Zimbabwe Indigenization Under Threat

Cultural performance at the 31st anniversary of Zimbabwe independence in the capital of Harare. The country is preparing for national elections within the next year., a photo by Pan-African News Wire File Photos on Flickr.

Indigenisation under threat

Sunday, 17 February 2013 00:00
Sunday Mail Reporter

Zimbabwe’s indigenisation and economic empowerment programme has come under a propaganda onslaught as Western-funded political parties seek relevance in the forthcoming harmonised elections. It emerged last week that MDC-T is making spirited attempts to sell its counter initiative, the Jobs, Upliftment, Investment, Capital and Ecology (Juice) programme, to the electorate by throwing spanners into the Zanu-PF-initiated empowerment drive.

Already, a spirited campaign has been lauched through sections of the private Press to peddle falsehoods on the indigenisation revolution.

The MDC-T subsequently issued a statement on Friday, attacking the empowerment programme, basing its argument on the discredited stories.

The party called for an investigation into Brainworks Capital, the investment advisory firm commissioned to handle the Zimplats indigenisation deal.

Sources said this was ample evidence of the Western-engineered plot.

“The enemies of indigenisation are trying to peddle lies. The MDC-T statement, which shows the electioneering that drives the enemies of indigenisation, is an attempt to sell Juice to a sceptical electorate,” the sources said.

“There is a spirited agenda to give mileage to Juice by peddling falsehoods on indigenisation.”

One of the stories alleged that the Zimbabwe Platinum Mines Limited (Zimplats) community share ownership deal will only benefit local communities after 10 years. It also claimed the deal will advantage the elite to the exclusion of local communities.

In addition, the publication opined that Brainworks Capital was expected to get US$45 million for its consultancy role with the money expected to be paid through the community share ownership scheme.

However, sources dismissed the allegations, saying they were all part of electioneering.

In fact, Zimplats has allocated US$10 million to community development projects. Of this amount, the mining giant has already disbursed more than US$3 million and is expected to pay the balance by October.

“The surrounding communities are already benefiting through the construction of clinics, roads and schools,” the sources said.

“That, in itself, pours water on claims that the deal will benefit the elite. These are locals that are benefiting from the fruits of indigenisation.

“The law is also very clear that 51 percent of equity in foreign-owned companies is reserved for indigenous Zimbabweans.”

It also emerged yesterday that Brainworks Capital will only be paid about US$14,5 million, and not US$45 million, for its services.

Zimplats is expected to provide the payment, and not the local communities or the Government as incorrectly claimed.

Brainworks Capital was formally appointed to carry out advisory work in the Zimplats transaction on June 8 2012.

The consultancy charges were to be paid on a success fee basis, with the fee pegged at up to 2 percent of the transaction value.

The success fee structure meant that if a deal was not going to be successful between the two transacting parties, the firm would not be paid.

In fact, sources said, the National Indigenisation and Empowerment Board sought the services of other companies but settled on Brainworks based on merit.

Vunani Capital Proprietary Limited had demanded 2 percent of funds raised from the deal while CBZ wanted 2 percent of funds raised in cash.

Genesis Global Finance was eyeing 2 percent of the transaction value while Capevest Business Consulting asked for 2 percent of the deal value.

Renaissance Financial Holdings demanded US$25 000 engagement commission; a US$50 000 monthly retainer and a 5 percent success commission.

An independent valuation report on the Zimplats Indigenisation Transaction by world-renowned investment bank JP Morgan shows that the deal removed market uncertainty around dealings with Zimplats’ holding company, Implats. The report, released last month, noted how indigenous Zimbabweans are to benefit from the 51 percent stake in Zimplats.

“The announced transaction does though remove an element of uncertainty with regards to the group’s operations,” reads part of the report.

“. . . The current announcement, although marginally negative to our valuation, may be viewed as slightly positive by the market as it removes an element of uncertainty with respect to the group’s operations in Zimbabwe.

“It also paves the way for future expansion projects to be considered at the mine.”