The Indigenization and Economic Empowerment Act is an act that puts the required machinery in place to provide economic empowerment to indigenous Zimbabweans. It was borne out of the need for redress, with regards to the bereavement of the Black Zimbabweans in the time of the Colonial Masters. The act was written and passed into law in 2008 but did not become enforced until the first quarter of 2016, due to policy inconsistency.
In the bill, the government mandates at least fifty one percent of shares of every public company and other businesses to be owned by indigenous Zimbabweans. This assertion of a fifty one percent controlling interest to black Zimbabweans is to affect other decisions such as merger, restructuring of shareholding, acquisition, unbundling, and relinquishment of controlling interest. Also, the bill states that government contracting and subcontracting will be done in favour of companies with indigenous Zimbabweans having a fifty one percent controlling interest.
The Minister of State for Indigenization and Empowerment, by the act, is empowered to review and/or approve the indigenization and empowerment arrangement. He/she has also been authorised to give instructions to licensing authorities (as defined in the bill) to decline renewal and registration of license to non-compliant companies.
Furthermore, a board known as the National Indigenisation and Economic Empowerment Board is to be set up according to the act to oversee compliance, administer funds and give advice where necessary. The board is to submit an annual report to the Minister and other reports as the Minister may require.
The act also sets up a fund named the Indigenisation and Economic Empowerment Fund that is saddled with the responsibility to provide financial assistance to indigenous Zimbabweans in business.
Taking a look at the law, the first major problem is that the act is not consistent with the call for greater foreign investments in Africa as the implementation of the Indigenisation and Economic Empowerment Act has caused drawback in investment by companies such as FujiFilm and NEC Corporation in Zimbabwe. Also worthy of note is the desperate need for capital injection in Zimbabwe to help the alarming state of its economy.
Also, the lack of a model that is commensurate to the circumstances of having a law that seeks an end to exploitation is a major challenge. Hence, the advantages of the act is not maximised and the country suffers reputational damage.
Looking on the brighter side though, this policy that is in support of resource nationalism is good because the global economic order is in favour of more developed countries. ‘Resource Nationalism’ may be the answer to undue exploitation of developing or underdeveloped countries by multinationals.
The issue of the Indigenisation policy in Zimbabwe is highly controversial. The question is what should be the focus of the Zimbabwean economy: Seeking a redress from exploitation of its resources by multinationals or seeking to strengthen the economy with capital injection?
Date of Publication: April 17, 2008