Zimbabwe's indigenization law provokes controversy

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."

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.”