent on Foreign Direct Investment and World Health Organisation approved suppliers limiting and or excluding the participation of African countries.

Local companies may comply with registration requirements, but a new hurdle exists. Donor funds cannot be used to support suppliers’ businesses implying no cash advance can be requested.

This literally means very few or no African-owned company can benefit from donor-funded businesses due to capacity constraints.

South Africa’s Black Economic Empowerment has been internationally accepted as if its objectives are different from our Indigenisation Policy. They are both protectionism policies.

The difference is in approach, developed countries and our neighbour made sure that all stakeholders buy-in by developing softer policies that were easily understood by all citizens and all stakeholders that include the international community.

The challenge posed by the Zimbabwean policy and other protectionism policies is they create an elite class, they promote capitalist approach that makes some black citizens better than others.

The classification of black indigene overlooks the fact some blacks are not economically marginalised. “Some animals are more equal than others,” Animal Farm lamented.

The system must be in a position to classify blacks by business capacity and a provision to graduate that will ensure successful blacks will not take up opportunities for the marginalised class.

Viewing it with a procurement eye, social objective require a balance of value for money, transparency and objectivity is achieved. In procurement, indigenisation does not mean promoting briefcase businessmen.

It implies sustainable relationship with marginalised sector of the society. Many policies have developed quota systems and preferential treatment in support protectionism policies.

Preferential treatment is not consistent with promotion of competitiveness in supply markets. It reduces the desire of the class to innovate.

Such policies allow for award of tenders if an indigenous supplier’s price is 10% above the lowest non-indigenous supplier.

Quota systems have created their own challenges in procurement. They fuelled a practice known as fronting that has been practised by newly resettled farmers.

An indigenous black Zimbabwean is put in front to create a face for the company when the control is with the unprotected class.

The solution to quota system is not easy to manage, it requires community classification that allows for graduation for businesses that have developed.

This ensures an elite class of indigenous blacks is not created and promotes fair competition between members in the same class. Capital is the challenge to economically marginalised and a payment regime that promotes healthy cash-flows would need to be crafted.

Above all, a reporting mechanism of indigenous companies is required to ensure no individual is more equal than others.

Nyasha Chizu is a fellow of CIPS and Zimbabwe branch chairman writing in his own capacity.

Feedback: chizunyasha@yahoo.com

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