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Rethinking the Zim Kwacha

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The Indigenisation and Economic Empowerment Bill was gazetted on 22 June 2007, and in his speech to open Parliament on 24 July, Mugabe stated it would be one of the priority pieces of legislation the Parliament would consider.

Critical to the Bill is its definition of “indigenous,” which is “any person who before 18 April 1980 (Zimbabwe’s Independence Day) was disadvantaged by unfair discrimination on the grounds of his or her race, any descendant of such a person, . . .”

Before Independence, all black (and “non-white”) Zimbabweans faced discrimination on the grounds of race – whether they were “indigenous” or of South African, Malawian, Zambian (or Indian or Chinese) or other descent. Ironically, if this Bill is passed as is, one could be considered “indigenous” for the purposes of economic empowerment, but might still not be able to vote, given the changes to the Citizenship Act, which prejudice those Zimbabweans whose parents were not born in this country – regardless of race.

We received these comments recently from a subscriber, looking to spark debate:

It seems our fundamental rights are being violated by the Indigenisation and Economic Empowerment Bill [H.B. 6, 2007] gazetted 22nd June 2007.

It states its purpose as being to create an enabling environment that will result in increased participation of indigenous Zimbabweans in the economic activities of the country, the ultimate objective being a situation in which at least a 51% shareholding in “every public company and any other business” is in the hands of indigenous Zimbabweans.

In the shorter term, the Minister will be empowered to publish statutory instruments prescribing acceptable lesser percentages and thresholds that will apply “temporarily”.

Key terms are defined in clause 2: “business” [company, association, syndicate or partnership having for its object the acquisition of gain]; “controlling interest”; “indigenisation”; “indigenous Zimbabwean” [any person who before 18th April 1980 was disadvantaged by unfair discrimination on the grounds of his or her race, any descendant of such a person, and any company, association, syndicate or partnership in which such persons hold the controlling interest or are the majority of the members].

To my simple mind this definition is clearly a distinction as to race, and even if people were disadvantaged by unfair discrimination on the grounds their race before 18 April 1980, it shouldn’t mean a person should be disadvantaged by unfair discrimination on the grounds of his or her race now merely because they were not so disadvantaged or are descendant of such a person.

It seems especially unfair on descendants considering it has been almost 30 years since 18th April 1980. We also know that these populist policies have already shown their failure in other countries, such as those in South America, many years ago.

This also seems to be in flagrant violation of:-

The same subscriber also offered this creative solution on the topic of price controls, and following on from some reports that South Africa might extend the Rand Monetary Zone to include Zimbabwe.

If you want anything on price controls or other populist policies that have already shown their failure here and elsewhere many years ago the ex-Mexican president is a good source. Zambia, Zaire etc. have also had similar experiences.

What about this idea for economic recovery, provided they fix the fundamentals:- Balance of payments support by SA in Rand (obviously some downsides but what the heck, we’re in a mess) but herein lies the twist – start with a higher exchange rate and steadily decrease the rate every 90 days until inflation has stabilized. So say you play around with some noughts and make $1,70 = R1 today and $1,50 = R1 in October, $1,30 in Dec and so on – this eases the cash flow because everyone will want to defer paying and get their forex incomes paid and converted quickly – Z$ becomes the currency of choice.

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