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Zimbabwe's indigenization law provokes controversy

President Robert Mugabe's new law requires all businesses to majority black shareholders.

Mugabe’s move on private businesses came just as Zimbabwe’s economy was showing green shoots of recovery. After a year of tight fiscal management and generous Western funding there was a palpable spirit of optimism across the land.

But the new indigenization law has “almost totally destroyed foreign investors’ interest, frozen virtually all external lines of credit, plunged business confidence to subterranean lows, intensified Zimbabwe’s isolation and motivated many long-established enterprises to give serious thought to divestment,” said economist Eric Bloch.

It is implicitly racist, Bloch argues, “and prejudicial to those who have energized the economy for years.” The regulations have a special resonance for Bloch whose parents were Jewish refugees from Nazi Germany.

Advocates of the indigenization measures, which include the Zanu-PF-aligned Affirmative Action Group, say they are designed to empower previously disadvantaged citizens. Just in case foreign investors may be unsure of where to find a suitable black Zimbabwean partner, the government will supply a list of suitable candidates.

It is precisely this thinly veiled cronyism that has drawn the most fire.

“It is clientelism at its worst,” the Zimbabwe Independent newspaper commented recently. “Just like the land reform program, we shall see nationalization of private assets by a greedy clique.”

Prospective “partners” have already been descending on companies in Harare and Bulawayo, Zimbabwe’s two main cities, to assess new possibilities for plunder, the newspaper reported.

“Zanu-PF officials are hiding under the convenient cover of legitimate historical grievances to pillage the economy and enrich themselves at the expense of the nation and the people,” political columnist Dumisani Muleya wrote. Just as they did in the land reform campaign, in which Zanu-PF officials amassed farms and took the best ones for themselves, wrote Muleya, they will now grab shares of companies. “The same will apply with indigenization.”

The MDC’s bid to review the regulations in the Council of Ministers which Tsvangirai heads will be a litmus test of his strength. So far Tsvangirai has not wielded much power in the unwieldy coalition. Mugabe recently stripped several MDC ministers of their powers and handed them to his own ministers. These include regulations governing the interception of communications, which will now be used to monitor emails, critics point out.

South Africa’s President Jacob Zuma who is heading regional mediation efforts was confronted by Tsvangirai’s complaints of Zanu-PF’s bad faith when he visited Harare last week. But Zuma did not appear perturbed by the complaints. He left Harare giving bland reassurances that progress is being made.

Mugabe, as usual, appears to be living on another planet. He told journalists that he and Tsvangirai have tea and pancakes every Monday afternoon.

Everything was going swimmingly well, said the president, “We belong to each other.”