CZI urges caution on indigenisation

THE Confederation of Zimbabwe Industries (CZI) has advised the soon-to-be formed government to put on hold a blanket approach on the indigenisation and empowerment regulations, adding that the policy required more clarity to stimulate economic growth.

Victoria Mtomba

In its submissions made during a meeting convened by the Office of the President (OPC) on August 2, CZI said in the short-term, there would be need to craft an economic policy which seeks to attract more capital as the country’s main economic sectors remain in doldrums due to underfunding.

CZI said the new government should adopt proposals made by different sectors in 2010 to ensure that the empowerment policy catapults economic growth, which has slowed down in recent times.

The meeting was chaired by an official from the Office of the President and Cabinet and was attended by CZI, other business organisation which include the Bankers’ Association of Zimbabwe, Zimbabwe National Chamber of Commerce, Chamber of Mines of Zimbabwe.

The meeting becomes the first following Zanu PF’s landslide victory in the just-ended general elections.

The party won a two-thirds majority in Parliament and may soon form the next government should the Constitutional Court dismiss a challenge on the outcome by outgoing Prime Minister Morgan Tsvangirai.

CZI said the new government should also manage political risk linked to the outcome of the poll results.

“(There is need for) better articulation of the indigenisation and economic policies taking into account recommendations of sectoral committes,” the CZI said.

“In particular, exceptions to the 51% rule for sectors requiring imported technology and capital not available in the country need to be highlighted. Unequivocal statement that the multicurrency system will be maintained for at least the full term of the government.”

The indigenisation law compels foreign-owned companies to sell 51% to locals.

Analysts say Zimbabwe has since 2009 attracted low foreign direct inflows due to lack of clarity on the empowerment policy as well as hassles in setting up a business.

FDI rose to $400 million in 2012 from $65 million in 2009.
In the medium-term, CZI said the government should engage in discussions and engage on the reintroduction of the local currency.

Reserve Bank of Zimbabwe has already allayed fears of an immediate comeback of the local currency which became worthless in 2008.

The government was also urged to restore confidence in financial markets that encourages savings by individuals and the informal sector and mobilising cheaper foreign lines of credit.

CZI urged the government to resolve infrastructure constraints and facilitate private sector investment in infrastructure as well as mobilising long-term capital for expansion projects.

Turning to the country’s external debt, currently hovering around $10,7 billion, CZI said the new government should fully engage creditors to ensure that the country’s creditworthiness improves.

Zimbabwe’s economy, according to Finance minister Tendai Biti, requires a $4 billion stimulus package to quicken economic growth.
Biti has already revised year end economic growth rate to 3,4% from the initially projected 5% to underperformance of key economic sectors.

The manufacturing sector has been struggling to grow since 2009 due to liquidity challenges, antiquated equipment and failure to compete with other products from the region.

Most companies in the sector have closed down and many people have been rendered jobless.

The majority of the companies in the sector are operating at less than half of their capacity as they fail to attract more working capital both locally and internationally.

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  1. No going back on endiginization, this is the time for workers to be empowered. Ndosaka takavhota nehungwaru.

  2. No going back on indigenisation, this is the time for workers to be empowered. Ndosaka takavhota nehungwaru.

    1. Now you are speaking for workers? In any case if companies which are closed at the moment and workers are languishing at home, how does this indeginization create the funds needed to kickstart these companies??

  3. hungwaru hupi. tanga wapihwa Zisco, national railway and any comany you want in Bulawayo tione kuti unozvigona zvekuita run some business.

  4. You think a company is run using populist policies like how you want to run town councils and Zupco and NRZ. Its not a kitchen or a flea market stall. Tichenjererei mukoma

  5. There is only two economic schools of thoughts. One from the East and the other from the West. Over time the one from the west. which advocate first for a democratically elected governance has been accompanied with business prosperity world over. In instances were the opposite is allowed to govern a country, then economic disaster has followed. We are doomed as a country for the next five years. As business people in this country, we have to budget for the irrational policies going forward and for those that fail to plan for the irrational policies, then they shall find themselves out of business. Democracy has always served the interests of business people very well. German and America are examples of such countries were business is been served well by their governments.

    1. You are spot on, the next few years are going to take us back to shortages and high inflation.

      Unlike the zim dollar that Gono could print freely and at will, the $US cannot be printed- it has to be earned. Mugabe and ZanuPF have promised to write off water, rates and electricity bills; increase civil service wages, increase payments to war vets and on top of all that they will need new vehicles for the new cabinet (one merc, one 4 x 4), new 4 x 4 cars for the MPs, endless trips to Singapore for his troublesome eye- where is this money going to come from?

  6. The chinese who we tout as great operators we should emulate are busy inviting investors using cheap labour as an incentive and today they are number two…Indeginization is already there as most of these companies are run by locals with strong financial interests in the said companies. Rather than cash in on the labour unrest in SA to get our companies going it looks like the thrust will incrrease shelf space from 70% to 100%..

  7. @mqondisi goz is engaging stakeholders not u cause electioneering is over hameno iwe watosara uchiri mu election mode they knw reality yemapoulist policies.

  8. I feel u Martin but i dont think its wise for us to continue viewing the world as either West or East. Lets look at all nations as potential business markets and engage all as equals. This world no longer has black or white or indian. Its now so dynamic, it matters not what colour anyone is wearing. Unfortunately our leaders are still stuck in e past, the very distant past. I realy hope there’s light at e end of the tunnel.

  9. The colour of the cat does not matter, but can it catch mice?

  10. The government has been given great advice by CZI. I hope their policies reflect this information. Indiginization is just about taking existing companies and introducing new shareholders. That alone will not create new jobs. The policy divides existing wealth without creating new wealth. This will lead to stagnation of the economy in its current state and very few people will benefit from that. In sectors of the economy that need investment such as manufacturing, the implications will be that no new investment will be brought in meaning there won’t be new jobs created etc. That would be a disastrous.

    1. I meant to say that would be a disaster.

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