3 December 2012

Zimbabwe: Invidious Spot - Kasukuwere's Zim Indigenisation Battle

Photo: Zimplats
Platinum mine in Zimbabwe


Zimbabwe's Indigenisation and Economic Empowerment Act, which was signed into law on April 17 2008, has courted criticism and placed Youth Development, Indigenisation and Empowerment Minister, Saviour Kasukuwere, in an invidious situation. Deputy Editor-in-Chief, Dumisani Ndlela, caught up with the minister for an interview on the contentious empowerment campaign, under which foreign-owned companies operating in Zimbabwe have been called to cede at least 51 percent shareholding to indigenes. Excerpts of the interview below:

Minister Kasukuwere, thank you for giving me the time to talk to you, principally about indigenisation. You're the key person, you're the minister in charge of this policy. I'd say, depending on how you see it, this has been largely controversial. Can you define this policy for us, for the nation?

Thank you very much. Let me start by saying this is a national policy; there's a national law that seeks to ensure that the people of Zimbabwe are in charge, are in control, that they derive a benefit and survive on the resources of their country. The law seeks the development of the people, the well-being of the society and that security and growth of the national economy is in the hands of the people. So our policy is one to eliminate poverty, to undo the colonial injustice, expand the national economy, bring on board the majority to become active participants in the economy.

 Basically, it's an empowerment policy?

It's for empowerment; it's transformative.

But in your view, why has it courted so much controversy and criticism if the intention is noble?

There are people who think they have a duty to speak on behalf of foreigners when foreigners have their own ability to speak. They are the good corps - they must speak to please their masters for whatever reason. They do not seek to speak on behalf of the people, the downtrodden. There are people who refused to go to war and fight for Zimbabwe's independence. In many instances, the same characters...you see them again speak against policies that seek to empower the people. They have done so with the land reform programme; they have problems with indigenisation because it's part of their DNA. So the controversy, there's no controversy because the law was passed by Parliament. There was a majority view and so the controversy exists in the minds of those who think for an African person to be emancipated is wrong. They are trapped in their colonial straightjacket, mental straightjacket, which tells them you must remain a servant, you are a boy, you are nothing more than a worker.

How broad is the empowerment programme that you're pushing? I guess the criticism has been that instead of creating jobs, it has resulted in unemployment because it has not attracted foreign direct investment, and it has not resulted in new industry or new investment?

Look at those companies which have been successfully indigenised, their company statements and what they say they are going to do. A lot of work is done behind the scene. The world over, the issue of citizens benefitting from their resources, equity and fair benefits accruing to the people is not a debatable matter. If you look at companies that have complied, they are actually announcing plans to do major investments in our country because they now know they have security of tenure. When we indigenised Meikles, Pick'n Pay came in. They poured in US$25 million. How many Pick'n Pays have been built around the country? When we did the empowerment transaction with the bank, Ecobank, the shareholders poured in more money and they are expanding. I'm just giving you some of the companies that have been successful after being indigenised - PPC, UNKI - who have gone on now that they have the confidence and the country has accepted them. I challenge you, give me one company which closed owing to indigenisation in Zimbabwe. To the contrary, they have now expanded. Those who are not doing anything...it's because they are hoping...because they think some regime change will materialise to leave them in that comfort, where they continue to be islands of prosperity. Otherwise normal companies the world over are now saying Zimbabwe is the safest investment destination because this unequal ownership cannot be sustained. So those who are minimalist in their approach, who think it must only be them as individuals, continue to peddle the myth that indigenisation or empowerment is in conflict with FDIs (foreign direct investment). No...But we still hear individuals who are expected to know better undermining a law of the country...They are undermining the law, abusing institutions to block legitimate, legal expectations of our people. It's unfortunate and very sad.

I realise Kenya has adopted a resource indigenisation model like you're proposing but it has not courted any controversy....

While Kenya has done it and there's been no outcry, because it's being done in Zimbabwe, some Zimbabweans - the people who are opposed to indigenisation are not foreigners, it's Zimbabweans.

But I guess the scepticism emanates from the land redistribution programme. I admit this was a noble initiative to redistribute fertile land which was in the hands of a minority whites to landless blacks who were crowded on infertile lands. But I guess in terms of equity, a lot of blacks still remain landless while a few, maybe well connected...

But is it any reason for you to oppose it because you have not received land as an individual? The problem with many of us is that if I don't benefit as Saviour Kasukuwere, I must make the loudest noise, go on the mountain top and say 'It's not fair'. The 60 000 Zimbabweans who are tobacco producers now, who are they? Are they not citizens of this country? Why is one angry with 60 000 tobacco farmers and happy with 4000 white farmers? If a Zimbabwean benefits, I have benefitted as well. The land reform programme has benefitted 400 000 families. Who are they? Are they not Zimbabweans?

But don't you think it could have benefitted much, much, more...

If's don't make history. The reality of the matter is that land is now in the hands of our people and it will continue to benefit generations to come. I own a piece of land, I own a farm; one day I will die and another Zimbabwean will continue. But the most important thing is that it is now owned by the majority as opposed to a system, a land tenure system which was skewed in favour of a minority.

Tell me about compliance. You started with the mining sector and I'm sure you've moved to the manufacturing sector. What would you say is the level of compliance to indigenisation in the mining sector?

Obviously, it takes time. It is not an overnight event. Like now, discussions are being held behind the scene; we have to hammer out agreements, there are processes that must be attended to, boards, etc, have to come on board and this is all part of the work. But like I have always said, the majority of the mining firms in the country have accepted the empowerment programme; they have complied with the empowerment programme. There has been very interesting compliance in the manufacturing sector. We're almost there in terms of most of the manufacturing ccompanies but there is a lot of work that our officials have to deal with. We have had to increase manpower to deal with the work.

I guess the issue of poverty should be key, and critics have spoken about the indigenisation programme's lack of capacity to create jobs. Unemployment is said to be at 80 percent. How do you intend to tackle the issue of poverty through this initiative?

Let us not believe some of the crazy numbers we get. There's no way a country can survive with 80 percent unemployment. What we must deal with is to formalise this huge informal sector in our country. We must create a conducive climate for our budding entrepreneurs who are running their small enterprises in tailoring, manufacturing of coffins. How do we bring them on board to become part and parcel of our mainstream economy? We have to accept that the majority of our people are in SMEs and we must attend to their requirements. They want access to funding; they want access to shelter where they can operate from; they want training programmes. These are some of the objectives of the empowerment programme. How do we support what mai (Sithembiso) Nyoni is doing in the SMEs? Those in Siyaso? The economy is large but highly informal. Now, your second part of the question: How do we fight poverty? The moment we make it easy for participation by the majority in the economy, we are now addressing poverty. And the core challenge is: How do we undo decades of a mental frame that is opposed to the aspirations of the majority, how do we deal with laws that consign our people to perpetual poverty? How do you undo some of the by-laws in the country, some of the laws that penalise...and look at what we have been trying to do as a government. I'm pleased to say the President, in his State of the Nation address, addressed one of the key fundamentals, mining. How do we formalise gold panning? We have millions of people in this country who're looking for gold in rivers, but we now need to strike a balance between the environment and sustainable mining. That's job creation. The land reform programme, we're talking about 60 000 tobacco farmers.

I am reminded of your public fall-out with the Reserve Bank of Zimbabwe governor (interjects - SK: That is now history). The governor offered an alternative and I guess it suggested procurement from these big mining and manufacturing concerns. And you spoke about formalisation of the small scale sector. Don't you think that alternative could assist in terms of growth of small businesses?

Procurement has always been part and parcel of the empowerment process. Let's not look for abstracts in the process and run with them. Procurement by itself is not a means to an end; we have a whole chain. It's part of our strategy.

But why don't we legislate for it? I guess in South Africa they have done that?

We have come up with a statutory instrument which will address the same matter in more detail. If you look at the indigenisation law itself, we've already accepted it, it's there. There is procurement, local procurement, preference for Zimbabweans. It's just part of it, the overall strategy - how we plan to combat poverty...

I am thinking the empowerment model that I'm seeing, I'm thinking of something that really reaches out to the grassroots, minister, something that empowers the folks who are farming in rural areas?

Farming is empowerment; access to land is empowerment...

But farming also requires markets?

This is why we say we need to fund our farmers to produce more. We needs markets, we must support our producers. Look at Mbare musika, GMO tomatoes coming in from outside the country, when our own women in Mutoko, the small farmers in Murehwa, are having to fight for a market with people coming from South Africa with GMOs.

And these are the people supplying the big retail outlets.

Precisely. That's why as we indigenise, we're very clear and categorical that procurement must support local, Zimbabwean producers.

Have you started unravelling that?

First of all, we have to deal with control of the compaies. Now that Nicholas Ncube is chairperson of Blanket Mine, isn't it time we expected him to look at the procurement bucket and support the people of Gwanda? If he doesn't do that, then we have a problem. You cannot have authority over the allocation of resources if you do not have power or control. We must be unapologetic about it and I'm unashamed about it. We must place our people at the control of these companies for them to direct procurement.

Talking about recent empowerment deals, I recognise, well, I've seen documents on PPC, I have read about the UNKI empowerment deal, and these are vendor financed. Are there immediate empowerment benefits in that kind of deal?

First of all, we never said we were going to grab assets. I think this is very important.

But I remember you said you were not going to pay anything for our resources?

Remember, I'm a businessman, I understand business. When we are structuring these things, we look at them very closely. There is our value sitted there. I can tell you and I must admit we could have done better had it not been for the stupid noises coming from our own government. What we've now done, which is fair by any standard, has been achieved out of a difficult situation when you've your own Zimbabwean pulling you, working hard behind you to make this programme fail.

So you reckon vendor financing is the best model?

Because you are going to be funded anyway. And the vendor financing takes into account one thing, there'll be no diminution of value and our 51 percent is not coming down and a dividend can be declared. Look at the price of platinum today and what it means to the transactions in platinum mines.

I guess the risk of vendor finance deals is if the resources prices plummet and there're no dividends, it can create challenges?

We are talking about business here; we must take risks, calculated risks. And some of the risks that we've taken, we have actually come with good deals for this country. The argument (from detractors) has now changed from us trying to grab assets to say 'the structure that you've come up with is not the best'. What is the best? The same people yesterday were saying it cannot be done are now busy saying...you know, it's...they pursue you everday. You make progress, they must find something (wrong). We are determined, we are going forward. What I'm happy with is when we see the communities develop.

And then Zimplats. Where are you with Zimplats?

Zimplats, the papers are here. We're happy that they are talking to us. We know there are some people who are interested, who think they can blackmail us, but no. So far I'm happy we've our agreements in principle; they've complied with the law.

You have been angry with Tongaat Hullet?

I have not been angry, our guys are talking to them and I'm happy they have started engaging with our people. This thinking that you can be arrogant and get away with it, it doesn't work. We've a law.

Thank you minister for your time.

My pleasure.

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