Black Economic Empowerment and Corporate Governance in Zimbabwe

Topics: Zimbabwe, Macroeconomics, Corporate governance Pages: 9 (2758 words) Published: March 19, 2012
Indigenous Zimbabwean as defined in the National indigenisation and Economic Empowerment Act refers to anyone who, before independence in April 1980, "was subjected to unfair discrimination [presumably in Zimbabwe] on the grounds of their race, and includes a descendant of such a person". Thus indigenous Zimbabwean means any person who before 18 April 1980, was disadvantaged by unfair discrimination on the grounds of his or her race , and any descendant of such person, and includes any company association, syndicate/ partnership of which indigenous Zimbabweans form the majority of the members or hold the controlling interest. National indigenisation and Economic Empowerment Act, defined indigenisation as a deliberate involvement of indigenous Zimbabweans in the economic activities of the country, to which hitherto they had no access, so as to ensure the equitable ownership of the nations resources. Empowerment means the creation of an environment which enhances the performance of the economic activities of indigenous Zimbabweans into which they would have been introduced or involved through indigenisation. The locus of control shifts from managers to workers so that the workers become responsible for their actions but managers do not lose their involvement. Workers are considered as strategic business partners so that participation and involvement of workers is enhanced. Workers who participate in programs designed for learning are encouraged, recognised and utilised. Empowerment brings element of commitment and identity that is we are citizens of Zimbabwe. Corporate governance is a term derived from a Latin word gubanare which means to steer. It is the manner of directing and controlling the actions and affairs of an entity. Reduced to basics, it is the exercise of powers and actions to achieve goals of an organisational entity. Core concepts of corporate governance include... accountability, responsibility, fairness, transparency, sustainability, good board practices, control environment, board commitment, openness, reputation, stakeholder interface, ubuntu. Background to Indigenisation and Economic Empowerment

Despite reports that the Zimbabwean government is mulling over accelerating the implementation of the Indigenisation and Economic Empowerment Act passed in 2008, many foreign firms continue to operate their businesses. Lured by the ever increasing attraction of the Zimbabwean economy, which has been propped up by the economic stability brought about by the unity government, foreign economic players are making inroads into the Zimbabwean market.

For example, the British American Tobacco company under its Zimbabwean subsidiary, BAT Zimbabwe, last year purchased 15 million kilograms of tobacco. The company will consumed just 10% of the crop and exported the rest to other BAT operations worldwide.

Mining company, Zimplats, which is owned by South Africa’s Impala Platinum also recorded impressive gains and is reportedly seeking to increase platinum mining in the country and production at some of its mines. A report by the Confederation of Zimbabwe Industries (CZI) shows that factory-capacity utilisation in the country is up to 57% from less than 10% before the unity government, which is an encouraging sign for investors.

Dr E. Bloch warned that South Africa, Zimbabwe’s largest trading partner in the region, will be watching the empowerment issue closely, especially since they have several interests in the country.

“Zimbabwe must be wary of scaring off investment. Empowerment must be acceptable to SA as well. Our version of their Black Economic Empowerment initiative must not scare them off,” he said.

In Zimbabwe today, industry and commerce is predominantly the domain of big conglomerates, who own most businesses in all sectors. The levels of black people's participation in industry and commerce and business entrepreneurship continues to be unacceptably low. As it stands, blacks who...
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