Indigenisation Success Stories: Despite a Barrage of International Criticism regarding the Country's Indigenisation Programme, There Is Hard Evidence on the Ground That the Policy Is Working and Zimbabweans Are Being Empowered. the Data Proves That the Country's Economic and Social Indicators Are Moving Forward Positively

New African, July 2013 | Go to article overview

Indigenisation Success Stories: Despite a Barrage of International Criticism regarding the Country's Indigenisation Programme, There Is Hard Evidence on the Ground That the Policy Is Working and Zimbabweans Are Being Empowered. the Data Proves That the Country's Economic and Social Indicators Are Moving Forward Positively


SINCE 2010, THE MINISTRY OF YOUTH Development, Indigenisation and Empowerment and the National Indigenisation and Economic Empowerment Board (NIEEB) have processed more than 1,000 indigenisation and economic empowerment (IEE) applications, with the manufacturing and mining sectors in the lead. Of the applications that have been processed to date, 871 companies were found not to be indigenously owned and thus non-compliant with the indigenisation legislation. The table opposite (applications received by the ministry since 2010) shows the non-compliant companies distributed across the sectors of the economy.

[ILLUSTRATION OMITTED]

Applications in the mining sector constituted 46% of the total applications, mainly due to the importance of the sector to the IEEP process. Essentially, the funding of the entire JEEP is through the monetisation of Zimbabwe's sovereign right to the minerals in the ground.

Recent studies show that the mining sector is becoming an anchor of the economy, particularly with the discovery in 2006 of diamonds in the Marange area. Currently, the sector is emerging as an JEEP pacesetter, as statistics show that the sector has a considerable foreign shareholding, with the biggest mines being owned l00% by foreigners.

[ILLUSTRATION OMITTED]

In the last two years, the manufacturing sector saw 329 IEEP applications, thereby accounting for 38% of the processed applications. Agriculture, tourism, retail, and the finance sectors received the lowest number of applications. Principally, agriculture is deemed to be largely indigenous due to the land reform programme, and in tourism there are contentious issues with regards to conservancies (game parks), while the financial sector is still being considered at policy level.

However, studies show that the structure of Zimbabwe's banking and finance sector is relatively diversified. "As at December 2010," according to a study by Dr Jesimen Chipika and Joyce Malaba, "the banking and finance sector was relatively indigenised at 68% in the banking sub-sector, 97% in micro-finance institutions, and 94% in the asset management sub-sector."

Yet while foreign-owned banks account for about 50% of the total deposits of US$4,178m as at 27 July 2012, indigenously-owned banks are supporting loans and advances in the economy with a loan deposit ratio of 78% in 2010, compared to foreign banks at 50%.

According to Chipika and Malaba, four banks--BancABC, Ecobank, MetBank and Kingdom AfriAsia--have increased their foreign shareholding beyond the IEE threshold of 51% indigenous-owned.

However, the two authors point out a disturbing trend: "In 2010, out of a total 377 bank branches in Zimbabwe, 333 branches (88%) were within urban centres where 35% of the population resides, while rural communities were serviced by 44 branches (12%) of the total branch network, despite 70% of the population residing in the rural areas. Therefore, the banking sub-sector, while indigenised in ownership, is not indigenised in terms of service provision."

Status of Applications--Other Sectors

SECTOR         APPROVED  NOT APPROVED  PENDING

Energy                0             8        1

Transport             7             1        6

Services              9            11        1

Property             13             5        9

Retail                2             0        2

Agriculture           0             0        1

Finance               6             4        1

Construction         13             9        7

Communication        11             0        4

Total                61            38       32

In the last two years, the rate of IEE approvals in the
manufacturing sector was higher at 47% compared to 34% in
the mining sector. Congruently, the rate at which applications
are not approved is high in the mining sector when compared to
the manufacturing sector because of the greater focus on high
value transactions. … 

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Indigenisation Success Stories: Despite a Barrage of International Criticism regarding the Country's Indigenisation Programme, There Is Hard Evidence on the Ground That the Policy Is Working and Zimbabweans Are Being Empowered. the Data Proves That the Country's Economic and Social Indicators Are Moving Forward Positively
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