Encouraging foreign direct investment through legal and economic reforms and encouraging the economic empowerment of Zimbabwean citizens are not mutually exclusive policies that require vast debate on the point of balance.
Both are necessary, both are possible and we can have our cake and eat it too. It simply requires taking the already stated Government policy, which is now to be fast-tracked into law, and applying it imaginatively and creatively so that we can have the best of both worlds. Many other countries, right up to the economic giants of the modern developed world, have faced the same challenges and have found the neat solutions.
For a start we need to define FDI a bit more precisely. Coming into Zimbabwe with a container load of cheap consumer goods, opening a shop in Harare Street and hiring a part-time sweeper should not count as FDI.
Almost every country in the world has a minimum limit involving the actual cash value of the FDI and the number of local jobs created before they accept that the investment will benefit the country. Many also define areas where investment is highly desired and offer incentives. Zimbabwe can set similar limits on size, job creation and sectors. This is an administrative decision and it should be easy for the Government, after consulting its economic advisors, to set such minimums. To an extent this simply advances us from the list of reserved businesses, at least those outside the resources field, as these tend to be small and often pure family affairs.
At the other extreme, anyone wanting to build factories in Zimbabwe with large local payrolls should be able to do so with the minimum of fuss and bother. They can already do this in almost all our neighbours and if we want a share of the FDI flowing into the region we need to be able to compete here, as well as offering a potential workforce that, thanks to our education system, is likely to be more easy to train. By being at least equal to our neighbours on every measure we can forge ahead.
Even in the extractive sectors, and platinum and diamonds are the only two listed, we can be open to suggestions as to how the 51-49 split can be achieved. One way that needs to be explored is seeing such companies listed on the Zimbabwe Stock Exchange. The bulk of ZSE shares are held by Zimbabwean institutional investors and many Zimbabweans, through NSSA or their private pension fund, actually own an interest in a wide range of companies. We see no reason why it should not be possible to put together offerings for other big mining or natural resource companies.
Finding a Zimbabwean billionaire wanting to put up 50 percent of a new platinum mine could be hard. Finding 50 000 Zimbabweans doing so through their pension funds could be a lot easier and would also ensure that the actual investment was properly vetted in advance. Con men would be weeded out by those hard-faced investment advisors at the funds. Even if the Government started off as a partner, it could gradually sell off its holding using the money raised to help fund the next investment.
We need to remember that the United States raised the bulk of the capital needed for its early industrialisation through share and bond issues with a healthy percentage of foreign investors. China largely went a moderately different route with local businessmen building the factories, and sometimes floating this company on a Chinese exchange, and hiring the workforce but the foreign investor providing the detailed specifications and contracts for the products to be made, transferring licences and technology where necessary. In both cases everyone won.
The other objections to the original legislation have largely been overcome by the revised policy of grandfathering in existing businesses and Minister of Finance and Economic Planning Patrick Chinamasa in his recent budget statement suggested that “citizens” would be definition of those allowed in the reserved areas.
That change would not make any practical difference nationally, since well over 99 percent of citizens are indigenous people; ZimStats in the last census noted that minorities were impossible to record without a surprising number of decimal places in the tables. But such a change would remove the oddity of discriminating against a few thousand citizens on the ground that their grandparents used their vote most unwisely.
The one inherited major inequality, the land issue, is now being addressed with President Mnangagwa and Minister Chinamasa both enunciating what is now a national consensus that land reform must stay but that the issue of compensation needs to be sorted out.
The Government is now in the fortunate position of having a general national economic consensus of how to have both FDI and empowerment, has promised to fast-track the legal changes that will provide the framework for a sensible policy, and has enough people both within Government and in the general community who can quickly draw up flexible administrative guidelines for implementing the agreed policy.