How Africa Can Own Its Resources: The Zimbabwe Example

Former South African President Thabo Mbeki along with Zimbabwe President Robert Mugabe. The two leaders had worked on a power-sharing agreement for Zimbabwe., a photo by Pan-African News Wire File Photos on Flickr.

How Africa can own its resources: The Zim example

March 21, 2014 Opinion & Analysis
Baffour Ankomah New African

THERE is no doubt that if Zimbabwe succeeds in pushing indigenisation to its logical conclusion, it will have a huge impact on how Africa in general does business with its natural resources in the future. Africa can even rewrite the principles of a world economy that has grown fat on cheap resources sourced from Africa and elsewhere in the developing world.

This makes the former south African president, Thabo Mbeki’s recent admonition to Africa not to let Zimbabwe fail in the implementation of its indigenisation programme all the more important. Because of the critical place Zimbabwe’s example has for the future of Africa, it is crucial that we quote liberally here from a Mbeki speech given on August 23 2013.

He said: “I think we should ask ourselves the question: Why is Zimbabwe such a major issue for some people? Zimbabwe is a small country by any standard; there is no particular reason why Zimbabwe should be a matter to which The New York Times, the London Guardian and whoever else . . . why are they paying so much attention to Zimbabwe?”

Mbeki answered the question himself by telling a story: “Towards the end of last year (2012),” he said, “they asked me to speak at a conference on Zimbabwe diamonds. So I went, and what surprised me about the conference held at Victoria Falls was that everybody and anybody who has anything to do with diamonds in the world was there.

From America, from Israel, from India, from Brussels, everybody. It was not about diamonds in the world, it was about Zimbabwe diamonds. So I was puzzled, saying, but why have they all come?

“Maybe two hours before we left the conference to come back, we sat in a session which was addressed by one of the Indian diamond people. In the course of his presentation, he explained why. He gave an answer to this query in my head. He said in a few years’ time, Zimbabwe would account for 25 percent of world production of diamonds. So I said, ‘I now understand. I understand why everybody is here,”

Mbeki also understands well the resistance from the metropolitan powers when a country like Zimbabwe tries other ways to own its resources. According to him, “powerful players” say openly that the Zimbabweans “have set a bad example (with land reform) which we don’t want anybody else in Africa and the rest of the world to follow. So they must pay a price for setting a bad example.”

But bad example for whom? Mbeki responds:
“Bad in the instance of the interests of these other people, not bad in terms of the interests of the people of Zimbabwe. So I think this is part of the reason that there is so much attention, globally, on a country in a continent which is actually in itself never mind the diamonds — not particularly important, but it is important because it is setting in the minds of some a bad example which must be defeated.”

Mbeki then came to the crux of the matter, which has so much bearing on how Africa can own its resources: “I am using all of this talk about Zimbabwe,” he said, “as an example about our continent because (with) all of these things I am saying relating to Zimbabwe, you can find the same or similar examples of on the continent, but we are not challenging it as intellectuals. We are not challenging a narrative, a perspective about our continent which is wrong and self-serving in terms of the interests of our people.

“The Zimbabweans are now talking about indigenisation and I can see that there is a big storm brewing about indigenisation. But what is wrong about indigenisation?

What is wrong with saying “Here we are, as Africans, with all our resources, sure we are ready and very willing to interact with the rest of the world about the exploitation of all these resources, but what is the indigenous benefit from the exploitation of this, and even the control.

“You have seen examples of this, all of us have, when Chinese companies, in terms of all this theory about free markets, have sought to acquire US firms and they got prohibited. No, it is indigenisation of US intellectual property. We can’t allow it to be owned by the Chinese, so no.

“So when the Africans say ‘indigenisation’, why is this a strange notion? And yet when we talk about solutions to Africa’s development, one of the issues that we have to address is exactly this indigenisation. How are we utilising our resources to impact positively on African development? I am saying this because I can see that there is a cloud that is building up somewhere on the horizon when Zimbabweans say indigenisation.

But we have to, as intellectuals and thought leaders, address that and say: “yes, indeed as Africans we are concerned about our own renaissance, our own development, and we must as indigenous people make sure that we have control of our development, our future, and that includes our resources, and therefore indigenisation’s correct. We must demonstrate it even intellectually, which I am quite sure we can.” If only Africa could have 100 people with the clarity of Mbeki.

Indigenisation the answer:

So what is Zimbabwe trying to do? In 2007, President Mugabe, after 27 years in power, suddenly discovered, like the Ghanaian parliament, that the huge natural resources of the country, especially in the mining sector (Zimbabwe is said to be sitting on a “Persian Gulf of strategic minerals of our earth,” in all about 68 known strategic minerals), had been exploited for over a century by foreign owned companies but very little benefit was accruing to the people. It was the classic African conundrum of poverty in the midst of plenty.

Mugabe’s answer to this was an indigenisation and economic empowerment policy which Zimbabwe as a country would take an active, as opposed to the hitherto passive, participation in the exploitation of its natural resources. This meant Zimbabwe would now take a joint venture interest in every-none indigenously owned company in the country with a net value of US$1m, by taking 51 percent shareholding in the companies which the “foreign partners” keep 49 percent.

The Zimbabweans have since come up with a radical definition of natural resources, which include: “(a) The air, soil, waters and mineral resources of Zimbabwe”; (b) “The mammals, birds, fish and other animal life of Zimbabwe” (c) “The trees, grasses, and other vegetation of Zimbabwe”, (d) “The springs, vleis, sponges, reed beds, marshs, swamps, and public streams of Zimbabwe”, (e) “Any landscape, scenery or site having aesthetic appeal or scene, value or historic or archaeological interest”.

The above resources then become the “Capital” with which the Zimbabwe nation uses to negotiate for the 51 percent shareholding in companies, especially in the mining sector, in which “non-indigenous” (or foreign) investors are interested. Thus, instead of the traditional way of allowing foreign owned companies to exploit the natural resources and pay a royalty to the nation, the Zimbabwean state now takes an active part in the business as a joint partner, in fact the majority-shareholder.

The country then divides the proceeds coming out of its 51 percent shareholding as follows: 10 percent goes to the community in which the business (say a mining company) is located. A further 5 percent goes to the workers in the company, and the remaining 36 percent goes into a sovereign national fund to be used for the total development of the country, especially the areas which have no companies based there. The communities getting the 10 percent shares decide what projects are needed in their areas and how to spend the money on the projects. Of course their activities are monitored by two government ministries the ministries of indigenisation, and environment. The workers who get the 5 percent shares in their companies are encouraged to put them in pension and other funds, so that from time to time they will get a lump sum each from that investment. So far, the communities that have had money released from their 10 percent shares are doing well on projects such as building new school blocks, clinics, roads, irrigation schemes, repairing dams, drilling boreholes etc, while big companies like Schweppes and Meikles have given 51 percent of their shareholding to their workers.

It has been a good start overall, especially in the extractive sector where existing companies have either complied with or are about to comply with the indigenisation law. If Zimbabwe does not relax or get distracted, as African governments are wont to do, and pushes indigenisation to its logical conclusion, in a decade or two from now the business landscape in the country will have changed drastically and other African countries will have a good example to draw on.

In fact, there is a huge potential for indigenisation to become a liberating force not only for Zimbabwe but also for the whole of Africa. This must be what drove ex-President Mbeki to make the passionate plea to Africans everywhere to defend the developments in Zimbabwe. In effect, Mbeki was saying: “Don’t let Zimbabwe fail, because there is something in it for all of us and our future generations.” And Africa had better listen. Because throughout history, societies have changed through big ideas held and implemented by a few people at the micro level, which later became the norm. Such ideas were usually implemented on a pilot scale before being employed generally. In this context, Zimbabwe has unwittingly become Africa’s laboratory and sacrificial lamb; and the continent had better not look a gift horse in the mouth.

The challenges:
All said and done, Africa must not expect anything to be easy on the “alternative” course. There is bound to be resistance and spoiling tactics by the metropolitan powers and their multi-national companies, which have grown used to getting African resources on the cheap. They will do everything in and outside the book to prevent Africa freeing itself from the shackles of the current world economic order. Which should inspire the Africans to question the motivation of these powers in helping countries such as Germany, Japan, south Korea, Taiwan, Singapore, Malaysia and the others to rise from the ashes of the Second World War and the Cold War, while at the same time frustrating African attempts to be a Japan, South Korea, Germany, Taiwan or even miniature forms of them. Why do they resist or kill African attempts to be like these countries?

At the moment, there is stiff resistance by the metropolitan powers to indigenisation in Zimbabwe. A hefty US$1 billion was taken out of the country by investors before the recent elections, which is now making government finances difficult to handle. This is exactly what the Henry Kissinger-inspired American national security memorandum, NSSAM 200, of 1974, recommended. Thus, if Africa should embark on an “alternative” way, it should not be surprised to find multi-national companies refusing to invest or threatening to pull out of Africa, a horror that orthodox economists and other like-minded Africans will recommend that the continent should avoid, especially in this day and age where capital has many places to fly to. But if Africa collectively stands its ground and acts in the manner suggested by President Jammeh and Dr Tony Aidoo of Ghana namely letting the resources remain in the ground — the multi-national companies will come will nilly, if indeed the majority of the world’s natural resources are in Africa.

— New African.