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Financial illiteracy

Opinion & Analysis
The pursuit of life, liberty and happiness is what we all strive for. The promise of a better life for all is what independence was meant to offer.

The pursuit of life, liberty and happiness is what we all strive for. The promise of a better life for all is what independence was meant to offer.

Report by Mutumwa Mawere

The colonial constitutional order was framed on racial considerations informed by a belief that not all human beings are equal or ought to be treated as such. The link between civil and economic rights was a direct one and the role of the State was to protect the rights of settlers.

Accordingly, the State had no obligations to promote and protect the rights of the native majority.

The ideology of indigenisation, if it exists at all, is informed by a general observation that the promise of a better and prosperous life cannot be released without the active and direct role of the State and its actors.

Ordinarily, the law of gravity should work to the advantage of the majority, but the experience of independence has produced an absurd outcome in respect of economic empowerment.

The understanding of the true drivers of the colonial economic model is yet to be appreciated to allow for effective strategies to be put in place to drive the economic emancipation agenda.

No empirical evidence has been brought forward that provides a causal link between the success of the settlers and flow of funds from the mother countries.

Rather, what we learn is that the majority of the settlers were people of no real and substantial financial means.

The people who left Europe for the colonies must have understood that the promise of a better life would not be realised in Europe, otherwise there would have been no need to leave a prosperous life.

The pursuit of a happy life motivated many to endure any hardships that the early years of colonialism offered.

How then did the settlers transform the physical geography that they found in Africa while at the same time improving their quality of life?

The settlers from Europe understood that there was no need to travel all the way to Africa to be poor, for if poverty was the objective no rational person would have seen the need to be poor in a far away place.

The physical and administrative infrastructure that was built during the colonial era was principally financed from domestic resources supported by private external capital.

The settler business model was exclusionary by design and construction because it could not been viable if it was inclusive.

The version of history that the settlers lived through is completely different from the version widely held by the majority.

The settlers truly believe that they were entitled to behave in the manner they did as they attributed their economic success that continued even during the post-colonial era to their creativity and hard work.

Any suggestion that the colonial administration economically empowered settlers is easily dismissed as ridiculous.

The settler community was not homogenous, but plural and diverse in nature.

A lot is expected from the State and its actors particularly in the post-colonial dispensation.

There is a general belief that the State exists and it has a duty to economically liberate the historically disadvantaged persons.

Jonathan Moyo is not alone in holding the mistaken belief that the State can alter class and race relations through indigenisation and economic empowerment models. A few weeks ago, I was at the lobby of the Meikles Hotel in Harare when I saw Goodwills Masimirembwa chatting with Tendai Savanhu, the Indigenisation and Economic Empowerment deputy secretary, in the Zanu PF Politburo. Masimirembwa is a State actor having been appointed to various State positions including being the Zimbabwe Mining Development Corporation (ZMDC) chairmanship.

In a dysfunctional society, it is so easy for a person like Masimirembwa to believe that he was appointed to this position because he is smart and more patriotic that any other Zimbabwean.

So when I approached him, I expected the arrogance that was displayed. My reason to approach him was principally because of a resolution that I had come across dealing with the affairs of Shabani Mashaba Mines (SMM).

The name of the secretary presumably of ZMDC, was not revealed, but what seemed to be at play was an the attempt to give life to the decision made by President Robert Mugabe to transfer the control and management of SMM to ZMDC on the premise that SMM was now wholly owned by the government of Zimbabwe.

What then did the resolutions provide for? This is what the first resolution stated: It was resolved that Afaras Gwaradzimba should hand over the Nickdale (Pvt) Limited share certificates to the Mines and Mining Development minister Obert Mpofu.

Firstly, even Masimirembwa would know that a company limited by shares is a juristic person.

Nickdale is a private company with shares issued in the name of the Reserve Bank of Zimbabwe.

Accordingly, Nickdale is not a company under reconstruction.

In terms of the records kept at the Registrar of Companies, Nickdale holds 76% of the issued share capital in the purportedly restructured SMM.

Nickdale chairman is Honour Mkushi. Gwaradzimba is not a director of Nickdale, let alone an officer of the company, to allow him to represent the company.

At the very least, one would have expected Nickdale to be represented at the said meeting.

It would appear that Gwaradzimba is in possession of shares that belong to Nickdale and not only that, but he proceeds to make an undertaking to make such property available to the Mines minister.

Masimiremba is a lawyer by training and, therefore, is expected to know better.

The Reconstruction Act specifically provides that after the confirmation of a reconstruction order by a judge in chambers, the conversion of debt into equity can proceed and it would appear from the version of events that I wanted clarification from Masimirembwa that such conversion did take place, to allow for Nickdale to be recorded as a shareholder of SMM.

To the extent that Nickdale is now recorded as a shareholder of SMM, it means that legally, Gwaradzimba should have nothing to do with such a company as the issuance of shares to Nickdale confirms that the control and management had to change hands to reflect the fact that the shareholders of the company changed pursuant to the purported reconstruction.

Pursuant to the transfer of control from Nickdale to ZMDC, Camelsa now part of Grant Thornton, was to carry out an initial audit of the SMM salary payroll.

When I approached the all too powerful Masimirembwa, I just wanted to establish the legal basis on which ZMDC purported to be involved in SMM’s affairs and more importantly whether SMM was still under reconstruction.

The reaction of Masimirembwa tells its own story of borrowed power that has gone to his head. He indicated that he had no obligation to clarify the issues that I sought to clarify notwithstanding the fact that ZMDC is not a private concern.

The danger of using the State to pursue indigenisation and economic empowerment programmes, is that even mediocre people who are lucky enough to be on the right side of State actors can assume absolute and unaccountable power that ends up undermining the very values they are appointed to promote and protect.

If the State was meant for smart people then elections are rendered meaningless and the propensity for people to cling to power in the mistaken belief that they alone are best suited to protect the poor using the State is increased.

Who would want to leave the State when being part of it gives one access to wealth and power?

There is no doubt that Masimirembwa now thinks he is the State and is, therefore, not accountable.

However, the people of Mashava and Zvishavane deserve answers as to how ZMDC got involved in the affairs of SMM.

The hijacking of the State for personal ends cannot be better illustrated than in the case of SMM.

Gwaradzimba’s principal is Patrick Chinamasa and Masimirembwa’s principal is Mpofu and therein is the problem.

Mugabe was made to believe that the administration of SMM is now vested with ZMDC when Chinamasa had sought to defy this by asserting that SMM remain under reconstruction, notwithstanding the fact that Nickdale is the legal holder of the shares.

In the case of Nieebgate, Mugabe was under the impression that the Zimplats deal was concluded on the basis that mineral rights would be exchanged for shareholding in Zimplats, yet the reality is that the deal negotiated was on a different basis.

The fact that ministers do what they wish is symptomatic of the problem that Zimbabwe now faces as it decides very soon on who should govern for the next five years.

Although Mugabe may still argue that his eyes are on the price, the tragedy is that he will always be the last to know about the true nature of how the government is running.

Even if he wins the elections, the decay is all there to be seen.

Mutumwa Mawere is a businessman based in South Africa. He writes in his personal capacity.