Mugabe enacted the indigenisation law to please his very demanding but wasteful Zanu PF cronies. Sadly, the law is bad for business. After years of economic decline without gaining anything by the cronies to plicate them; how much longer can Mugabe keep up this charade!
Mugabe enacted the indigenisation law with its hallmark demand for all foreign owned businesses valued at $ 500 000 and above to sell 51% to local black Zimbabweans back in 2008. The Zimbabwe economy was in tatters with shops empty, inflation a runaway 500 billion per cent, etc. He had already doled out to his ever demanding but wasteful cronies most of the seized white farms and many were already deserting the farms and demanding easier loot. He needed to come up with something quick-smart and the indigenisation law with its promise to his cronies to control foreign owned business with little input from them was the answer.
Zanu PF cronies were given seized white farms complete with the animals, crops, plant and all the buildings worth hundreds of thousands of dollars and even millions. They failed to make use of all these assets and keep up agricultural productions and within a few years most of the seized wealth was gone but that is another story. The indigenisation law was just an extension of the white farm invasion with the subtle difference that instead of being disposed completely the foreign business owner will be forced to concede 51% of the shares to a Zanu PF chef(s) or approved appointee(s) and retain the balance and the management of the business.
If Mugabe had allowed the white farmers to retain 49% of the farm and its management farm production would have suffered but not totally collapse as happened.
To the existing foreign business owner and would-be foreign investor the indigenisation law is a Dickensian “a ass”.
"If the law supposes that," said Mr. Bumble, squeezing his hat emphatically in both hands, "the law is a ass - a idiot".
Paying tax, workers, etc. are a great inconvenience but a necessary evil the business person will grudgingly pay but being force to a partner one neither ask for nor need is a curse no shrewd business person would willingly tolerate. Tax is milk from a cow, having a partner imposed is the tick and partner with 51% controlling shares is a tick the size of a monkey! No matter how sweet the grass may happen to be, no cow would graze with a tick the size of a monkey on her back!
When President Mugabe passed this act in 2008 his cronies believe law will work and they too will become filthy rich and finally live happily ever after. How Mugabe convinced these cronies back then; I attribute it to his persuasive oratory skills. How the cronies have continued to believe this nonsense to this day, eights later without even one local or new foreign investor having step up to be sucked dry; I attribute it to the mind numbing naivety of these cronies.
It is one thing to wait in vain let the dog guarding the grinding stone hoping something to fall off. What these Zanu PF cronies are doing is more like the proverbial dog guarding the grinding stone not knowing the miller now does all the family’s grinding. “Kugarira guyo sembwa kusaziva vatenzi vaenda kuchigayo!” as one would say in Shona.
The total failure of the law to deliver any foreign owned shares had no effect on the ordinary Zimbabweans; they would have never got even a sniff of any of the shares just as they never got any of the seized white farms. The masses would have benefited the businesses themselves, directly as employees and indirectly from the economic boom; if the existence of this obnoxious law had not forced local and foreign investment to dry up.
Unemployment has soared to 90% plus and the years of little or no economic investment is one of the factors behind the worsening economic meltdown. This has affected everybody the masses and the Zanu PF cronies alike. Mugabe has never been bothered about the suffering of masses he cannot ignore his increasingly restless cronies; the truth of indigenisation law never delivering any foreign owned company shares is slowly dawning on them!
Mugabe was never, even back in 2008 when the law was enacted, under an illusion that the indigenisation law would rest in any local or foreign business owner wanting to go into such cow and tick partnership. It was a cheap political gimmick and he is a reckless politician known for making very reckless gambles damn the consequences. The violent seizures of the white owned farms being one such very reckless gamble; with equally damning consequences to the nation, at least.
Still the damning consequences of indigenisation law to the nation cannot be ignore for long; a 90% unemployment rate, for example, is socially and politically unsustainable. Last week Mugabe reviewed the law and tried to make it as acceptable to the would-be foreign investors. Investors have been given the option of not selling any shares if they paid some empowerment levy instead, for example; but still there were no takers.
Mugabe is now caught in an impossible situation of his own making; he can keep the indigenisation law and risk certain social and/or political turmoil or scrap the obnoxious law and disappoint his cronies that they have been the dogs guarding the grinding stone all these years for nothing. Being the reckless gambler he is Mugabe will keep the law, continue tinkering with it without changing the key tenet of forcing foreigners to sell shares to locals, and damn the consequences.
One of the damning consequences of seizing the white owned farms was the collapse of the country’s food production; Zimbabwe fall from its coveted position of exporting surplus food to having to import food at great expense. The current drought hitting the region has hit the country very hard; the consequence of one of Mugabe’s reckless gambles that has now come back to bit him and the nation. By failing to scrap the obnoxious indigenisation law Mugabe has compounded the nation’s situation; the nation will now have to deal with the terrible drought on the one hand and the economic meltdown due to lack of investment on the other.
Mugabe has recklessly gambled with the nation’s wellbeing even people’s very lives many times in the past and seemed to get away with it; however this time the cumulated damning consequences are such he will not get away with it!