Empowering People

When the National Party won the 1949 elections in South Africa and set about implementing the infamous Apartheid policy, they represented a disadvantaged group in South Africa in the form of the Afrikaners. These people, the product of many races that inhabited South Africa from the 1500s, spoke a colloquial version of Dutch mixed with French, Indonesian and Malay languages. By and large they were not well educated, had a significant majority of impoverished members and had been marginalized under successive “Uitlander” Governments that had dominated South African politics for the previous century.

They took over a country where foreign interests dominated and where the business legacies of the Rhodes era controlled perhaps nearly half of all private sector interests. They set about protecting their heritage, language and culture with vigor and at the same time enforced racial segregation across the country and sought to protect the poor in their midst with job reservation and protection. They established Afrikaans Universities, newspapers and language institutions, they deliberately created Afrikaans controlled business entities in all spheres of life – agriculture, banking, manufacturing and commerce.

They were brilliantly successful – the Afrikaner poor were lifted out of poverty, their children educated and employed in the State system or enabled to start up enterprises of their own in the private sector. Today companies such as SA Breweries, Nationale Piers, Rembrandt, Sanlam, Nedbank are global players in their fields, many are leaders in the sectors they are active in – SAB is number three globally, NP is the second largest communications Group in the world. Their Universities achieved world recognition for excellence and many Afrikaners play a leading role in research and science. The language, although it is only spoken by a tiny minority (perhaps 6 million people) is well developed and sophisticated.

For other minorities or even majorities emerging from a similar background, the lessons of the Afrikaner era in South Africa (just 45 years) must be a real role model. When they handed over power to the ANC in 1994, they left behind a country that was firmly middle income, had a well developed infrastructure and many Cities and Towns that can hold their own in the 21st Century. On their way they created many problems – led the country into international isolation and then war and left behind a black majority that was angry, bitter, deeply racist and poorly educated with little experience in managing a well developed modern industrial economy.

Following the negotiated transition, the Afrikaners collectively decided not to seek power, but to retire from the political field except as voters and to concentrate on achieving influence through their legacy from the apartheid era. 21 years later the legacy is still largely intact – their business empires have expanded and are well entrenched in other African countries, their language has survived and their children are thriving in many different capacities.

The ANC has tackled the problems of the country in many ways that are similar to the policies of the Afrikaners after 1949. BEE has forced the transfer of wealth on a significant scale to the new ANC linked elite and they have adopted policies that have paid social subsidies to many millions of poor families while a range of other policies have forced employers to hire black employees ahead of other minorities, especially the “whites” (many are actually quite “brown”).

But these same policies have undermined confidence and management capacity in all State linked organisations with disastrous consequences. As a result South Africa is the slowest growing member of the Bricks alliance. At the same time the problem of inequality has become much more severe. But it is in agriculture where the failure is most stark. As was the case in Zimbabwe post Independence in 1980 when foreign donors purchased 3,8 million hectares and allowed the State to distribute this to disadvantaged individuals, the South Africans have begun by buying land from owners and then redistributing the land to new occupants. Like Zimbabwe they have not allowed the new occupants to get title and as a consequence these new owners, almost without exception, have allowed the properties to become unproductive and derelict.

In Zimbabwe we have adopted a wide range of policies designed to “empower” the black or indigenous majority. In addition discrimination is widespread in the State and in all State controlled entities as well as all major corporate’s. Because of patronage and the strategy of Zanu PF to effectively control all aspects of national life, virtually all significant companies in the private sector follow hiring practices that favour the employment of individuals who are “connected”.

Most recently (2007) the State has adopted a policy they have termed “indigenisation”. Under these laws and regulations the State can require a company to hand over 51% of their equity to “indigenous” individuals and leaving the State to determine who is “indigenous” and who is not and also implying that the transaction will not involve compensation and will involve a loss of management control.

Whatever their motivation, these policies are simply not acceptable to the private sector. If the desire was to allow local partners to secure an interest in corporate activity, then the existing investors would require that they pay for their stake and then follow their investment with fresh capital as the business expands. Most significantly investors, local or foreign, would never accept the loss of management control.

Yesterday I was in a conference in Harare where a senior civil servant from the Ministry of Finance argued that the indigenisation policy was like a lion roaring in the bush, but not actually eating anyone. Then why have an Act of Parliament and detailed Regulations? While this Act is on the statute books investors are unlikely to be prepared to invest in Zimbabwe. This reluctance is reinforced by the fact that some $30 billion in farm investment owned by some 10 000 corporate’s have been taken over by the State without compensation since 2000.

But worse than this, the deliberate destruction of the commercial farm industry and non-payment of compensation, forcing thousands of owners into destitution and two million people rendered homeless and without an income is one thing, the other is that over 70 per cent of the farms are derelict and abandoned. Zimbabwe has to import three quarters of its food needs and the 60 per cent of our industry that was dependent on agriculture, has also folded.

But our leadership continues to voice the view that this is their right and that they are correcting simply an historical injustice. But what about investor rights, property rights, the rule of law and the rights of citizens of whatever color and origin? We need the rest of the world, they do not need us; if we continue to pursue failed policies and damaging strategies we will continue to be a dismal example of failure. Certainly we can never empower our people with these policies – rather they are designed to exploit, extort and coerce compliance.

Eddie Cross
Harare, 11th April 2015