SAR, Vol 11, No 4, July 1996
FIGHTING FOR CONTROL:
THE INDIGENIZATION DEBATE IN ZIMBABWE
BY BRIAN RAFTOPOULOS
Brian Raftopoulos is Acting Director, Institute of Development Studies, University of Zimbabwe
The "indigenization debate" has been a major theme of political discourse in Zimbabwe for some time. But more recently, Zimbabwean President Robert Mugabe has increased his rhetorical attacks on multinationals and white business. Mugabe's accusations that white and foreign capital have been blocking black advancement in the economy certainly rings true but as always, his threats have been short on substance.
In 1995, the debate took a new turn as Strive Masiyiwa, a Zimbabwean businessman, set up a new company, ECONET, to establish a cellular telephone system in conjunction with a US company. Masiyiwa ran up against an obstacle: in response to the formation of this company the Post and Telecommunication Corporation (PTC) refused to grant ECONET a licence to operate.
Masiyiwa took the case to the Supreme Court which ruled that the establishment of a cellular network was a constitutional right relating to freedom of expression and that the PTC monopoly was not justifiable in a democratic society. In response, the President issued the Presidential Powers (Temporary Measures Cellular Telecommunications Services) Regulations of 1996, re-establishing the PTC monopoly over the provision of cellular telephone services. The regulations require that other parties wishing to enter this field acquire clearance from a ministerial technical committee established to vet applications. In May this year Masiyiwa submitted papers to the Supreme Court seeking to declare the Presidential Powers unconstitutional.
In this battle with the state Strive Masiyiwa has not received any support from the indigenization lobbies which have, until now, been at the forefront of debate and discussion around this issue. It would seem that the lobby groups are more concerned with not jeopardizing their close relations with the state. The state itself is clearly not prepared to tolerate such attempts to develop autonomous power bases in the private sector. Another argument that has been raised is that Masiyiwa is a front for white multinational business. If the state had a clear and principled policy on international finance - and if certain high-ranking members of ZANU PF weren't, themselves, acting as a front for white capital - this argument would have more force. Even the indigenization lobbies are not on the whole averse to foreign capital except in so far as they seek greater resources and legislative support in their relations with the latter.
The ECONET episode is important not only because it indicates a certain trend in the assertiveness of the African Business elite. Masiyiwa's use of the judiciary to challenge the state is reflective of a broader trend among independent, ex-ZANU PF politicians and opposition parties to use the courts to challenge unfair election procedures on the part of the ruling party. These high profile individual judicial challenges demonstrate the most viable route at present for elite challenges to ZANU PF dominance. However this emphasis on legal battles also demonstrates the distance between such elite resistance, and the inability of opposition parties to construct a broader oppositional alternative. In the midst of all this judicial activity, the absence of the lobby groups would appear to be indicative of the state of the indigenization debate in Zimbabwe today. This debate has reached a crisis point, characterized by conflicting groups, and ruled over by a state that is unclear about what their indigenization strategy should consist of. How did Zimbabwe get to such a point? Indeed, what is the "indigenization debate" and who are these "lobby groups," anyway?
During the formative years of Nationalist politics in Southern Rhodesia, in the 1950s, a central concern of the emerging nationalist intellectual elite was its desire for upward mobility. Through its educational achievements, professional aspirations, and social and cultural practices a significant number of this elite sought to establish themselves, and to be seen as, an emergent middle class, even as they sought, and succeeded in presenting themselves as a nationalist leadership.
Unfortunately for this nascent elite the structures, ideology and policies of settler colonialism seriously constrained their ambitions. However the aspirations remained, even during the years of the liberation struggle when the recalcitrance of settler colonialism, the imperatives of guerrilla warfare and the determining influences of geo-political alliances, introduced the largely rhetorical adherence to a socialist trajectory. As Mugabe admitted in 1991:
Our former parties, ZANU-PF and P.F. ZAPU were established and developed in an environment which, on the one hand, was national and on the other, was international. But as the parties established themselves externally and began relating to socialist countries, the Soviet Union and China, . . . they not only derived many thousands of tons of weapons for the national struggle but their political ideology as well. [Financial Gazette: 28 March, 1991]
The strong, organic development of a socialist strategy during the liberation struggle always remained weak, even during those brief heroic attempts at a leftist turn by groups such as ZIPA, who in the mid-70s attempted to transcend the more limited agenda of the old guard nationalist leadership. The rise of an African middle class remained a central element of the liberation agenda, even though its political discourse was often cloaked in more appealing populist rhetoric. The seeds of an indigenization project, which saw the emergence of an African bourgeoisie, was therefore an important, though contested, part of nationalist ideology.
With Independence in 1980, an alliance of nationalist parties fulminating with leftist discourse, but for the most part intent on consolidating a new state and party elite, took power. During the first eight years of independence the state embarked on a combination of welfarist programme for the African majority and consolidation of state elite through the use of state resources. During this period, the language of indigenous capital accumulation was repressed and officially such an agenda was looked at disdainfully. The popular legacy of the liberation war and the ideology of developmentalism through welfarist policies, combined with elite ethnic alliances, provided a cementing ideology for a nation in the making. Nevertheless, this was a period of a broadly popular government in which the claims of an indigenous accumulation project were marginalized or undertaken surreptitiously in both the state and in the white-controlled private sector.
There were several reasons for the marginalization of this debate. First, the policy of Reconciliation introduced in 1980 sought a peaceful co-existence with white capital which continued to dominate the private sector. The policy of "Growth with Equity" introduced in 1981 sought to achieve high rates of economic growth, increased incomes and a restructuring of the economy to promote rural development. The policy also included a rapid increase of social services for the majority. The role of the black entrepreneurial class in the project was, for the most part, absent. Second, the governing elite was opposed to the emergence of an African business class, autonomous of the state. They feared that such a class would be less reliant on the politics of patronage and would therefore be less easy to control. Third, the developmentalist policies and populist rhetoric of the 1980s provided a cover beneath which the state elite indulged its own enrichment. Through this covert process the leadership of the ruling party purchased commercial farms, and entered into various commercial ventures. The proliferation of parastatals in the 1980's such as the Zimbabwe Development Corporation (ZIDCO), the Zimbabwe State Trading Corporation, the Mineral Marketing Corporation and many others, provided a further means to enlarge the basis of the state dependent petty-bourgeoisie, and expand the net of political patronage. Apart from such interventions, there was also the more crude looting of state assets through corruption practices. The 1988 Willowgate Scandal in which ministers were allowed to purchase cars at reduced prices from a state-owned assembly plant, was then turned into an accumulation opportunity, as these minsters resold the vehicles at substantially higher prices.
But by the late 1980s several factors induced the indigenization debate to emerge with greater force. First, the clear limitations of the 1980s accumulation model were placing pressures on the state to redirect its economic policies. An increasing budget deficit, limited foreign investment, and growing unemployment were some of the major factors which increased internal business forces' criticism of the state and external pressure from international financial institutions, resulting in the 1990 introduction of the Economic Structural Adjustment Programme [ESAP].The new legitimacy which this program provided for capital accumulation meant that frustrated aspirations of the emerging African elite could no longer be ideologically repressed. The way was opened for the forces of indigenous accumulation to press their demands with greater openness and legitimacy.
Second, demands for greater African participation in ownership of the economy were made against a background of continuing racial inequalities in the post-colonial economy. For example, by 1991, 50% of the population received less than 15% of total annual incomes and about 15% of total consumption, while the richest three percent of the population received 30% of total incomes and were responsible for 30% of total consumption. [ World Bank, Poverty in Zimbabwe: Current Knowledge and Issues for the Future, 1995.]
Finally, the retreat from socialist rhetoric linked to the broader international consequences of the 1989 debacle in Eastern Europe left the ruling party without a mobilizing ideology. The ideology of Indigenization combined a certain continuity with nationalist demands of the past, with renewed attempts to capture and control the more recent demands of an aggressive and expanded African elite for a greater share of the post-colonial promise. For the ruling party, this was also a political imperative as the emergence in the late 1980s of opposition parties such as the Zimbabwe Unity Movement and the Forum Party had demonstrated the potential for political opposition from disconcerted sections of the African middle class.
Indigenous business lobbies emerge
Black business persons seized the opportunity to ensure that their interests were not marginalized under ESAP. In 1990, the Indigenous Business Development Centre (IBDC) was formed and, with the support of some state bureaucrats and politicians, began to lobby the state vigorously. In general, the IBDC sought the decisive support of the state to promote black entrepreneurs through state-led policy reforms and the allocation of state resources to blacks on preferential terms. Their demands included: the deregulation of laws and procedures hindering black enterprises; directives to financial institutions to finance black businesses; access to finance at well below market interest rates; preferential allocation of government contracts and markets to blacks; land redistribution designed to build a strong black commercial class in the agrarian sector; and anti-trust legislation to control the monopoly position of white capital.
To date, the IBDC has been relatively effective in using what Sam Moyo described as the `entryst' approach to lobbying, involving close contact with top level state and party officials, members of parliament and business executives in the private sector. Indeed, the IBDC's lobbying interventions have been, to a significant extent, the catalyst which brought indigenization to the forefront of Zimbabwean political debate.
Lobbying for political position from IBDC structures has become a feature of IBDC politics. In the 1995 cabinet shuffle, two IBDC members were appointed to Deputy Ministerial positions. Certainly, this is a logical step for an organization heavily reliant on state intervention for furthering its programs. However, in focusing it efforts on the state, the IBDC has neglected its own democratic structures. It has had problems providing a leadership succession structure, with the IBDC constitution providing a complex sequence of electoral procedures. While annual elections at the Regional and General Assemblies have the objective of expanding the democratic procedures, leadership struggles have instead intensified. In addition the actual membership base of the IBDC is not clear. Attempts to obtain a list of members and their actual economic activities proved fruitless.
As a result of these conflicts, there has been a split within the IBDC: one faction led by Ben Mucheche, a leading figure in the transport sector, and another by Chemist Siziba, a former president of the IBDC. At present there is little sign that the rift will be healed, and there are indications that leading politicians have lent their support to different factions within the IBDC. Thus, the IBDC's very existence has become dependent on changing power relations within the ruling party . . . a fragile basis for support.
As well, what gains have been made by the IBDC are negligible. Although the IBDC counts several state initiatives - such as the Set-Aside program in the construction sector which requires that at least 30% of the contract value of all large-scale building contracts be sub-contracted to small- and medium-sized enterprises - among its successes, for indigenous business people these were considered insufficient. For its part, the state has been divided between a formal commitment to indigenization and the need to maintain strict fiscal control over funds disbursed for this program. Moreover, the state has yet to produce an overall strategy on indigenization. Several general draft reports produced by the Planning Commission and a Committee of Experts of the ruling party, remain programmatic statements and lists of objectives, rather than a concrete plan worked out with the sectors and social partners concerned. The document says more about the weakness of the position of the Planning Commission in the structure of government, than it does about the seriousness of commitment to a broadly discussed program of indigenization.
There are also signs of a tension in government over indigenization policies. In 1994, the Chairman of the Select Committee on the Indigenization of the National Economy, established in April 1991, complained of the: reluctance by government to show its willingness to serve the small and medium scale businesses when they are beset with financial problems by invoking the state loans and guarantees act which it has done with big companies when faced with closure.
The absence of an overall policy on indigenization and the lack of transparency of the policies already in place have already resulted in serious abuses. The 1994 Tenant Farmer scandal in which the Minister of Agricultural leased state farms whose leases had expired with white farmers, to select black farmers without transparent guidelines, provided an example of the kind of inconsistent indigenization program that could unfold in the country.
Birds of a feather
The continuing debilitating crisis within the IBDC and apparent stasis in new government initiatives on the indigenous program led to the formation of a new organization of indigenous business persons in July 1994. The Affirmative Action Group (AAG) has adopted an aggressive lobbying strategy using even more stridently nationalist language than the IBDC. As with the IBDC, the interventions of the AAG resonate with the discourse of the American Black Nationalist Movement. In a statement reminiscent of Malcolm X, the AAG have warned:
Those who wish to become `uncle Toms' or the field Negroes or the window-dressed or the `Mr Nice Guys' . . . are using their sense of professionalism to defend the indefensible at the expense of the nation . . . be warned . . . A.A.G. will expose them . . .
Once again beyond the bravado of public statements the membership base of this organization remains unclear. Indeed, not only is the AAG program similar to that of the IBDC but they appear to be attempting to forge an even closer alliance with the ruling party.
In January 1995, yet another indigenous lobbying group was organized in order to inject new life and direction into the antagonization debate. The National Reconstruction and Development Board (NRDB), made up of both IBDC and AAG members, aimed to bring together technocrats and astute business people "of all races" to develop a policy framework for black economic empowerment. It was intended that this Board should be independent and, `not a wing of particular pressure groups.'
A major issue for the group was the procedure for selling of Government assets. The sale of Government shares in Delta Corporation to South African Breweries and the sale of Astra Corporation shares in National Foods to AM Zimbabwe (formerly Anglo American Corporation), had raised serious questions about government commitment to indigenization. The NRDB objected that:
The blacks lack information on what is happening with regards to disposal of government assets. The whole process is not transparent, and the indigenous persons interested in acquiring government assets do not know how to go about it, because of lack of information. The Board should demand a public modus operandi on sale of government assets. [Minutes of the Third Meeting of the NRDB; March 31, 1995.]
The NRDB's attempt to unify various indigenization lobbies did not succeed as the different groups continued to both pursue their different political patrons in the ruling party leadership and maintained different emphases in their lobbying strategies. While both the IBDC and the AAG have clamoured for business deregulation and state subsides, the AAG has placed greater emphasis on the control and redistribution of white-owned wealth.
Other Voices: The World Bank and labour
Aside from these lobby groups, the indigenization debate has drawn reactions both internally and externally. The World Bank has responded to the current indigenization initiatives of the state with a call for restraint on government intervention. In the case of land re-allocation, the Bank proposes a progressive land tax. With regard to industrial and financial wealth the Bank warns,
it is important that changes to assets ownership are based on efficiency criteria, but there are no mechanisms built into the proposals so far put forward that would ensure that new owners of such assets would be efficient managers - an issue which generally the market is much better at revealing than any administrative mechanism. There is therefore a risk that such asset reallocation will lead to individuals with privileged access to decision makers being favoured . . . [World Bank, The Public Sector and Poverty Reduction Options in Zimbabwe; 1995.]
The World Bank has introduced a Z$700-million loan scheme for small businesses which has been critically received by the indigenization lobbies. These lobbies feel that the facility could benefit established white-owned businesses, unless specific measures are introduced to ensure that black-owned companies and the informal sector are given priority. The Indigenization groups are also opposed to funds being made available through commercial banks, which they argue will continue to support white control of the economy. In the words of the President of AAG:
These financial institutions and their staff are incapable of dealing with the informal sector . . . if I had a choice I would personally prefer that the service be provided by the Post Office Savings Bank which understands small money which is what people in the informal sector need.
The World Bank have therefore challenged virtually all the key assumptions and demands of the indigenization lobby, favouring instead market-determined `race neutral' schemes that accept the racial distribution of resources as a basis for neo-liberal `reform.'
Expectedly, the rhetoric and agenda of the lobby groups has also drawn the ire of certain white business commentators. On the one hand, white business takes the perspective which leaves indigenization largely at the discretion of the private sector and totally subordinate to market driven growth. State interventions into the process are considered largely disruptive of the white business view of `racial harmony' which is centrally concerned with the least possible disruption to white privilege in the Zimbabwean economy. On the other hand, there is the argument that the lack of progress in indigenizing the economy lies in cultural differences between the races based on a dualist model of the economy. Both of these perspectives totally ignore the institutional and structural interventions of the settler state which severely proscribed the ability of blacks to privately accumulate fixed assets.
For its part, the labour movement while broadly supporting the policy of indigenization, has criticised the narrow conception of the program being espoused by the indigenization lobbies. As the movement has watched its members being marginalised and further impoverished by ESAP it has called for a broader process of black empowerment which reaches beyond the accumulative agendas of the black elite.
In an attempt to move the debate on indigenization into a more general discussion of alternative development strategies, the Zimbabwe Congress of Trade Unions' (ZCTU) in its publication Beyond ESAP (1996) has called for a corporate strategy between labour, the state and capital. Through such a strategy the labour movement hopes to develop what it refers to as a "truly national compromise" in which "all interest groups and stakeholders participate in policy formulation, decision making and implementation." In order to develop this corporate setting the ZCTU has proposed the establishment of the Zimbabwe Economic Development Council (ZEDC) developed on the NEDLAC model in South Africa. However, while this is a refreshing intervention on the part of labour, at this stage it is highly unlikely that the labour movement has the lobbying strength on its own to change the current direction of the indigenization debate.
Indigenization: ideology of transformation?
Finally, there is no doubt that a call for more African control of the economy in Zimbabwe is a justified intervention which has mobilized large sections of the emergent business groups in the country. Moreover, Mugabe has increased his attacks on white business and multinationals, accusing them of continually blocking black advancement in the economy. Much of his political rhetoric over the last year has concentrated on this theme, as he seeks to mobilise an increasingly disillusioned constituency. However, at present, the indigenization debate in Zimbabwe has reached a crisis point, divided by conflicting groups, and presided over by a state that is itself unclear about the indigenization strategy it would like to pursue. Furthermore, indigenization as an ideology of transformation remains proscribed by the elitist nature of its programmatic reach. Thus, even if an indigenization strategy was advanced in a more dramatic manner, structural reform of a grossly imbalanced economy seems unlikely in the near future.
- 30 -
Disclaimer: Opinions expressed in this article are those of the writer(s) and not do necessarily reflect the views of the AfricaFiles' editors and network members. They are included in our material as a reflection of a diversity of views and a variety of issues. Material written specifically for AfricaFiles may be edited for length, clarity or inaccuracies.