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Robert Zhuwao Correspondent
The position over the interpretation of indigenisation has been clarified. This should pave the way forward for implementation. I noted at a presentation I did at a meeting for the African Heads of Mission a few months ago that Algeria has a 51:49 percent indigenisation law since 1962 which has worked well for their country. Granted, the dynamics of implementation of the same given Algeria’s position as the world’s 18th largest oil reserve and Zimbabwe, a landlocked country, are different. The need for indigenisation is required without a doubt. Businesses will have the opportunity to engage, discuss and even chastise faltering ministers and government to enable for success of the programme.

Business operators should be able to call it as it is on the ground as they need to operate profitably.

Indigenisation has reached a point of no return. Abandoning or going back on it is not an option.

Some politicians often prey on the naïve who think that the indigenisation programme is reversible.

Resistance has seen the sabotaging of the programme since it was mooted around 1990; accordingly, any attempts to reverse the gains the programme has achieved will meet the same, if not more, resistance from those who believe in it.

Adjustments will be made and errors corrected, but the programme has forward moving gears only.

I have often said during business discussions that for Zimbabwe as a landlocked country with no oil reserves, there are three key sectors that are essential for the growth of our economy which will aid in the indigenisation of our economy.

Once we have control over energy, fuel and finance, then we have power as a nation.

It is pleasing to note that Government is making progress to address the power supply situation in the country.

The Zimbabwe Power Company has greatly improved the provision of electricity in the country. It may not be fully reliable, but the situation has improved.

Zimbabwe’s annual electricity consumption is about 12,57 billion kWh.

This is based on total electricity generated plus imports minus exports.

The country produces about 8,925 billion kWh leaving a deficit of 3,645 billion kWh. Investments in the sector to increase production have been made with China providing a $1,2 billion loan to add 600 MW to the capacity in Hwange.

Another 200 MW emergency power generation plant is to be set up in Dema. To date, the Zimbabwe Energy Regulatory Agency (ZERA) has approved solar projects to add another 155 MW to the national grid. This still leaves a deficit to self reliance and presents investment opportunities in the sector. Challenges to businesses has been the cost of electricity which remains high for industry and consumers.

There is need to interrogate and unlock value out of carbon credits from some of our power generation plants. Carbon credits are awarded to countries that have reduced their greenhouse gases below their emission quota.

They can be traded on the international market. A feasibility study may need to be carried out to assess the viability of using carbon credits to cushion consumers.

To encourage consumers to move to solar, other countries pay the individuals the carbon credit to have say, solar geysers and lighting.

Given Zimbabwe’s current situation, it is an initiative that may work well.

A carbon credit bourse can be established to trade carbon credits. Communities can be encouraged to grow woodlots as they qualify for carbon credits whilst alternative fuel sources to firewood encouraged. These may be in the form of compressed briquettes.

The fuel sector is dominated by foreign companies.

Zimbabwe spent $744 million on petroleum products, namely petrol and diesel as at July 2015.

Fuel is critical to the stability of any country. The fuel sector needs distribution and forecourt vending to be handled by local companies.

Lessons need to be learnt from past experiences where foreign companies held the nation at ransom leading to shortages and long winding queues.

Business and commerce was greatly compromised then, until Government licensed indigenous companies who then helped avert further damage to the economy by importing the product.

Over the last three years, though, indigenous oil companies have been pushed out of the industry, leaving the country at risk of shortages should the current foreign-owned companies decide not to import the product.

A local entity will never turn their taps off on their own. The current scenario leaves very little space for fair pricing, hence Zimbabwe’s high price of fuel.

The availability of cheap fuel is critical to any economy. When a board I chaired successfully fought for liberalisation of the sector, the reasoning was that dividends from such industries remain inland for the benefit of the Zimbabwean economy.

The current scenario shows a total capitulation in the belief of the indigenous fuel companies to run the sector.

In terms of finance, Zimbabwe has 14 commercial banks of which nine are Zimbabwean, five building societies of which four are Zimbabwean and three deposit taking micro-finance institutions, all Zimbabwean.

With these statistics it is astonishing that there is major worry with indigenisation of the banking sector. Zimbabwean banks outnumber foreign banks.

In my opinion, it is a sensitive specialised sector at the moment. Foreign banks have an advantage of goodwill over their local counterparts.

This comes in handy when raising funding and foreign currency transactions especially with investors who will not be familiar with the local banks.

Goodwill, especially in the finance sector, takes a long time to establish.

This does not mean that our local banks are not good enough. The likes of POSB, CBZ, ZB and FBC have stood out notably in building strong brands.

The challenge local banks face is lack of depositor confidence given indigenous banks’ record of failure.

Confidence for local banks is slowly building for those that are attuned to local needs and the economy as the boards are more flexible than overseas based boards.

Localised boards basically make decisions faster than their foreign counterparts.

However, local banks need to be more innovative in their approach to luring depositors and they have been found wanting operationally. Some operate a mafioso style of banking whilst some have deviated from their core businesses.

Service officers are often rude to customers whilst in some cases that have been reported to my office, local managers operate as agents of dispossessing indigenous businesses of their properties which are often auctioned off at below forced sale values.

Finance is pivotal for Zimbabwe’s infrastructural development and economic resurgence.

The Ministry of Youth, Indigenisation and Empowerment is of the view that finance can be unlocked from the diaspora.

A point I agree with given that in 2015 remittances from the diaspora were $966 million compared to foreign direct investments which were $566 million as at November 2015. I note that they have embarked on a strategy that seeks to address economic empowerment, social engagement and political participation.

The ministry’s focus on indigenization should now turn to creating good corporate citizens out of indigenous businesses and converting them into investment-creating assets. This is a step in the right direction as it enables capacitating the indigenous business to be able to run their businesses profitably.

It is prudent for the financial sector to craft investment packages for people in the diaspora to invest in infrastructural projects.

I have written before that up to 85 percent of Harare’s CBD is owned by foreigners. Policies encouraging the need to invest in projects that can earn diasporans revenue in dividends to subsidize their families in Zimbabwe need to be crafted. This relieves dependency on their wage/salary abroad.

Under the right conditions these are Zimbabweans willing to invest in the rebuilding of Harare’s skylight and Zimbabwe’s infrastructure. These are people not requiring politicking; but straight business talk.

*Robert Zhuwao is the National President of the National Business Council of Zimbabwe (NBCZ), a registered NGO lobby group, think-tank, demand based training, capacity building institute for indigenous business development

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