Zim vows to forge ahead with Indigenisation as SA counters B-BBEE fronting

Zim vows to forge ahead with Indigenisation as SA counters B-BBEE fronting

ZIM’s Minister of Youth, Indigenisation and Economic Empowerment, Patrick Zhuwawo, says government will not go back on its threat to cancel licences of foreign companies that fail to comply with its indigenisation laws by April 1.

In an interview at his Harare offices on Tuesday he said that such laws were not peculiar to Zim and companies that wanted to operate in the country needed to simply comply.

“We exceeded the deadline one year and one month ago on the first of March and at the moment we have companies that are operating illegally and I am duty bound by the oath of office that I swore to uphold the laws of the country.

“And the companies that do not comply with the law risk having their licences revoked. I want to say that if you have a motor vehicle, you can own a motor vehicle but you cannot put it on the road unless you are licensed to drive on the road. So people can own companies but those companies cannot operate until they are licensed to operate,” he said.

Zhuwao scoffed at assertions that the move by government would scare away investors, saying such claims were coming from “voodoo economists”.

“It does not scare away potential investors, it does not and will not and I say it does not because there is similar legislation in other jurisdictions in other territories and that does not scare away investors. That is an argument that is put forward by voodoo economists,” he said.

He said his ministry was organising an indigenisation compliance clinic where he would meet with business and explain the law and its implications for them.

“One of the things that I have discovered is that some of the organisations that represent business have been lying to businesses and therefore I am making myself available in what is being referred to as indigenisation compliance clinic to make it clear that if they are a company which is non-compliant, or believe that it is non-compliant, they come to understand how best to remedy,” he said.

The youthful minister said there were also a number of companies that did not fall within the indigenisation threshold, adding it was necessary for them to understand that the Act and other pieces of legislation didn’t apply to them.

He said workers employed by non-compliant companies should institute legal action to ensure that they did not close shop without paying them their dues.

“If there is a very likelihood that you might lose your job, by virtue of the fact that the company is operating illegally, you should take it upon yourself to consult legal practitioners to ensure your rights as a worker are protected from the acts of illegality that would have been perpetrated by the management,” he said.

Zhuwawo said workers could also approach the courts to force the non-compliant companies to remedy their non-compliance with the law.

He said there was a likelihood that some companies were deliberately not complying as a way of sabotaging the economy.

“If a company has got management that is so incompetent that it does not understand that they are breaking the law, chances are that company is not operating efficiently and when that company stops operating, what will then come in is probably a company that knows how to operate better.

“And the reason I say this is for companies to be here they must be very clear about this, is that we have got a trade deficit of about $2.9 billion which means that we import $2.9 billion worth of goods, which means that there is a viable credible, market in this country. So companies that then think that we are going to close, yes they can close but what we will then do is that we see which companies have had their licenses cancelled and we will go on an aggressive programme to attract other people into those particular sectors. There will never be a vacuum,” he said.

Zhuwawo said Zimbabwe had immense technical capacity to take over the companies that would have been closed and what was only needed was for the country to agree on whether they really wanted to indigenise.

“There is a chance that some companies are deliberately not complying because they are stuck in a mode of denial and stubbornness. If they believe that they are sabotaging the economy, they are sabotaging themselves at the end of the day.

“Our technical capacity as indigenous black people is huge, it is immense. What we now need to do is to get into the conversation whether indigenisation is going to be implemented or get out of the way and then we can focus on doing things in the same way that we got the conversation on whether land reform was going to be implemented or we got it out of the way,” he said.

Meanwhile the Zimbabwe Congress of Trade Unions has written a letter to  Zhuwawo, demanding meet him  to air their  reservations over his threats to shut down  non complaint companies  arguing that  it could lead to massive job losses.

In a letter dated March 24, ZCTU acting secretary general, Gideon Shoko, says that this would not only lead to job  losses but was meant to benefit a few individuals in the ruling Zanu PF party.

“For us, empowerment is affording as many people as possible an opportunity to earn an income. This is in sharp contrast to the current indigenisation programme which is meant to benefit a few politically-connected individuals. If at all we are genuine about empowering our people, why don’t we resuscitate the closed companies or start new ones? Let us stop playing truant with the people’s lives,” he says demandinga meeting with the minister to discuss the issue.

In SA the Department of Trade and Industry (dti) on Tuesday held a historic conference in a bid to help black-owned businesses to implement the Broad–Based Black Economic Empowerment (B-BBEE) Act correctly and counter B-BBEE fronting practices.

Held in Johannesburg under the theme “Do it right and lead from the Front on Empowerment”, the conference also provided the overview of the B-BBEE Act and the recently launched Black Industrialists Programme as interventions by government to drive economic transformation.

The dti said fronting was one of the practices that had become prevalent in South Africa since the Broad-Based Black Economic Empowerment Act of 2003 was enacted, and had significantly derailed economic transformation.

The dti describes fronting as a deliberate circumvention or attempted circumvention of the B-BBEE Act and the Codes.

The B-BBEE Amendment Act of 2013 was enacted to create the B-BBEE Commission to deal with this scourge by monitoring and investigating these fronting practices among others.

Earlier on Tuesday, Acting B-BBEE Commissioner Zodwa Ntuli said too many companies were putting black employees as stakeholders, sometimes without their knowledge as a form of fronting in order to get higher BEE rankings.

Ntuli was speaking on SABC’s Morning Live where she said such practices undermined the government’s transformation agenda.

At the conference, deputy minister of Trade and Industry Mzwandile Masina said the time had come for government to curtail fronting once and for all.

Minister of Trade and Industry Rob Davies, who presented via a video link, said fronting undermined companies that would easily get work which they deserved, but ended up up not getting it because B-BBEE scorecards favoured fronting companies.

B-BBEE compliance is currently measured by means of a points system in which companies earn points based on their performance in five areas: ownership, management control, skills development, enterprise and supplier development (through preferential procurement policies – those which favour BEE-compliant businesses for government tenders and contracts), and socioeconomic development.

The National Empowerment Fund estimates the equity holding by black people on the Johannesburg Stock Exchange to be at three percent while the 2015 report of the Commission on Employment Equity shows that white people still represented about 70 percent and 60 percent of top management and senior management, with black people representing only about 13.6 percent and 21 percent respectively.

The Jack Hammer Executive Report for 2015 shows a decline from 15 percent in 2012 to 10 percent in the number of black Chief Executive Officers measured on the top 40 JSE listed companies.

Chairperson of the Parliamentary Portfolio Committee on Trade and Industry, Joan Fubbs, said BEE must not only be good on paper, but black people needed to benefit meaningfully from the B-BBEE Act.

“Fronting is a sanitized word that means fraud,” she said. – ANA