Indigenization? Absolutely, but… but what?

The following is a response to an article that appeared on the newzimbabwe.com news website on Sunday November 10th 2013. The author, one Lovemore Fuyane, writes about the economic indigenization model being pursued by the government of Zimbabwe.

The author of said article concedes the benefits to a nation of having an economy largely comprised of indigenous corporations across the value chain. Among these, he cites that such corporations are far less likely to divest during economic downturns than their multinational counterparts, and are, “particularly less likely to relocate the highest value employment creating parts of the value chain offshore.” This writer wholeheartedly agrees with Mr Fuyane on that front. One needs not look far to see examples of non-indigenous corporations exploiting foreign operations for the benefit of their home markets. The rumored retrenchment at Mimosa mine is a case in point.

However, Mr Fuyane goes on to contend that the current indigenization model being pursued in Zimbabwe is unlikely to bear the intended results, but end up in his words, “nothing more than a market destabilizing political tool.” It is in this regard that this writer vehemently disagrees and this article will serve as a rebuttal to some of the faulty arguments and assertions made in the original piece.

The main premise of Mr Fuyane’s argument is that because there isn’t – or he cannot identify – a successful precedent of a similar model having worked, therefore the route being pursued by the government will inevitably fail. When put s plainly, the fallaciousness of his contention is self-evident.   The writer asserts that instead of pursuing a stake in already existing foreign owned firms, a better form of indigenization is one in which indigenous people found and grow their own firms, as is the case with Strive Masiyiwa and his Econet Wireless firm. In support of this claim, he cites examples of developed countries such as the USA, Germany, Japan & South Korea, whose economies comprise largely of indigenous firms of indigenous founding.

Attractive as this argument seems, it simply doesn’t hold to rigorous scrutiny. First and foremost, even if there was an inherent superiority of the model he supports, it is not mutually exclusive with the current model being pursued by government. That is to say, there is no reason why Zimplats cannot cede a controlling stake in their local operations, while the next Strive Masiyiwa starts the next major indigenous firm. Both can be done at the same time. Secondly, this author would contend that the model being pursued by government would actually facilitate the formation of purely indigenous business entities. Continuing with the example of Mr Masiyiwa, he did not start Econet from out of the blue, but first received a very high level of education, having acquired an Engineering degree in the UK. He had needed capital funds to turn the idea of Econet into a tangible reality on the ground. Such is not possible in a state of affairs where the vast majority of a nation’s resources are monopolized by tiny minorities as was the case in commercial farming or by a handful of multinationals.

Furthermore, Zimbabwe’s unique history and current circumstance render comparisons with the United States, Japan, and Germany et al non-analogous. Those nations simply did not go through the colonial subjugation that Zimbabwe did, and it is this legacy of subjugation that leaves us burdened with a skewed ownership structure of critical resources and sectors. Put simply, there was no need for a Zimbabwe-like indigenization model in Germany or Japan because there was never a situation where the German or Japanese economies were so thoroughly dominated by foreigners as Zimbabwe is. In pursuit of this line of argument, the author further speaks of ‘resource less’ nations such as the Netherlands having achieved developed status through a model antithetical to Zimbabwe’s indigenization. It seems he is either ignorant of, or conveniently forgets that the Netherlands owes much of its development to the exploitation of the former Dutch East Indies, now Indonesia. In critically analysing our path to development, we need to remain cognizant of examples that are, and those that are not analogous to our situation. Looking at the path to development that imperial powers took will not lead anywhere.

Lastly, it’s worth pointing out that the author of the original article seems to have a shallow perception of Zimbabwe’s indigenization policy. It’s not simply a numbers game of 51/49. There are important provisions, such as the community and employee trusts, that if implemented and managed properly will go a long way in ensuring broad based and sustainable development. It is from such schemes as the Umguza Community Share Scheme that the next Strive Masiyiwa receives education or health facilities from.
The onus is on us as Zimbabweans however, to ensure that these programs are managed effectively for the benefit of all.

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