Posted: 2005-08-15 23:58 Black empowerment - Zimbabwe style  Presenter: Lindsay Williams Guest(s): Dumisani Muleya A description of Zimbabwe’s own style of black economic empowerment - called indigenisation by some - comes from Business Day Harare correspondent Dumisani Muleya LINDSAY WILLIAMS: When we first heard about the proposals from the Zimbabwean government there was a minimum black shareholding of 20% proposed in all mining companies within two years - I think that was about nine months ago - increasing to 25% in seven years, and 30% in 10 years. Has the process stalled now? DUMISANI MULEYA: Basically it’s actually 30%. There are some regulations which government is currently considering - I have those draft regulations - basically those draft regulations will amend the Mines and Minerals Act in order to introduce this black empowerment provision. It basically reads: “In order to increase participation in ownership by historically disadvantaged persons in the mining industry, mining companies shall achieve 30% historically disadvantaged ownership of mining industry assets in 10 years - 20% in two years, 25% in seven years and then the full 30% in 10 years.” LINDSAY WILLIAMS: So the theory is very similar to the theory in South Africa? The BEE process in South Africa has been proceeding apace, and in the main has been a success. The theory is one thing, how will the process be different in Zimbabwe should it go ahead? DUMISANI MULEYA: Actually they plan to reform the mining sector along the lines of South Africa’s Mining Charter - however in Zimbabwe it will be quite entangled into the politics of the day because there have been a lot of threats here of nationalisation of foreign-owned companies. The threats have been made by President Robert Mugabe and his Ministers. That’s the uncertainty in the mining sector - if not across the whole economy - particular to foreign investors. The problem that basically affects that kind of legislation in Zimbabwe is that it’s entangled into politics - it’s the rhetoric of politicians when they are going for votes, they always raise these things. When they table these things there is always scepticism around about how achievable it would be, about what the funding arrangements for these things will be, and the feasibility or in fact viability of mines under such a regime and what it will be like - those are the questions that people are asking… LINDSAY WILLIAMS: Many people I speak to think that this could actually be a rescue plan for the economy of Zimbabwe - not in isolation of course, but with other things - but what worries me is are there enough empowerment partners to take advantage of this legislation, should it go through? DUMISANI MULEYA: Yes. If this legislation does go through, it will be very difficult to make sure that it works in practice - because there are all sorts of serious implications of funding. If you look at the situation now there is a serious foreign currency shortage. When they are selling their stakes to local investors as stipulated by the legislation the mining companies would need those equities to be sold in foreign currency terms - we’ve seen in the past year that local investors do not have capacity to raise foreign currency in order to take up stakes like this. We have an example in Zimplats - a platinum mining company owned by South Africa’s Impala Platinum - that has offered local investors 16%, but there has been a dispute going on about fund raising, and who qualifies. The government just last week ended up saying that the 15% is to be split onto two for different consortiums. We’ve also seen similar disputes with regards to Independence Gold Mines here - the gold mines are owned by Metalon - so there has been some disagreement as to how local investors are included, because they don’t have the money, and they can’t raise foreign currency to buy into those mines. LINDSAY WILLIAMS: The danger is, of course, that the deals will fall into the hands of small concentration of individuals - and empowerment will not be broad based. Is that a real fear? DUMISANI MULEYA: Yes, here it’s even worse than South Africa - small politically organised groups will grab these stakes, so these political sharks will just move in using their political connections and resources in order to take up these stakes - so it won’t really be empowerment, it will be just an elitist empowerment process, which is exactly the problem that we have been facing over the years. This “indigenisation” program has just degenerated into an empowerment of the political, economic and military elites – in some cases there are some people in the army who have ventured into the mining sector. I’m talking here about certain military and former military people that have moved into diamond mining here in Zimbabwe. Comments Related to this transcript: Comment on this transcript... Name : Email : Comments :