‘Empowerment policy may boomerang ‘

Zimplats is one of the many foreign-owned companies targeted for indigenisation

THE indigenisation and empowerment policy, Zanu PF’s election trump card, may trigger an economic downturn due to lack of clarity and funding constraints, political and economic analysts, contend.

Business Reporter

As Zimbabwe gears for harmomised elections set for July 31, political parties have crafted election manifestos to win the hearts of the electorate. Zanu PF, which has been in power since independence in 1980, is optimistic that an empowerment policy compelling foreign-owned companies to sell 51% stakes to locals, will catapult economic growth.

Zanu PF, according to the election manifesto, sees $7,3 billion worth of equity, including through creation of employee share ownership schemes, going to indigenous Zimbabweans through transfer of 51% shareholding from foreign-owned firms to indigenous people, creating a basis to leverage other opportunities.

Zanu PF envisages Zimbabwe’s $10,9 billion economy growing by an average of 6% in the first year, 7,3% in the second year, 8% in the third year and 9% in the fourth and fifth years, buoyed by the empowerment policy.

“Accordingly, Zanu PF reform programme of indigenisation and people’s empowerment is the only meaningful, concrete and viable vehicle to mobilise critical resources that are meaningful and viable to finance the development of economic and social infrastructure and to finance the productive sectors of the economy to benefit everyone,” the Zanu PF election manifesto reads in part.

But analysts say that the policy may have a boomerang effect on the economy which has already taken a knock during the first quarter.

The government estimates show that the economy could have contracted by nearly 3% due to political uncertainty.
Political economist Brian Ngwenya sees Zanu PF’s indigenisation thrust as populist and unsound.

“Zanu PF policy is old wine in new wine skins because growth, development and employment creation has always been a Zanu PF campaign strategy since 1980.Corruption in the indigenisation of the market shows that little promise is there from the process, as a vehicle to transform
Zimbabwe economic woes,” he said.

John Robertson, an independent analyst based in Harare, said the Zanu PF manifesto would not stimulate economic growth.

“I believe they are entirely wrong by believing that changing the ownership of existing assets will help them raise new money.

I think it will not yield any return for future investments . They (Zanu PF) are incorrectly assessing the view of the population as no one will be empowered by indigenisation as an individual,” he said.

He said on the other hand, the MDC T manifesto was within reach if the productive capacity of the economy was restored. The Prime Minister Morgan Tsvangirai-led MDC-T plans to revive the economy through several measures, anchored on attracting more foreign direct investment.

A local analyst who refused to be quoted for professional reasons, said the question of funding was the key to success of the empowerment policy, warning that if not managed well, foreign companies would end up fronting foreign shareholders widely perceived to be sympathetic to Zanu PF.

“It’s most likely that the funds will come from China or Iran. This means the Chinese will get 51% in Zimplats and considering our history   of not paying back, the 51% will be taken by China after we have failed to pay back the loan,” the analyst said.

The analyst added that politicisation of State institutions, which Zanu PF says are key to driving economic growth, may also work against the party.
Renowned economist Godfrey Kanyenze said politicians should create a platform that allows people to participate in the economy other than trying to carry people on their backs. Kanyenze said people should not read too much into political party manifestos as they try to win their votes.

“We want a politician who doesn’t promise people anything, but who says to the people, ‘let’s do it together’. We need a politician who creates an environment that allows us to do our own thing. The government should be democratic and developmental. I don’t want to be carried by someone.