SALUTATIONS
Professor Cho: Chairman – Yonsei University
Deputy Minister Chidakwa: State Enterprises and Parastatals
Distinguished Professors
Ladies and Gentlemen
Having already spent at least four days in Korea and seen what your country has achieved, from its hardships to economic prosperity, I have had my resolve in seeing my own country achieve economic prosperity strengthened. I believe more
than ever that while Zimbabwe still has much to do, we are on the right track
in pursuing “Broad Based Economic Empowerment” for our people. Indeed Korea and
Zimbabwe share some historical similarities, being countries that were colonised and have had to endeavour to free their people from poverty and guarantee them socio-economic security and their place as participants in the world economy.
I can confidently say therefore that we in Zimbabwe have much to learn from a Republic that has clearly reached where it is today because of the commitment, spirit and endeavours of its people. I have thus reached the conclusion that we in Zimbabwe can, with your support and help, through business partnerships and synergies achieve our own economic growth and prosperity for our people.
My presentation to you today is therefore to seek to have you understand better what Zimbabwe has been doing with regard to achieving “broad based economic empowerment” for its people and what such an initiative in the form of indigenisation means for potential foreign investors, including from Korea.
I would like,most importantly, to share with you what we have been doing with regard to the indigenisation of our economy, most importantly to demystify the misconceptions about indigenisation in Zimbabwe. It is these misconceptions which might have made some in Korea to hesitate coming to Zimbabwe to invest in an economy that, far from being a threat to investment as has been misrepresented, will guarantee such investments.
I will focus my presentation of two critical questions on indigenisation that have on many
occasions been raised by potential investors:
1) WHAT IS INDIGENISATION AND WHAT DOES IT OFFER TO ZIMBABWEANS.
Indigenisation is a Government policy and initiative defined by two considerations by the Government of Zimbabwe:
i. Firstly,by reflection on a past historical experience where its black majority and indigenous population experienced racially imposed economic deprivation by it colonisers;
ii.Secondly,an insight into a future for Zimbabwe that recognises that the ownership of our
economy is a matter national interest and importance. This means that it is therefore imperative that sustainable economic growth, development and socio-economic prosperity of Zimbabwe is owned and controlled by its own people.
[The story of Korea inspires us!!]
Given such considerations the laws of Zimbabwe have now made provision for the majority
indigenous Zimbabweans who were deprived of any benefit from their economy by
colonialism to own at least 51% of their economy, especially in key sectors that are strategic and critical to the growth and development of our economy. Any foreign investment in Zimbabwe must therefore ensure that at least 51% of such investment is secured by Zimbabweans.
The overall objective for indigenisation is therefore to achieve the following:
Ø To economically empower previously disadvantaged Zimbabweans.
Ø To create conditions that will enhance the economic status of disadvantaged Zimbabweans.
Ø To promote the development of a competitive domestic private sector that will spearhead economic growth and development. We believe that development is a process owned by a people. This is achieved through ensuring that the people of a country control and own its economy so that they
are guaranteed the benefits of such an economy to help drive their development.
Ø There is therefore no investment that can thrive in an economy a low income domestic investor thus the need to ensure sustainability of both the foreign and domestic investor.
Most importantly our indigenisation initiative is based on a “broad based economic
empowerment” approach, one which seeks to benefit all Zimbabweans at all levels and does not seek to benefit only a privileged few. This means that any investor coming to Zimbabwe will have a broad market to invest in amounting to no less than 13 million Zimbabweans.
To achieve such a broad based approach we have identified three keys areas that must be guaranteed ownership of
Zimbabwe’s economy, namely:
(a) local communities
(b) employees and
(c) the sovereign wealth fund.
Ladies and Gentlemen, one cannot invest in a country where the people themselves are not
able to participate in their economy and ensure that foreign investments are made sustainable and indeed profitable. I will therefore outline to you that indigenisation is a policy that seeks to guarantee the people of Zimbabwe ownership and control of their economy, having been historically deprived of
any participation in their economy by colonialism. It is such broad based economic empowerment that will ensure that Zimbabweans begin to grow their own economy and guarantee development that secures their own socio-economic needs.
2) WHAT IS THE IMPACT OF INDIGENISATION ON INVESTORS WHO WISH TO INVEST IN ZIMBABWE.
Here I will correct the misrepresentation that by indigenising our economy we are seeking to scare off or chase away investors who wish to come to Zimbabwe. On the contrary we believe that it is through indigenisation, where a people own and control their economy and natural resources, that investors can then be invited into a country and be able to confidently invest in that country knowing for certain that their investment, to whatever extent, is guaranteed by the people of that country. We have since learnt, and indeed the world is learning, that any investment, whether domestic or foreign, is
difficult to sustain when the people of the host country are excluded from participation and benefitting from their own economy. Such deprivation causes resentment and conflict which in the long term is not conducive for any investment, whether domestic or foreign.
3. COMMUNITY AND EMPLOYEE SHARE OWNERSHIP SCHEMES/TRUSTS
By local communities we mean that those Zimbabweans who have long been marginalised from
the economy on whose very land lies vast natural resources, including mineral resources, must benefit from those natural resources by securing at least 10% share in any foreign investment or company exploiting such natural resources from within their community or land. By so doing we will transform the lives of millions of Zimbabweans residing in rural areas who have in the past benefitted
only as labourers for mining companies mining their mineral resources.
The Government has begun a process of setting up community share ownership schemes/trusts thorough which local communitieswill be able to hold and own 10% in any investment that exploits their naturalresources. The Community trusts will build on capital which has been denied of them and this is the beginning of the accumulation of wealth by our people. Our communities with their capital and value arising from their equity in community share trusts can result in them being able to attract Korean investors to attract much needed infrastructure by leveraging on the shares. Effectively we
have entered an era were our communities have been empowered to pay a part in national economic development creating opportunities for employment, domestic investment and overall upliftment of the people.
We must be aware that these CSOS/Tare not an end in themselves, where the community simply owns ten percent shares,but are a means to guaranteeing real and broader investment and development for the communities.
A community will thus be able use their 10% share in the exploitation of their natural
resources to build roads, infrastructure, schools, and hospitals, etc, to benefit those economies. It also means that once such a community is economically empowered it can then use its 10% stake to open other investment opportunities for itself, such as investing on the stock market or even in other countries, therefore broadening their developmental capacity beyond the 10% it will have
originally secured from the exploitation of its natural resources.
Zimbabwe recently set up its first community trust, involving a platinum mining company,
Zimplats. This Trust has guaranteed to at least three local communities a share in a company to the value of at least 100 million United States dollars. Several other such trusts are already in the process of being set up by companies that have already concluded negotiations with the Government of Zimbabwe.
You can imagine now, that any investors from South Korea will thus be able to come to
Zimbabwe targeting not only a small population in the capital cities but with an eye on local communities that are economically empowered and could well be seeking goods and services from South Korea to complement their development. Zimbabwe is also a country with vast skilled human resources, it being ranked the most educated country in Africa at the moment.
The challenge has however been that Zimbabwe’s employees who were historically
exploited under colonialism have not benefitted from their labour and from companies they have helped to grow. Through employee share ownership scheme/trust we will guarantee employees direct benefit from companies they work for through securing for them a minimum of 5% share in the ownership of those companies. This means that foreign investors will be guaranteed a committed labour force, free from debilitating labour actions and therefore able to ensure maximum profits. Workers are key in company growth and development for they too take risks and deserve rewards. Hard working mine workers in many an African setting have sacrificed with their sweat but the hand of their service they drift into a life of penury. An empowered labour force is a productive labour force.
4. SOVEREIGN WEALTH FUND
A Sovereign Wealth Fund is an inter-generational fund that guarantees nationals of continued
benefit arising, in our case, from the extraction of our mineral resources. It will be used to ensure equal
development of our country and insulate our country in times of unpredictable resource
prising and exhaustibility. It is our desire therefore that the Sovereign Wealth Fund ensures financial stability of the national economy. The wealth fund gives the country security to develop the economy and comfort to our entrepreneurs. The value of our national endowment shall be captured under the Sovereign Wealth Fund.
5. EMPOWERMENT OF ENTREPRENEURS.
Ladies and gentlemen, it is important that a nation like Zimbabwe, and learning from the
inspiring Korean story, consciously support the creation of entrepreneurs through SME development and other interventions. The Korean story boasts of Daewoo, Hyundai, LG, among other giants who are leading businesses which have created wealth beyond and without. Our National Indigenisation and Economic Empowerment Board through share warehousing and direct support to the young entrepreneurs is aimed at supporting the growth and development of Zimbabwean economic
giants. We are now convinced further that any foreign investor can never be confident in investing in a country where the people of that country have not achieved for themselves a level of economic participation and domestic investment to encourage the foreign investors to partner with them. Zimbabweans must first be economically capacitated.
inspiring Korean story, consciously support the creation of entrepreneurs through SME development and other interventions. The Korean story boasts of Daewoo, Hyundai, LG, among other giants who are leading businesses which have created wealth beyond and without. Our National Indigenisation and Economic Empowerment Board through share warehousing and direct support to the young entrepreneurs is aimed at supporting the growth and development of Zimbabwean economic
giants. We are now convinced further that any foreign investor can never be confident in investing in a country where the people of that country have not achieved for themselves a level of economic participation and domestic investment to encourage the foreign investors to partner with them. Zimbabweans must first be economically capacitated.
6. INDIGENISATION GUARANTEES FOREIGN INVESTMENT
Our vision for indigenisation is characterized by partnerships between local Zimbabweans and foreign investors that guarantees win-win outcomes, security of investment and establishment of up and down-stream industries for the maximum benefit to the majority of the population. Foreign investors must be confident in coming to invest in Zimbabwe, in a country where they are guaranteed by law at least 45% in the economy of Zimbabwe. Put into context, this is an economy with the second largest platinum reserves in the world, estimated to have the largest alluvial diamond fields and with other vast reserves of gold, chrome, coal, etc. Surely 49% of such an economy cannot be deemed as little or a bad investment.
ProfessorSeung- Hun Chun, President of the Korean Institute of Development, yesterday said, “Africa is a Land of Opportunities and Korea, The Land with Vivid Experiences of Development”, he further
posited that in order to tackle its challenges, Africa needs to seek for feasible alternatives carefully, and he notes that needed is visionary leadership by the government with strong development ownership. This is what we are doing as we design a trajectory of growth and development based on the democratization of our economy that transforms architecture that by and large
was exclusivist to an era of inclusive investment.
For Africa, the time hascome for us to learn from Korea on how they overcame adversity and achieved prosperity. Africa is a continent with a sad history of deprivation which led to conflict, wars and diseases. Such a hostile environment has not been conducive for sustainable investment. Zimbabwe however has not only managed to maintain general peace and stability conducive for foreigners to invest. It has now embarked on an indigenisation programme that will see the people of
Zimbabwe willingly and freely participate along side bona-fide investors.
Ladies and gentlemen Zimbabwe welcomes you, the doors are open. Economic freedom ensures peace and stability and it is an ideal that our heroes and forefathers fought for as they over- threw colonialism, racism and apartheid.
Zimbabwe willingly and freely participate along side bona-fide investors.
Ladies and gentlemen Zimbabwe welcomes you, the doors are open. Economic freedom ensures peace and stability and it is an ideal that our heroes and forefathers fought for as they over- threw colonialism, racism and apartheid.
The natural resources are vast, human resources plenty and the indigenisation law both enabling and protective towards foreign investors. Lastly allow me to quote His Excellency, President Robert Mugabe when he said, “We wont rob investors of what rightly belongs to them but we also don’t want to be robbed!!”.