Wednesday, March 03, 2010

Firms face Zim ownership law

from AlJazeerah:

Companies in Zimbabwe have hit a government-imposed deadline to show how they intend to transfer 51 per cent of their ownership to black Zimbabweans....David Monyae, a South Africa-based political analyst, told Al Jazeera that the law itself was not controversial, but that "the key issue is how you go about doing it".

"The entire concept of 'indigenisation' is nothing new or unique to Zimbabwe. Here in South Africa we have BEE - [Black] Economic Empowerment - and in other areas in western Africa and the like you have what you call 'localisation'," he said.

"I think it's aimed at spreading the wealth, to ensure that wealth creation in Zimbabwe is shared by a much wider base. But ... the policy has to be written in consultation with all stakeholders in Zimbabwe, and ensure that it advances the economic growth of the country before [the] rush for redistribution."

In the US, when my uncle died of cancer, his wife ran the firm for years during a time when women running and owning businesses was rare.

Later, she transferred ownership and running the business to her son; alas, at this point, the government started "affirmative action".

First, firms owned by "minorities" started getting their business, even though she was a woman and women running businesses were rare.

Then after her son took over, they included women in affirmative again they lost contracts.

The irony? These competitors were run by their owners, white men, but on paper, they were "owned" and "run" by a front man who was a minority, but who didn't do any of the work.

Same thing will happen here.

There are plenty of black Zimbabweans who could run these businesses, but I suspect most of them have fled the what will happen is that Mugabe's cronies will "take over" and get rich on the spoils, instead of trying to run the businesses for the benefit of the country.

the result? Ruined businesses, outsiders unwilling to invest money, and no long term economic benefit.

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