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Zimbabwe's indigenization law provokes controversy

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

South African President Jacob Zuma, left, and Zimbabwean president Robert Mugabe at Harare International Airport on March 16, 2010. Zuma came to Zimbabwe for talks to ease tensions within the year-old unity government. Mugabe and Prime Minister Morgan Tsvangirai both greeted Zuma at the airport, in a rare joint appearance by the feuding leaders. (Desmond Kwande/AFP/Getty Images)

HARARE, Zimbabwe — A visitor to Zimbabwe may wonder what all the fuss is about.

What could be the significance of a single word that generates such heated debate? It even eclipses the arguments bedeviling the government of national unity, as the unwieldy power-sharing coalition is called here.

The hullabaloo surrounding “indigenization” is greater than what might be expected from the dictionary description. That’s because under President Robert Mugabe’s rule, indigenization is the word for the process to redress the ills of the colonial past by redistributing assets to Zimbabwe’s black indigenous majority.

In South Africa they call it black economic empowerment. But in that country political consensus on the issue makes it less contentious.

In Zimbabwe, like everything else, indigenization is the subject of bitter dispute. The Indigenization and Economic Empowerment Act was passed by parliament in 2007. But only last month was the new law actually implemented by the publication of specific regulations. These require companies valued at $500,000 or more to “cede” a 51 percent share to black Zimbabweans.

The outcry that followed was understandable. Mugabe’s government has a reputation for seizing other people’s property. Over the past 10 years vast tracts of productive farmland have been occupied by Mugabe’s supporters and allocated to the president’s cronies. Despite the formation of the power sharing government, land is still being grabbed and commercial farmers —black and white — are being dispossessed.

The new indigenization law is widely seen as Mugabe’s bid to please middle-class supporters. The new legislation reserves key sectors of the economy for indigenous ownership including the production of food and cash crops, transportation, bakeries, retail and wholesale trade, and estate agents.

Mugabe’s partners in government, the Movement for Democratic Change led by Prime Minister Morgan Tsvangirai, say they don’t oppose the indigenization law in principle but revisions are required to its regulations, including arbitrary quotas, which are likely to scare off investors.

The German ambassador to Harare, Albrecht Conze, said this month that German investors — among the most prominent in the region — would be looking elsewhere unless there was a change of heart in government.

Conze was speaking in Harare during a visit by the president of the Confederation of German Trade Unions, Michael Sommer.

"I hope positive signals will prevail over the negative signals (from Zimbabwe)," he said. "Unfortunately, that is not the situation at the moment."