The Sunday Mail
Dr Gift Mugano
Zimbabwe is struggling to bring in investors, which is crucial to achieving the long-sought economic take-off.
It is not a secret that we desperately need foreign investors to achieve economic growth.
Closing companies is not the way to go for Government as this will have a negative impact on the economy.
First of all, we need to understand that because we use foreign currency in our economy, our need for FDI is very high, especially at a time when we are not receiving much international financial support due to the debt overhang.
So, anything that puts a dent on attracting FDI should be seriously reviewed for our benefit as a country.
We are already in a precarious situation; we are not exporting much and our capacity to earn foreign currency is very limited.
Therefore, we need to burn the midnight candle, looking at ways to get FDI.
This proposal to revoke the licences of companies that do not comply with the Indigenisation and Economic Empowerment Act can come back to haunt us.
It will definitely scare off investors and deprive us of FDI. Investors will panic. No investor wants to invest in a country that is shutting down companies.
It will also be difficult for companies that are operating here and may have complied with the Act to put in more investment in the process of expanding their businesses.
They are likely to abort such expansion.
Further, companies will fail to attract offshore investment because investors will not be prepared to send their money, fearing that Government will take drastic action.
It should be made clear that the question of indigenisation and empowerment is not debatable. Almost every other country in the world has mechanisms for carrying out similar programmes.
However, it is important to continue dialogue and not close the door on deliberations.
The fact that a significant number of companies are not operating is a symptom of a fundamental issue that needs dialogue.
Zimbabwe’s risk profile is already very high, partly because of sentiments over indigenisation.
While it is a very good policy, it is also incumbent upon us to protect the goodness of this policy by not soiling its name.
We have to be responsive to the negativities that are being spread about indigenisation, and we can only do that if we continue with dialogue.
Government should not make decisions based on emotions, but be prepared to get back to the table and hear the voices of those companies that are yet to comply.
It is not good for companies not to comply: It is worse for Government to take drastic decisions.
I believe the road to fulfilling the indigenisation and empowerment policies is long, so we should not take shortcuts, but go through all the necessary avenues.
Dr Gift Mugano is an economist and research associate in the Department of Economics at Nelson Mandela Metropolitan University in South Africa. He shared these views with The Sunday Mail’s Chief Reporter Kuda Bwititi on March 18, 2016.
