The Euromoney Investment Conference, which started in the capital this week, presented another opportunity to reveal the disconnect between government’s well-intended investment policy and the acerbic indigenisation policy being pursued by hawks in Zanu PF.
It is now unavoidable for government officials to address the indigenisation issue whenever the country hosts international businesspeople. Parties to the GNU have been making a concerted attempt to allay investors’ fears that the indigenisation policy is not good for direct foreign investments. This effort is more often than not sabotaged by the conduct of public officials who have made it their business to fight investors in the name of black empowerment.
Vice-President John Nkomo this week led the crusade to preach the virtues of the indigenisation policy.
He said the policy promoted the participation of Zimbabweans in the mainstream economy.
“Investors should embrace this policy as it is a confidence-building measure that assumes political stability in the country as well as promoting a win-win business partnership,” he said.
Finance minister Tendai Biti reportedly lent himself to the project by telling delegates that “nobody should be worried” with the policy as it is about the “democratisation of the economy”.
Really? But investors at the conference should have immediately sensed the dissonance in the GNU over the indigenisation project when Biti declared that foreign-owned banks should be left alone.
This was a direct response to his Cabinet colleagues who have set their sights on the financial services sector.
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The brutish execution of the indigenisation plan is well-documented. Investors looking at this market know that the indigenisation policy in its current mode has very little to do with democratisation of the economy. It is cherry-picking good projects and arm-twisting investors to surrender shareholding to community share trusts which are largely partisan institutions whose real benefit to communities are yet to be realised. The response to this has been obvious. Investors are worried and they will keep seeking assurances that their investments would be not be expropriated. In fact, Nkomo and his colleagues in Cabinet know that the empowerment programme has become the biggest obstacle to attracting foreign direct investment. The message from investors has been that they do not want to put their capital, expertise and technology into a business that they have no control over. Most invested climate indices have relegated Zimbabwe to the bottom of the pile largely because of shoddy execution of the empowerment programme.
This is the reality that investors are alive to. Mere talk at business shindigs — expounding the virtues of a discredited plan – will therefore do little to attract investors to this market. The country already has a bad reputation stemming from a bureaucracy that moves at the speed of a glacier in approving and executing policies, and a very corrupt civil service that seeks inducements at every opportunity. Then there is the huge challenge of a crumbling infrastructure and grossly inadequate power supplies.
The empowerment programme has compounded this already grubby situation. VP Nkomo, if the government is really committed to empowering its people, it should demonstrate this commitment by selling off decaying State enterprises to local businesspeople.
That will be a major step towards democratising the economy.
