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The "indigenisation" of Zimbabwe; Foreigners and local whites out
The Economist
April 22, 2010

A muddle over "indigenisation" looks set to slow down an economic recovery

For a moment it seemed as though a mortal threat to businesses in Zimbabwe had been lifted. Now the usual lack of clarity has been restored. Would-be foreign investors and local businessmen alike do not know what to do next, except to hold their breath.

Two months ago Zanu-PF, the party of Robert Mugabe, who marked 30 years in power on April 18th, unilaterally announced regulations to put into effect an "Indigenisation and Economic Empowerment Act". The law, passed two years ago but not previously enforced, required all firms worth more than $500,000 to be majority-owned by "indigenous Zimbabweans" and to show plans within six weeks for compliance within five years.

Under Mr Mugabe's bluntly racist conception of nationality, white Zimbabweans are excluded, since the law defines "indigenous" as those "disadvantaged by unfair discrimination on the grounds of his or her race" before independence in 1980, plus their descendants. So any white Zimbabwean, let alone a foreign firm, is liable to be prevented from wholly owning any smallish enterprise or farm. Whites are barred altogether from some sectors, including bakeries and beauty parlours.

Among the foreign firms that would be hit are Barclays Bank and Standard Chartered, two British banks that are big in the region, as well as Nestlé, the Swiss-based food giant, and Impala Platinum Holdings (Implats), one of the world's biggest producers of platinum, which is headquartered in South Africa but is one of Zimbabwe's prime mining companies.

Just ahead of a deadline for companies to submit their plans for compliance, the Movement for Democratic Change, the former opposition party that is locked in an unhappy national unity government with Mr Mugabe's lot, said that the cabinet had pronounced the regulations "null and void". Rubbish, said Saviour Kasukuwere, a Zanu-PF man who is the minister in charge. He insisted that there would merely be further "consultation" before the law is put into action.

Even the delay gave foreign and local white business people a glimmer of hope that they could go on running their own shows. Zanu-PF would be loth to admit publicly that it was backing down over anything, least of all in the face of foreigners and whites. Mr Mugabe says that indigenisation "recognises our sovereign right of ownership". Ultimately, he says, his law will prevail.

The next step is for a parliamentary committee to consider the regulations, so far without a deadline. But the MDC's slim majority in the lower house, which it won in a general election two years ago despite rigging and intimidation, is steadily being whittled away by deaths, arrests and criminal convictions which mean that a growing number of the party's MPs cannot vote in parliament. And even if the indigenisation rules were suspended or scrapped, that would be no guarantee of security. Earlier this month a South African-owned game ranch was invaded, even though a new bilateral investment-protection treaty between the two neighbouring countries' governments had just come into force.

In any event, the indigenisation debate and Zanu-PF's capriciousness hardly encourage foreigners, let alone white citizens, to invest. Despite Zimbabwe's mineral riches, most big mining firms have stalled future plans. And the uncertainty is spiking the efforts of Tendai Biti, the MDC man who is the unity government's finance minister, to secure the foreign cash the country sorely needs to recover from Mr Mugabe's ruination of the economy.

Some say this is part of Zanu-PF's plan to fight the next election, perhaps as early as next year, on its usual populist platform, blaming the West for all Zimbabwe's ills. It is certainly wary of letting the MDC take the credit for a recovery.

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