ZIMBABWE – Government must repeal the country’s poisonous indigenisation laws rather than seek to make piece-meal changes to it, the opposition People’s Democratic Party (PDP) has said.
In a statement this week, PDP spokesperson Jacob Mafume said even after the so called new framework the policy remains a contamination to the country’s economic environment.
The new indigenization and empowerment framework is neither new nor clearer. The framework seeks to impose an empowerment levy on all companies at a time when the majority of companies are closing down due to high operational costs.
To add an additional tax on them is unsustainable. The truth of the matter is these companies will choose to shutdown than pay this heinous levy, Mafume said.
Extending the compliance deadline to March 2016 offers no relief to anyone. The challenge is not with the time limit but with the Zanu PF indigenization infrastructure.
Finance Minister Patrick Chinamasa and his indigenisation counterpart Patrick Zhuwao early this week revealed they had agreed on a raft of changes to the offending statute blamed for investor flight. The two who seem to have been fighting over the implementation of the policy announced non-compliant companies will now be levied rather than be forced to cede their shareholding for nothing.
Mafume said the indigenisation and empowerment formula is unworkable.
Zimbabwe is in need of capital to get out of the challenge that Zanu PF has placed it in. Zimbabwe needs capital in the form of Domestic Savings, Oversees Development Assistance and Foreign Direct Investment (FDI).
In short, it (indigenisation policy) is a destructive model. It is wrong to expect a company to part with 51% of its shares without equity being paid for. It is wrong to construct an indigenisation and empowerment model based on acquisition of already created wealth, the PDP said.
The party added that a correct empowerment model creates equal opportunities and incentives for the majority in order to create wealth.
It is wrong to appropriate controlling interest for any shareholder who worked hard to build an asset. It is stupid to expect anyone to transact huge amounts of money when he does not have a controlling share.
Furthermore, in a country where 75% of the people are surviving of less than 0.35 cents a day, it is wrong to expect that these people can purchase the shares in private foreign hands, said Mafume.
Whilst it is the duty of every government to ensure that its citizens are empowered, we have always maintained that the Indigenization and Empowerment Act is not the correct model of doing so. The Zanu PF indigenisation and empowerment model ensures that the rich get richer but more importantly is that no serious person invests in this country.
The policy demands that investors cede up to 51 % shareholding to indigenous blacks for free and Mafume said this is wrong.
The new framework is thus a disaster that will confuse the situation further. Investors will certainly not be fooled by the same. The IMF, which is the beneficiary of the window dressing, must also not be fooled, he said.