Mimosa Holdings: Zvishavane Community Share Ownership Trust

The Zvishavane Community Share Ownership Trust has been launched with the community recieving 10% equity from Mimosa Holdings (Pvt) Limited as well as US$10million.

The President of the Republic of Zimbabwe launched the Trust acknowledging the compliance of Mimosa Holdings and citing that companies not in compliance with the Indigenisation law would be dealt with accordingly.

Community Share Ownership Trusts remain as a tool for implementation of the Government's objective to ensure that the people of Zimbabwe benefit from their God Given resources and ensure sustainable development as well as the creation of secondary economies.

2012: A Year for Emboldened Economic Empowerment

A New Year dawns upon Zimbabwe,
presenting our nation with an opportunity to consolidate the indigenisation of
our economy and facilitate real broad based economic empowerment. This
opportunity is being presented at a time when we are learning from western economies
in turmoil that no national economy is sustainable when it fails to guarantee its
majority people an equitable share in national wealth. Such lessons must
strengthen our resolve as we forge ahead with confidence on this path that
seeks to ensure that our nation’s wealth is restored to the majority indigenous
Zimbabweans who continue to be socio-economically deprived by the economic discrimination
inherited from colonialism.

The year 2011 witnessed our Government’sgenuine commitment to broad based economic empowerment of all indigenous
Zimbabweans without discrimination what so ever. The Mhondoro-Ngezi, Chegutu,
Zvimba Community Trust and Tongogara Community Trust are precedents of such
empowerment, guaranteeing local communities 10% shareholding in two mining
companies exploiting the world’s second largest platinum reserves. Zimbabwe’s
workers who have been the back bone of our economy, though long denied any real
fruit from their labour, are now being empowered through Employee Share Ownership
Schemes, the first of which have been established by Meikles and Schweppes to
the benefit of not less than 10 000 employees.

Indigenisation has also been about prioritizing the opening up of new frontiers and opportunities for young
and emerging entrepreneurs whom we must ensure form the foundation of our indigenized
economy. In this regard a Youth Development Fund has to date made no less than
US$40 million available to young entrepreneurs, which funds have been placed
under transparent co-management between the Ministry of Youth Development,
Indigenisation and Empowerment and reputable financial institutions such as Stanbic
Bank, CBZ and CABS. The Government of Zimbabwe has also set aside funds foryouth empowerment and job creation in its recent 2012 budget. Indeed we are ontrack with regard to ensuring the economic empowerment of our youths and injection of new entrepreneurs into the foundation of our economy. 2012 shall see us prioritize the capacity building of our youths, ensuring that they are endowed with the necessary entrepreneurial and business management skills to
guarantee their successful economic empowerment.

Civil servants, who have long expressed discontent over inadequate salaries, must begin to identify and pursue opportunities arising from their government’s economic empowerment
initiatives. Indeed their various associations can become vehicles for investing
in the economy, cushioning themselves from the current socio-economic challenges still being addressed by the government. Women too must take centre stage, as their resourcefulness has long proved them capability to positively define our economy, more-so when targeted as beneficiaries of economic empowerment. Where women come together and are motivated toward a common goal we have seen enough precedent of women entrepreneurship. Why should we not see women in mining,tourism, banking or manufacturing industries?

Our role as Government shall be to ensure that all our people, from whatever background are provided with the conduciveenvironment to successfully empower themselves economically. We shall thereforebe looking to the banking sector, especially non-indigenous banks, to open up attainable capital to indigenous entrepreneurs, while endeavoring to guarantee our indigenous
banks the rehabilitative support to ensure their stability and capacity toremain pillars for economic growth spurred by indigenous Zimbabweans. We shall also expect to see the National Indigenisation and Economic Empowerment Fund (NIEEF), our model of a sovereign wealth fund, play a more defined role in ensuring economic empowerment across the whole country.

2012 must see us pursue our people’s economic empowerment always with the understanding that it is only when the majority indigenous Zimbabweans own and participate in their national economy that such economy will grow in a sustainable manner. Such growth, pursued
within the socio-economic harmony achieved when the majority is guaranteed an
equitable share in their national economy, will become more appealing to
foreign investors whose investments are best secured by indigenous Zimbabweans
with whom they will partner.

May our 2012 resolution then be that Zimbabweans find a unity of purpose, an unwavering commitment to safeguard and see through thesuccessful implementation of indigenisation and economic empowerment toguarantee our economic prosperity and with it socio-economic development and rights for generations of Zimbabweans to come.

Minister Saviour Kasukuwere
Ministry of Youth Development,
Indigenisation and Empowerment.

Foreign Investment in Zimbabwe: Indigenisation Issues by HONOURABLE S. KASUKUWERE (MP)

Presentation by

HONOURABLE  S. KASUKUWERE (MP)

Minister of Youth Development, Indigenisation and Empowerment

at the Zimbabwe Capital Markets Symposium,

Sandton Convention Centre, Johannesburg,

4th November 2010

Presentation Title: Foreign Investment in Zimbabwe: Indigenisation Issues

Background

Colonial system: Dispossession, marginalisation & exclusion of indigenous Zimbabweans.

Since independence Government of Zimbabwe passed various legislation to rectify colonial injustices.

Notable achievements realised in land reform, social sectors & some professions like accounting, lawyers, management.

Little progress was achieved in terms of significant indigenous ownership in mining, manufacturing, construction, tourism & transport sectors .

Emergence of empowerment lobby groups to pressurize Government to speed-up the empowerment of indigenous Zimbabweans

Foreign Investment

Foreign investment presents our economy with opportunities for increased production, increased employment, development of infrastructure and new technologies.

Foreign Direct Investment is generally associated with improved standards of living for the residents of the recipient countries.

A development model anchored on foreign direct investment only and which does not include the meaningful involvement of local Zimbabweans, is socially, economically and politically unsustainable.

Our vision is characterised by partnerships between local Zimbabweans and foreign investors to guarantee participation by indigenous Zimbabweans, security of investment and establishment of up- and down-stream industries for the maximum benefit to the majority of the population.

Zimbabwe is not the only country with legislation for promoting participation by  the indigenous majority. Other countries like South Africa, Botswana, Zambia have similar laws.

Developed countries have achieved a significant participation in the economy by their nationals & foreign investment still plays a meaningful partnership role.

Fundamental principles

• Recognition of the universally accepted notion of equal opportunities for all as a matter of natural right & the need to eliminate ownership of wealth along racial lines.
• That indigenous Zimbabweans must own & benefit from the exploitation and utilization of their God given natural resources. 
• Commitment to underpin our political sovereignty through economic independence.
• The need for broad-based participation in the indigenisation process as opposed to the enrichment of a few individuals only.

Policy objectives

• To economically empower previously disadvantaged Zimbabweans.
• To create conditions that will enhance the economic status of disadvantaged Zimbabweans.
• To democratise ownership of productive assets of the country.
• To promote the development of a competitive domestic private sector that will spearhead economic growth and development.

Indigenisation & Economic Empowerment Legislative Framework

1. 1.       Indigenisation & Economic Empowerment Act (Chapter 14:33).
2. 2.       Indigenisation & Economic Empowerment (General) Regulations, 2010.
3. 3.       Indigenisation & Economic Empowerment (General) (Amendment) Regulations, 2010.

Indigenisation & Economic Empowerment Legislation

• Act sets 51% indigenous shareholding in all businesses with a net asset value of US$ 500 000 as the long term policy objective.
• All mergers, restructurings, unbundling of business, demergers, relinquishment of a controlling interest shall comply with the 51% indigenous ownership requirement.
• Promotes procurement of goods and services from indigenous businesses.
• Provides for the establishment of the National Indigenisation & Economic Empowerment Board to advise the Minister & manage the Fund.
• Provides for the establishment of the National Indigenisation & Economic Empowerment Fund to finance indigenisation and empowerment  transactions.
• Provides for financial instruments to assist local investors with funding from fiscus, levies & borrowings.
• The Minister shall approve all indigenisation arrangements.
• Businesses aggrieved by the Minister’s decision may appeal to the Administrative Court.
• The Indigenisation and Economic Empowerment (General) Regulations 2010 require existing businesses above the threshold of US $ 500 000 to declare their levels of indigenisation to the Minister and if not compliant, submit to the Minister their Provisional Indigenisation Implementation Plans.
• False declaration of information to the Minister regarding shareholding structures is an offence and liable to prosecution.
• New investments above the threshold of US $500 000, declare their levels of indigenisation to the Minister and if they are not compliant, they submit their Provisional Indigenisation Implementation Plans.
• Employee, Management & Community Share Ownership Schemes or Trusts are encouraged to be set-up as part of 51% indigenous shareholding to ensure broad based participation.

Reserved sectors for indigenous  Zimbabweans:

•  primary production of food & cash crops
•  retail & wholesale trade
•  barber shops, hairdressing & beauty saloons
•  employment agencies, estate agencies
•  valet services
•  grain milling, bakeries
•  tobacco grading, packaging & processing
•  advertising agencies
•  milk processing
•  provision of local arts & craft
•  marketing & distribution.

Indigenisation & Economic Empowerment Legislation (Cont’d)

• Establishment of Sector Committees for the purpose of assisting the Minister to come up with sector specific implementation frameworks, with respect to the appropriate minimum net asset value threshold above which a business in the sector or sub-sector concerned is required to comply with the regulations,
• … the lesser shares, maximum periods and weightings to be assigned to socially and economically desirable objectives & policies to overcome specified barriers and challenges to indigenisation in any sector of the economy.
• Sector Committees concluding their work & recommendations to be considered by Government before gazetting of the sector specific implementation frameworks.
• Government will review all licensing procedures to ensure compliance with I& EE legislation.
• Notable Indigenisation proposals approved to date: Schweppes (Pvt) Ltd, Old Mutual.

What indigenisation is not about

Immediate compliance: Phased compliance for both existing and new investments. New investors are free to come and invest on condition that they submit their plan, setting out how they intend to comply over 5 year period.

Investment prerequisite:. The 51% indigenous shareholding is not an investment pre-requisite.

Imposition of indigenous partners: The Government will not impose indigenous partners on foreign companies or businesses. Existing and/or new companies or businesses identify their own partners and negotiate the details of their joint venture agreements among themselves without any involvement of the Government.

Expropriation or nationalisation of businesses: The indigenisation process does not entail expropriation or nationalisation of companies or businesses. Indigenous Zimbabweans pay for any stake they take-up in an indigenisation transaction.

Conclusion

Our indigenisation & empowerment laws are not intended to stifle foreign investment, but rather guarantee security of investment through indigenous participation.

The indigenisation and economic empowerment laws are premised on the need to forge mutually beneficial partnerships between local and foreign investors.

Our indigenisation & empowerment laws have created certainty in Zimbabwe’s economy since investment requirements are now enshrined in the law and not subject to speculation.

Our Indigenisation & empowerment legislation ensures broad-based participation by indigenous  Zimbabweans to guarantee a stable investment environment.

Thank you!

Hon S Kasukuwere (M.P)

Minister of Youth, Indigenisation and Empowerment

Interview with Hon Minister Saviour Kasukuwere on Indigenisation & Empowerment

The Indigenisation and Economic Empowerment legislation which came into effect last week provides the rules and regulations that guide the economic empowerment of the communities and other special and disadvantaged groups such as youths, women, workers and war veterans. Among other things, the Indigenisation and Economic agenda seeks to have a 51 per cent indigenous shareholding in major and strategic companies and develop a broad-based domestic private sector which is critical to economic growth and development. To get clarity on aspects of this agenda, Anthony Jongwe (AJ) caught up with the custodian of the indigenisation and economic empowerment agenda in the inclusive government Minister Saviour Kasukuwere (SK) and the following is their discussion.

AJ: Good morning minister. The Indigenisation and Economic Empowerment Act is now operational. Could you please shed some light on how the processes (indigenisation and economic empowerment) will unravel going forward?

SK: Good morning Jongwe. As you have rightly pointed, the implementation of the legislation has started. Within the next 45 days, companies will be expected to complete the relevant forms. As a Ministry, we are putting in place adequate measures to ensure that these forms are readily available and that includes the option of downloading them from our website. The forms seek to elicit information pertaining to the current set-up obtaining in each relevant company. It is hoped that the information obtained will reflect the correct level of ownership. As a ministry, we intend to use the information to come up with comprehensive sector-by-sector plans on how best to enhance empowerment. The whole purpose of this initiative is to broaden the national cake by bringing more people into national economic participation and development.

AJ: But there are serious concerns about the timing of the whole process, minister.
SK: It is the same old argument used when we introduced the highly successful land reform programme

AJ: Another school of thought is arguing that this legislation is largely motivated by ZANU- PF’s need to have a strong bargaining weapon in the on-going sanctions issue since there was no unanimity on the need for the legislation in the inclusive government.

SK: It’s all nonsensical. Our approach to indigenisation is not a new phenomenon. We have always been clear on the need to empower the sons and daughters of Zimbabwe in the face of irrefutable historical imbalances created by colonialism. Almost three decades after the attainment of independence, the ownership of resources in most key sectors of the economy is still skewed in favour of foreigners, with indigenous Zimbabweans mainly employed as managers and workers. Recent assessment studies on the levels of indigenisation of the economy by Government reveal that critical sectors of the economy, notably manufacturing, mining, tourism, energy, financial, construction, transport and media production are still dominated by foreigners. This state of affairs is detrimental to the overall development of the economy and prosperity of indigenous Zimbabweans

AJ: Indigenisation and empowerment programmes are not new in Southern Africa. What is unique about Zimbabwe’s approach?

SK: You are correct Jongwe. Indeed, South Africa, Namibia and Botswana have all adopted and implemented indigenisation programmes. Our approach to indigenisation is based on the notion of broad-based participation by our people in indigenisation arrangements. As a resource-based economy, we need to use indigenisation to fight poverty and create more jobs. Our indigenisation and empowerment are anchored on the conviction that indigenous Zimbabweans must own and primarily benefit from the exploitation and utilization of their God given natural resources. This is a fundamental pre-requisite for sustainable economic growth, social and political stability and overall national development

AJ: How will these broad-based participation arrangements be funded?

SK: There are various structures critical to the successful implantation of the indigenisation and economic empowerment agenda. The National Indigenisation and Economic Empowerment Fund (arising from the transformation of the National Investment Trust) will provide loans for acquisition of shares, business start-up, rehabilitation and expansion. Another route will be listing on the Zimbabwe Stock Exchange. Listing on the bourse enables ordinary black Zimbabweans to acquire shareholding in listed companies.

AJ: How can employees participate in the indigenisation programme?
SK: Workers will be able to do so through Employee Share Ownership Programmes (ESOPS). These programmes shall enable employees of a company, through a Trust, to acquire, hold and manage a prescribed level of shares of the company concerned and receive dividends or incoming arising there from. Significantly, ESOPS will result in increased productivity, improved industrial relations and employee welfare, retirement security, and foster responsibility and commitment to the company by employees and reduce demand on social responsibility. In conclusion, let me say that the difference between rich and poor is opportunity. These broad-based participation arrangements give an opportunity to all Zimbabweans, including those in the Diaspora to create wealth for themselves, families and nation.

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Anthony is principal consultant at Global Workforce Solutions (Pvt) Ltd- a management and human resources consulting company. For feedback/enquiries, send e-mail to: consultgws@gmail.com or phone/sms on 073 3 306 193


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