An Analysis Of Zimbabwe’s Indigenisation And Economic Empowerment Programme (IEEP) As An Economic Development Approach

Researchjournali’s Journal of Economics Vol. 1 | No. 2 December| 2013 ISSN 2347-8233

1

www.researchjournali.com

Taonaziso Chowa

Lecturer, Department of Insurance and Actuarial Science,

Faculty of Commerce, National University of Science and

Technology (NUST), P. O. Box AC 939 Ascot, Bulawayo,

Zimbabwe

Marshal Mukuvare

Supervisor, Food Security and Livelihoods Programme,

Zimbabwe Red Cross Society, P.O. Box 1406 Harare,

Zimbabwe

An Analysis Of

Zimbabwe’s

Indigenisation And

Economic

Empowerment

Programme (IEEP) As

An Economic

Development Approach


2


Abstract

This paper looks at the historical processes that influence the indigenisation and economic empowerment

programme (IEEP) adopted by the Government of Zimbabwe (GoZ) and identifies the potential trickledown

benefits, constraints and alternative emphasis/models to the current programme. Targeted participants were

drawn from the government ministries, industry, economists, community leaders, youths, employees, and the

general public. We superimpose the employee/community share ownership schemes (E/CSOSs) and youth

development fund (YDF) models of the IEEP on the sustainable livelihoods framework (SLF) in evaluating

the broad based and long-term sustainability nature of the programme. Results show that the programme adds

to similar Malaysian & South African initiatives and is appreciated by the majority of targeted beneficiaries

though its position as a priority has been obscured by urgent needs for better service delivery and industry

revival. The E/CSOSs and the YDF launched under the IEEP fit well into the tenets of the SLF, while direct

equity acquisitions through indigenous partners seem to create a „cappuccino‟ analogy as it favours the

connected and economically viable individuals. We recommend tight monitoring through the established

national indigenisation and economic empowerment board (NIEEB), increased emphasis on procurement and

supply, capital mobilisation and capacity building for the youth entrepreneurs, increased awareness to the

general populace and flexibility in the 51% equity compliance period to ensure FDI attraction.

Key Words: IEEP, GoZ, SLF, ESOS, CSOS, YDF, NIEEB, FDI

1. Introduction

The periods of colonialism across Africa and Asia witnessed various forms of oppression and marginalisation

that were implemented by the colonial governments through skewed land & business ownership, uneven

education systems and unequal opportunities in employment & business. The ethnic riots of 1969 in Malaysia

by the majority and indigenous Malays (Bumiputera) against high poverty and the huge economic gap vis the;

British, Chinese and Indians, who were the majority equity holders led to a twenty year (1970-1990)

programme of economic reform known as the New Economic Policy (NEP), (Abdullah, 1997). The apartheid

system in pre-independence South Africa (SA) used tailored legislation and governance systems to dispossess

natives of their land, train Africans for certain forms of labour through Bantu education (Mathonsi, (1988),

Crouch (2004)) and ensured Afrikaner economic empowerment & racial dominance over non-whites

(Steenekamp (1990), Terreblanche, 1991).

The same could be said for the colonial government in Zimbabwe which relegated blacks to poor agricultural

land (reserves), (Chiumbe et al, 2003) and controlled the provision of education to ensure that the

missionaries would not „over educate‟ the blacks (Nherera, 2000). To reverse the inequality and


3


marginalisation there is need for a deliberate policy of empowerment; defined by Friedman (1992) as a

process of increasing the participation of marginalised groups in the economy. The Zimbabwe Indigenisation

and Economic Empowerment Act of 2007 [Chapter14:33], (www.parlzim.gov.zw), gives its policy definition

of empowerment as „the creation of an environment which enhances the performance of the economic

activities of indigenous Zimbabweans into which they would have been introduced or involved through

indigenisation‟ and goes further to define indigenisation as „a deliberate involvement of indigenous

Zimbabweans in the economic activities of the country, to which hitherto they had no access, so as to ensure

the equitable ownership of the nation‟s resources‟

2. Research Objective

This study is the first in assessing the Zimbabwe IEEP‟s ability to bring economic development and

empowerment to the general populace. The IEEP is superimposed on the sustainable livelihoods framework

(SLF) in order to assess its potential trickledown benefits. The IEEP is evaluated based on the policy

framework and the factors that shaped the legislation, anticipated benefits, constraints and alternative

emphasis on implementation or models of empowerment. Section 3 reviews the empowerment models from

Malaysia, South Africa and Zimbabwe. Section 4 presents the methodology of the study and the key issues in

SLF. Section 4 discusses the results and Section 5 concludes the study.

3. Literature review

3.1 Economic Empowerment Reforms In Malaysia

The NEP was a form of pro-Malay affirmative action in redistributing wealth and re-structuring society,

(Abdullah (1997)), and is hailed by the World Bank (1993) as one of the success stories of a developing

economy and an „economic miracle‟ of East Asia. Malaysia experienced a sustained average annual economic

growth rate of around 8 percent over the NEP period excluding the recessionary years of 1985 to 1986.

Roslan (2001) asserts that the NEP programme was successful in empowering the countryside, raised income

of the Malay as well as reduced poverty rates from 49 percent in 1969 to 16 percent by 1990 and further

reduction to 5.1 percent as of 2001. Shireen (1998), highlight three major approaches towards; provision of

social services (housing, health and education), increasing productivity of the poor through expansion of their

capital (land, research, development in crops, irrigation, marketing) and increasing employment (technical

education, financing), buttressed by government funding and marketing agencies (Stafford, 1997).

The Malaysian empowerment approach emphasised on privatisation of state entities, expanding new sources

of wealth through the setting up of specialized agencies to acquire economic interests and hold in-trust for

Bumiputeras, with the locals buying „units‟ in them, (Saruwatari, 1991), while mild on the taking or

http://www.parlzim.gov.zw/


4


reallocating the existing wealth. By 1990 the ownership distribution structure of equity stood as 19.3; 46.8;

25.4 percent for Bumiputera; other Malaysians and foreigners respectively, but the local share has remained

around the 20% mark which critics say is still far from the 30 percent target (Henderson, et al., 2002; Saad,

2012). Improvements in education and entrepreneurial support led to a marked increase in the number of

Malay entrepreneurs, those in managerial control and key professions such as doctors, accountants and

engineers. Emerging evidence however questions the „broad based nature‟ of Malaysia‟s NEP as statistics

reveal that only 20 percent of income earners have benefited much more from economic growth than the

bottom 40 percent (Muzaffar, 2010)

3.2 Economic Empowerment Reforms In South Africa

Although the pre independent policies of the ruling ANC were strongly anti-capitalist, SA‟s empowerment

process has been gradual mainly because the „negotiated‟ nature of SA‟s 1994 independence, taking over a

debt ridden & capital starved South African economy at independence due to apartheid sanctions (Rustomjee,

1991) and the need to balance between empowerment and economic growth. Other external developments

such as the collapse of the Soviet Union and the Washington consensus forced a review in the ANC strategy

when it got into office (Beal et al, 2005). Furthermore, SA required the provision of equitable quality

education as a basic tool for empowering the blacks to enable them to take up better jobs and opportunities, a

task which has registered significant progress with blacks making up more than 60 percent of university and

technicom students, (FW de Klerk, 2005).

Faced with the socio-economic inequalities created by the apartheid era, the new South Africa government

intervened with the Black Economic Empowerment (BEE) policy. The Department of Trade and Industry

(DTI) of South Africa outlined the main objective of BEE as to increase the number of blacks that manage,

own and control the country‟s economy (DTI, 2003). BEE was underpinned by three imperatives; that is

moral, social and economic growth (Jack & Harris, 2007). Revisions and enhancement to the BEE led to a

new Broad-Based Black Economic Empowerment (BBBEE). The DTI (2007) define the BBBEE as a socio-

economic process that directly contributes to the economic transformation of South Africa, the rationale being

the realisation of an increased number of blacks managing, owning and controlling the economy (over a ten

year period between 2007 until 2017). DTI (2004) states that; the BBBEE Act 53 of 2003 sought to come up

with a holistic framework that brought together various policies aimed at supporting the empowerment of

blacks guided by a solid scorecard system to measure the extent of BEE-compliance using the following:

1. Direct empowerment through ownership and control of enterprises and assets,

2. Human resources development and employment equity

3. Indirect empowerment through preferential procurement and enterprise development.


5


Schlemmer (2005) notes that the BEE‟s equity transfer approach did not result in wealth redistribution to the

marginalised groups but to a few „black elites‟ with political connections. BBBEE has been fraught with

„fronting‟ and „window dressing‟ where companies create an impression that they are complying by

appointing „non influential‟ blacks onto boards with little say on organisational decision making (Jackson et

al, 2005). The big businesses in South Africa have made inadequate investment in skills development;

resulting in the existence of vacancies whilst there are an equally large number of unemployed people who are

not qualified to fill the vacant posts. Servaas van den Berg (2003) indicates that the income gap between the

rich and the poor has not altered, with the black share of income still at 38.3 percent by year 2000 despite its

rise from 22.3 percent to 38.2 percent between 1970 and 1995. The above factors have led to Hoffman (2009)

to describe BBE/BBBEE as discriminatory against the majority of black South Africans who are still

marginalised in agreement with Baldauf (2006)‟s analogy of a “cappuccino” society and a repeat of the

Zambian indigenisation of the 1970s (Beveridge, 1974).

On the positive; the initiatives under the SA government‟s programmes to achieve socio-economic

transformation have resulted in the emergence of a visible black middle class Sanchez (2006) with Eskom a

public sector organisation BEE implementation having been applauded (Pelkman & Veenswijk, 2008). The

Employee Share Ownership Schemes (ESOSs) as implemented have been described by Mazibuko and

Boshoff (2003) as an effective approach of transfer ownership to blacks; that results in workforce motivation

and efficiency thereby advancing the growth of the business.

3.3 Land And Empowerment Reforms In Zimbabwe

Two key reforms have shaped the Zimbabwean social, political and economic landscape during the turn into

the 21st century namely the „fast track‟ land reform and the current Indigenisation and Economic

Empowerment Programme (IEEP). The Zimbabwe liberation struggle was fought on a Marxist – Leninist

rhetoric emphasising land redistribution as a critical factor for class differentiation, source of wealth and

power (Wekwete, 1991). Bratton (1987) states that; the black government managed to bring better; road

network, rural development, health services and education, with Auret (1990) describing the period 1980-

1990 as a „miracle of growth‟. By 1989, 95 percent of civil service posts were being occupied by blacks

(Castle, 1995). Chivaura (2002) cites the university of Zimbabwe (UZ) staff development programme as

having played a key role in capacitating blacks in higher and tertiary education.

The government of Zimbabwe inherited a skewed land distribution pattern where half of the prime land was

in the hands of 5700 white minority (Moyo & Skalness, 1990), while more than 5 million blacks were

confined to Tribal Trust Lands (reserves), (Moyo, 1989; Chiumbe et al, 2003). The period 1980-1999


6


followed a market based approach to land reform based on „willing buyer – willing seller‟ model outlined by

Borras (2003). The „willing buyer – willing seller‟ approach proved to be painstakingly slow and cautious due

to the property rights clauses in the Lancaster house constitution and the perceived negative effects of a faster

land transition on the economy (Bratton, 1987; Moyo & Skalness, 1990; Moyo 1995; Tshuma 1997).

The failure of market-based land reform saw a large scale invasion of white owned farms by war veterans

joined by the „masses‟ (Chaumba et al., 2003). These haphazard land invasions were formalised and resulted

in 4.37 million hectares of land having been redistributed to 114,830 households during its first two years

(UNDP, 2002). The total beneficiaries as at July 2013 stood at 276,620 indigenous households on 12.12

million hectares, representing 31 percent of prime agricultural land, previously controlled by some 3,500

white farmers (Zanu PF, 2013). Despite some researchers citing it as tool for gaining political mileage by the

ruling Zanu PF (Njaya and Mazuru, 2010) and evident underutilisation due to inadequate government support

and persistent droughts (Matondi and Dekker, 2011), the „fast track‟ land reform programme indigenised 96%

of the agricultural sector (Business Council of Zimbabwe (BCZ), 2011)). Moyo (2011) reveals that the land

reform has been broad based in some sense having empowered women, youths and other marginalised

groups. The 2013 tobacco (golden leaf and burley) selling season earned more than US$538 million, with

statistics showing that; of the more than 90,000 growers, 98.9 percent are indigenous with 1.2 million people

with close to six million dependants employed, (www.allafrica.com).

3.4 Zimbabwe’s Indigenisation And Empowerment Policy Framework

According to the BCZ (2011), the need for economic empowerment dates back to the 1990s with the

formation of pressure groups for empowerment such as the Indigenous Business Development Centre (IBDC)

1990, Affirmative Action Group (AAG) 1994 and the Indigenous Business Women‟s Organisation (IBWO)

1994. To redress the skewed ownership patterns in the economy where more than 80 percent of the private

sector was foreign owned, the government established the National Investment Trust (NIT) in 1996 to

warehouse shares for indigenous Zimbabweans when parastatals were being privatised (Zhou, 2000). The

government also established SEDCO, ARDA and ZMDC as stand-alone agencies for the promotion of small

and medium scale; business, farmers and miners respectively.

The Policy Framework on the Indigenisation of the Economy was first put in place by government 1998 and

was later revised and adopted in 2004 to become the foundation for the Indigenisation and Economic

Empowerment (IEE) Act [Chapter 14:33] of 2007. The indigenisation ministry consulted with key

stakeholders among them; Confederation of Zimbabwe Industries (CZI), Reserve Bank of Zimbabwe (RBZ),

Zimbabwe National Chamber of Commerce (ZNCC) and Zimbabwe Youth Council (ZYC), in the

http://www.allafrica.com/


7


development of the IEE Bill, Act and Regulations. The National Indigenisation and Economic Empowerment

Board (NIEEB) states that the IEE Act seeks to transform blacks from being mere suppliers of labour and

consumers and enhance their participation and ownership of resources, (www.nieeb.co.zw) and is being

implemented through the IEE Act and two key statutory instruments (SI) namely;

1. Indigenisation & Economic Empowerment (General) Regulations, 2010, and the

2. Indigenisation & Economic Empowerment (General) (Amendment) Regulations, 2010.

Key highlights of the Indigenisation & Economic Empowerment Legislation include:

1. 51% indigenous shareholding in all businesses with a net asset value of US$500, 000 and above as the

long term policy objective, requiring an approved implementation plan in; existing, mergers,

restructurings, unbundling of business, demergers, relinquishment of a controlling interest and new

business.

2. Promotes procurement of goods and services from indigenous businesses in general, with all government

departments, statutory bodies and local authorities obliged to procure at least 51 percent of their goods

and services from companies controlled by indigenous Zimbabweans.

3. Provides for the establishment of the National Indigenisation & Economic Empowerment Board (NIEEB)

to advise the Minister & manage the Fund. For example; the Youth Development Fund (YDF) was

established to ensure youth effectively participate in the economy as well as deal with unemployment

4. Provides for the establishment of the National Indigenisation & Economic Empowerment Fund (NIEEF)

to finance indigenisation and empowerment transactions and the assistance of local investors with funding

from fiscus, levies & borrowings.

5. Employee, Management & Community Share Ownership Schemes or Trusts (CSOSs) are encouraged to

be set-up as part of 51% indigenous shareholding to ensure broad based participation. Here 10 percent of

shareholding will be reserved for the CSOS and the proceeds from the trust will be used for provision of

socio-economic infrastructure as prioritised by the community chaired by the Chief with the District

Administrators and Rural District Councils and Chief Executive Officers also forming the committees

managing the funds.

6. Reserved business lines include: primary production of food & cash crops, retail & wholesale trade,

barber shops, hairdressing & beauty salons, employment agencies, estate agencies, valet services, grain

milling, bakeries, tobacco grading, packaging & processing, advertising agencies, milk processing,

provision of local arts & craft, marketing & distribution.

7. Provision for dispute resolution whereby businesses aggrieved by the Minister‟s decision may appeal to

the Administrative Court.

http://www.nieeb.co.zw/


8


3.5 Stakeholder Views On The IEEP

The years (2000 – 2008) witnessed negative capital flows due to hyperinflation and sanctions leading to the

adoption of the multi-currency system (dollarisation) in January 2009 (Chinamasa, 2009). As of May 2013,

Zimbabwe was ranked lowly on the World Bank‟s Ease of Doing Business Index standing at 170 out of 185

countries, (www.doingbusiness.org), which is a further impediment in the attraction of FDI. In light of the

state of the economy, key stakeholders see the need to improve service delivery, attract foreign capital and

improve employment as post dollarisation industry capacity utilisation levels have averaged 30 percent due to

obsolete equipment and the perceived lack of capital among the locals. CZI (2010) suggested sector specific

targets for indigenisation within a range of 20 to 25 percent over a longer period of 10 years. ZNCC (2009)

are of the view that the 51 percent threshold is too high & anti-capital attraction and advocates for

incentivised voluntary compliance model similar to SA‟s BBBEE.

The RBZ has since 2007 emphasized the need for an IEEP (RBZ, 2007), but recommends an implementation

period of 15 years and a shift of emphasis from equity compliance to a preferential procurement based Supply

and Distribution Indigenisation and Empowerment (SADIE) Model (RBZ (2011)). The RBZ argues that

indigenous people get immediate value income from guaranteed supply of goods and services than being a

shareholder whose dividends are dependent on company profitability (RBZ, 2012). The RBZ (2011) and

Bloch (2011) further stress the need for a broad based process capable of reaching grassroots people, youths,

women and vulnerable groups and view the short compliance period of 5 years as a downside risk to the

outlook of the economy.

3.6 Implementation Progress On The IEEP

The ZANU PF‟s emphatic election victory in the harmonised elections on 31 July 2013 may give us a glimpse

into the perceptions and initial impact of the IEEP on the majority of the Zimbabwean populace. The New

Constitution of 31 January 2013, places empowerment under the National Objectives emphasising the need to

redress imbalances resulting from past practices and policies. Section 14 (1) of the new constitution states that

“The State and all institutions and agencies of government at every level must endeavour to facilitate and take

measures to empower, through appropriate, transparent, fair and just affirmative action, all marginalised

persons, groups and communities in Zimbabwe” with emphasis on employment creation for the women and

youths.

There is ongoing progress on the implementation and compliance with the IEEP, with almost every company

having submitted information on its shareholding structure together with an IEEP implementation plan where

necessary. By mid 2013, 59 CSOSs covering 93 local authorities across the country‟s 10 provinces had been

launched with the cumulative value pledged funds reported to be over US$10 billion (Zanu PF, 2013).

http://www.doingbusiness.org/


9


Evidence from the ZBC-TV (2013) programme – Zimbabwe the Awakening Giant; indicate initial projects

having undertaken the; construction, reconstruction, furnishing, equipping & electrification of schools &

clinics and rehabilitation and construction of roads, boreholes, dams and irrigation infrastructure. The Old

Mutual funded CABS (Kurera/Ukondla) Youth Fund valued at US$10.5 million has created more than 8600

jobs and acknowledged the importance of capacity building as a key tenet of the economic empowerment

process by providing one million United States dollars through the ministry and ZYC. 133 ESOSs had been

approved while the value of shareholdings „ceded‟ to the NIEEF exceeded $2 billion as at March 2013

(www.herald.co.zw).

4. Methodology

4.1 Sampling And Research Design

The research took an analytical survey approach based on 164 questionnaire responses from Harare and

Bulawayo, of which 116 addresses the general issues around the IEEP from; the general public, employees

and youths, while the other 48 addressed ESOSs specific issues from three companies. Purposive sampling

technique using a total of 10 detailed interviews made up of 2 key informant interviews from; captains of

industry, senior government officials from the implementing ministry of youth development, indigenisation &

empowerment, economists, community leaders (Chiefs), Youth Groups leaders. Since the IEEP

implementation is still at infancy and yet to attain measurable progress we balance our survey with an

analytical approach on the set policy framework, the indicative trajectory from initial progress, views from the

key informants and secondary data sources.

4.2 The Sustainable Livelihoods Framework (SLF)

Chambers and Conway (1991) states that; a livelihood is sustainable if among other things is able to provide

opportunities for the next generation and contributes net benefits to other livelihoods at the local and global

levels in the short and long term, through capabilities, assets and activities required for a means of living. SLF

gives five interlinked forms of capital that encompass a livelihood namely; Human, Natural, Social, Physical

and Financial Capital and these are interlinked and a single asset can generate multiple benefits. The

government has a responsibility to ensure that policies and institutions that ensure sustainable livelihoods are

put in place (http://www.odi.org.uk). Therefore the SLF is a tool that can used to assess impact of the IEEP‟s

ESOSs, CSOSs and YDF on a number of indicators such as poverty reduction, well-being and capabilities.

Chambers (1989, 1997) explores Sen‟s Capabilities of „what people can do or be with their entitlements‟ and

argues that the analysis will allow people themselves to define the criteria which are important. He further

notes that the sustainable livelihoods outcome criteria may result in the inclusion of more diverse factors such

as self-esteem, security, and happiness, power and material concerns.

http://www.herald.co.zw/

http://www.odi.org.uk/


10


4.3 Ethics statement

This research made use of primary data that was collected in confidentiality for academic purposes. Our

secondary analysis masks any sensitive individual experiences beyond specific identification by future

researchers and users of this paper. Individual and company names mentioned in this paper pertain to events

in the public domain, which already have ethical documentation.

5. Findings

5.1 Awareness And Perceptions Towards The IEEP

A total of 116 questionnaires were completed out of 160 from youths, employees and adults with 46

respondents being female and 70 being male, making up 40 and 60 percent respectively. The Socio-

Demographic characteristics of Respondents had 70 percent (81 people in total) being youths which is

between 18 and 35 with the remainder aged above 35 years of age. The high literacy and educational levels

among Zimbabweans is evident as the percentages of respondents with (degrees or better, diplomas, advanced

level, ordinary level and below) was (74, 14, 3.4 and 8.6) percent respectively. There is generally a high level

of awareness from the public media of with everyone aware of the ongoing IEEP, but 47 percent of the

respondents lacked the specifics relating to the opportunities presented by the policy and how they can

benefit.

There is consensus view on the IEEP as a positive move to correct the effects of years of oppression and

marginalisation that caused the disparities and economic gaps that are prominent between the black majority

and the white minority in Zimbabwe. However IEEP prioritisation is obscured by the urgent needs for;

improved service delivery, formal employment and economic revival. This suggests the need for government

to concentrate more on what can bring immediate change to the populace especially the urban dwellers, while

the empowerment drive has to trickle down to the majority for them to view it as a priority.

5.2 Programme Design And Constraints

The key informants agree that due government process had been followed with the responsible Minister

presenting the Bill in Parliament, followed by public hearings and consultative processes where stakeholders

and the general public were invited. However industry representatives noted that some of their

recommendations and submissions were not factored in or embraced, specifically issues pertaining to the

powers of the Minister, alternative emphasis/models of empowerment as suggested by the RBZ and

implications the programme would have on foreign investments.


11


All key Informants from industry and the indigenisation board are in agreement that the majority of

indigenous Zimbabweans have no access to financial capital to pay for the 51 percent equity that has to be

acquired from the targeted firms. However government informants asserts that the programme is a long term

plan and its potential should not be limited to the short period that it has been implemented thus far with

equity partners expected to pay for their equity using future dividends received or advances from the NIEEF.

Some youths who had submitted bankable projects but had not accessed funding have began to view the IEEP

with scepticism by drawing an analogy with AAG whose lobbying enriched only a few individuals who had

access to the „centre of power‟. This view is supported by evidence on the ground where a very high skew of

share ownership towards top management in ESOSs, while the choice of indigenous partners has been limited

to the visible one in the society and business.

Economists and industry lobby groups highlighted that the indigenisation legislation is narrow in focusing on

the relationship between ownership and economic empowerment while ignoring the need for FDI attraction

through building investor confidence and considerations for property rights. They do not see ownership of

economic resources through state intervention via NIEEB/NIEEF reaching the disempowered groups. Further,

the programmes being run have limited resources; for example the CABS youth fund has a limited amount of

money and will not suffice, given that an estimated 60 percent of the population falls in the age group of 18 to

35 years of age. The ministry however argue that employment creation is also one of the criterions that are

used to assess feasibility of funds which will help and ensure the trickle down of the benefits of the

programme. In addition most reserved business lines require low start-up capital and the move is meant to

shield the local start ups while at the same time channelling foreign capital towards bigger projects.

5.3 The Employee Share Ownership Schemes (ESOSs)

Workers in several companies including Schweppes Zimbabwe, Old Mutual Zimbabwe Limited, BAT

Zimbabwe, Zimplats and Mimosa are now holding varying shareholdings between 5 percent and 31 percent

for Schweppes (above the regulatory maximum of 28 percent). Three organisations implementing the ESOS

had 48 respondents of whom 83 percent indicated that they were participating in the share scheme with the

balance of 17 percent indicating that they were not benefiting from the scheme. Half (50 percent) of the

employees sampled indicated that they had a detailed understanding of how the scheme works. The

employees indicate that the shares enabled them to share in the vision of the organisation with 67 percent

indicating that they were motivated to perform and reach set targets as this will ensure the organisation‟s

profitability. However; half of the respondents (50 percent) indicated that the scheme does not increase job

security, with a further 66 percent indicating that the dividends from the shares will influence their stay at the

organisation. The researcher attributes this feeling to the fact that the shares were not owned as individuals


12


and therefore the employees view the dividends as a bonus without much attachment to the sense of

ownership or belonging to the company.

The study also established that most companies used the bonus/incentive payment schedule and system that is

monthly, quarterly, half yearly or annually depending on employee grade had been used before ESOSs. The

organisations now pay annual dividends to the ESOS which is then disbursed to employees who are eligible

to benefit based ESOS profit entitlements, which translate to increased economic benefits for employees

compared to the situation prior to the implementation of the ESOS. The payment of a US$300, 000 in

dividends by Schweppes to its ESOS in July 2013 serves as an indicator that the programme has a potential

and is already benefiting indigenous Zimbabweans, (www.allafrica.com).

The third organisation in our sample had an ESOS approved but had not paid dividends for the past seven

years (since 2006). The employees at this particular company doubt the potential of benefiting from the

scheme given that the organisation has a policy whereby they do not declare dividends when implementing

capital projects such as expansion or setting up new plants. Employees also felt that they may not benefit fully

from the share scheme given that they are not in their names and when they leave the organisation they leave

behind the shares. Thus company dividend policy has a strong bearing on the ESOSs as a model of

empowerment.

5.4 The IEEP As An Economic Development Approach

The IEEP has the potential to enhance the economic status of the indigenous through the ESOSs, CSOSs and

YDF. The 10 percent equity and board representation for the CSOSs is a form of social capital that enables

the community groups through their leaders to influence the development agenda as well as strategic

directions of organisations. In contrast to corporate social responsibility (CSR) programs that largely

implemented in line with an organization‟s priorities, the CSOSs implement physical capital programs and

projects as prioritised by the benefiting community. The provision of financial capital to the youths through

the YDF backed by the human capital in capacity building initiative will ensure long-term sustainability of the

entrepreneurial ventures. Dividend disbursements to ESOSs avail financial capital with the extra cash

resources for their individual social and economic endeavours. Clearly; the CSOSs, YDF and ESOSs fit well

in the SLF and are in adherence to Sen‟s capabilities.

5.5 Government Position On The IEEP

The government position is that the current IEEP is a continuation of previously implemented reforms in the

education, civil service and land reform as inspired through the liberation struggle. Thus; the IEEP is part of



13


the progress by government in its endeavour to consolidate political independence with socio-economic

independence and will make use of existing programmes under SEDCO, ARDA, ZMDC and others. There is

some level of strictness when it comes to companies in the mining sector, with President R. G. Mugabe

suggesting that the mineral reserves and the subsequent environmental damage should at least make up the

government‟s share of 51%.

The then minister of indigenisation (http://saviourkasukuwere.blogspot.com) Honourable Saviour

Kasukuwere highlighted that compliance is not immediate but phased whereby compliance for both existing

and new investments on condition that they submit their plan, setting out how they intend to comply over 5

year period. The 51% indigenous shareholding is not an investment pre-requisite, while existing and/or new

companies or businesses are at liberty to identify their own partners and terms of their agreements with

Zimbabweans paying for their equity stakes. Hon. Kasukuwere suggests that; the nobility of the IEEP from

the government side lies in ensuring stability and security of investment while the investment requirements

enshrined in the law and regulations are meant to curb speculation. Some specific amendments to the

Statutory Instrument (SI) 116 of 2010 showed that the IEE Act is not “cast in stone” and will continually be

reviewed to make it as efficient as possible.

5.6 Measuring And Assessing Success Of The IEEP

The legislative framework that will be the key monitoring instrument was completed and finalised in June

2012. This means that the monitoring process can now begin guided by the Indigenisation and Assessment

rating that is provided for in the Act and subsequent regulations. The NIEEB was constituted in 2010 to

monitor the compliance of the IEEP transactions between companies and/or individuals in order to comply

with the law. The regulations make NIEEB‟s monitoring work semi-continuous through the issuance of

compliance certificates valid for two years and allowing room for reviews and audits at renewal.

The government will measure success at two levels with the 51/49 percent serving as an indication that the

economy itself is now controlled by the indigenous groups with the hope that the profits generated from

natural resources are retained and reinvested in the country for the development of Zimbabwe. Assessment

will also look at the percentage of growth rate achieved that will be attributed to indigenous people; with the

developments in Tobacco farming being cited as an example where a bigger portion of income is going to the

indigenous farmers.

6. Conclusions

Economic empowerment programmes are necessary and important; equality buries animosity, ensures a

peaceful coexistence & security while curbing speculation around asset prices due to uncertain laws. The

http://saviourkasukuwere.blogspot.com/


14


Malaysian riots, SA‟s BEE/BBBEE and scenarios similar to the violent land invasions of year 2000 highlight

the need for equitable ownership of a nation‟s resources and provide us with lessons on implementation of

empowerment policies. While the IEEP appear ambitious; its coming on the back of a successful land reform,

a high proportion of black managers running most firms and established institutions may lead to significant

progress in the prescribed five year period. The SLF applies well to the CSOSs in those communities from

were natural resources were being extracted, the YDF and with partial application to the ESOSs. There is

need for the government to address the general welfare of the people by improving service delivery, revival of

industry and formal employment creation as these urgent needs are a priority of everyday life. We recommend

increased awareness so that the general populace comprehensive knowledge of the IEEP aims and the

modalities of accessing or benefiting from the programme and commend the public media for their efforts in

addressing the same.

The biggest huddle to the success of the IEEP however lies in the poor economic performance that is

characteristic in the Zimbabwean economy and very poor ranking on ease of doing business. Since most

operating businesses are running at low capacity and in dire need of capital, it may be long before companies

(especially manufacturing) have their capital needs met and are able to declare dividends giving a dent to the

payments to CSOSs, ESOSs and indigenous partners. Thus immediate benefits may be realised through

supply and procurement than through equity, hence the need to ensure optimal benefits by emphasising on

both equity and procurement & supply, balanced with the encompassing of provisions that attract FDI. We

however warn that „the door to supply and procurement can only be opened wide if one has a powerful

„friend‟ inside management and boardroom to open it‟ hence the need to have a influential indigenous people

on the company boards and management.

The inclusion of empowerment programmes and initiatives in the new constitution of 31 January 2013 will

ensure the enactment of policies that are broad based and the ease of enhancing the current acts and

regulations. Lessons learnt from the land reform programme emphasise the need to mobilise capital for the

utilisation of capital and complement empowerment programmes with capacity building initiatives in order to

improve sustainability of the funded individual and community projects. NIEEB should therefore monitor the

programme tightly so as to realise the intended goals for employees, youths, communities and the nation.

The IEEP is still at infancy and yet to attain measurable progress hence our methodology to analyse the

potential of the policy framework and the indicative trajectory based on its set objectives, initial progress and

set modus operandi. We acknowledge that socio-economic transformation is a goal that cannot be realised

overnight but rather one fraught with complications, requiring policy; credibility, coherence, coordination,


15


consistency, sequencing, balancing with the macro-economy and commitment from both the private sector

and government. We conclude that Zimbabwe‟s IEEP has the potential to bring economic development and

benefiting the formerly marginalised black majority.

7. References

Abdullah, F.H. (1997). Affirmative Action Policy in Malaysia: To Restructure Society, to Eradicate Poverty in Ethnic

Studies Report. XV (2).

Auret, D. (1991), A decade of development Zimbabwe (1980-1990), Mambo Press in association with the Catholic

Commission for Justice and Peace in Zimbabwe

Baldauf, S. (2006). Class Struggle: South Africa’s new and few, black rich. The Christian Science Monitor

http://www.csmonitor.com/2006/1031/p01s03-woaf.htm.

Beall, J., Gelb, S and Hassim, S. (2005). Fragile stability, Journal of Southern African Studies, 31,4, 681-700.

Beveridge, A. A. (1974). Economic independence, indigenization, and the African businessman: some effects of

Zambia‟s economic reforms. African Studies Review, 17, 477e490.

Bloch, E (2011). Indigenisation: Setting the record straight. The Zimbabwe Independent 14 April 2011

www.theindependent.co.zw accessed 11 June 2012.

Borras, S.J. (2003). Questioning market led agrarian reform: experiences from Brazil, Colombia and South Africa.

Journal of Agrarian Change 3 (3): 367 394.

Bratton, M. (1987). The Comrades and the Countryside: The Politics of Agricultural Policy in Zimbabwe. World

Politics, 39 No. 2. 174-202.

BCZ (2011) Business Council of Zimbabwe – Summary Report on Indigenisation and Economic Empowerment in

Zimbabwe: A Strategy for Wealth and Employment Creation for Poverty Reduction. Harare.

Castle, J. (1995). Affirmative action in three developing countries: Lessons from Zimbabwe, Namibia and Malaysia.

South African Journal of Labour Relations. Vol. 19. Issue 1.

Chambers, R., 1989, „Vulnerability, coping and policy‟, IDS Bulletin 20(2): 1-8

Chambers, R. and G.R. Conway. 1991. Sustainable Rural Livelihoods: Practical Concepts for the 21st Century. Institute

of Development Studies DP 296, 1991. University of Sussex: Brighton

Chambers, R., 1997, „Responsible well-being – a personal agenda for development‟, World Development, 25: 1743-

1745

Chaumba, J., Scoones, I. and Wolmer, W. (2003). From Jambanja to planning: the reassertion of technocracy in land

reform in South-eastern Zimbabwe? Sustainable Livelihoods in Southern Africa Research Paper 2, Institute for

Development Studies, Brighton.

Chinamasa P. (2009), Budget Statement for the Republic of Zimbabwe, p.4-5

Chivaura, I. (2002). The affirmative action programme at the University of Zimbabwe: gender and equity issues. Harare:

Jongwe Press.

http://www.csmonitor.com/2006/1031/p01s03-woaf.htm

http://www.theindependent.co.zw/


16


Confederation of Zimbabwe Industries (2010), CZI Position and Proposed Amendments to SI 21 of 2010, The

Indigenisation and Economic Empowerment (General) Regulations of 2010. www.czi.co.zw/indigenisation.pdf

downloaded 11 June 2012.

Crouch, L. (2004). South Africa: Overcoming past injustice. In I. C. Rotberg (Eds.), Balancing change and tradition in

global education reform (53 - 81). Lanham, Maryland: Rowan & Littlefield Education.

DTI (2003). South Africa’s Economic Transformation: A strategy for broad-based black economic empowerment.

Department of Trade and Industry. Pretoria www.info.gov.za/otherdocs/2003/dtistat.pdf. (Accessed 4 June 2012

DTI (2004). BBBEE Code of Good Practice on Broad-Based Black Economic Empowerment. Department of Trade and

Industry. Pretoria Available at: www.thedti.gov.za.

DTI (2007). South Africa’s Economic transformation. A strategy for Broad Based Black Economic Empowerment, 2007.

The Department of Trade and Industry. Available at: www.thedti.gov.za.

Friedman, J. (1992). Empowerment: the politics of alternative development. Oxford: Blakwell.

FW de Klerk Foundation, (2005). Black Economic Empowerment in South Africa. www.fwdeklerk.org.za (accessed 28

May 2012).

Gelb, S. (2003). Inequality in South Africa; Nature, Causes and Responses. Johannesburg. The Edge Institute.

Henderson, J., Hulme, D., Phillips, R. and Nur N. A. M., (2002), Economic Governance and Poverty Reduction in

Malaysia; Globalisation and Poverty (DFDI)

Hoffman E.A. (2009), A Wolf In Sheep's Clothing: Discrimination Against The Majority Undermines Equality, While

Continuing To Benefit Few Under The Guise Of Black Economic Empowerment Syracuse Journal Of International Law

and Commerce [Vol. 36:87

Jack, V and Harris, K. (2007). Broad-Based BEE: The Complete Guide. Frontrunner Publishing: South Africa.

Jackson, W.E, Alessandri, T.M and Black, S.S. (2005). The Price of Corporate Social Responsibility: The Case of Black

Economic Empowerment Transactions in South Africa. Federal Reserve Bank of Atlanta. Working paper series 2005-29.

Mathonsi, P. (1988). Black Matriculation Results: A Mechanism of Social Control. Bramfontein, South Africa:

Skotaville.

Matondi, P. and Dekker, M. (2011). Land Rights and Tenure Security in Zimbabwe’s Post Fast Track Land Reform

Programme; A synthesis report for Land Ac. Ruzivo Trust, Harare.

Mazibuko, N.E and Boshoff, C. (2003). Employee perceptions of share ownership schemes: An empirical study. South

African Journal of Business Management, (34)2, 31-44.

Moyo, S. (2011). Land Reform and State Reconstruction, paper presented at the CCR policy advisory group seminar

State Reconstruction in Zimbabwe, Siavonga, Zambia, 9-10 June 2011. In State Reconstruction in Zimbabwe.

Moyo, S. (1995). The Land Question in Zimbabwe, Sapes Books, Harare.

Moyo, S and Skalness, T. (1990). Land Reform and Development Strategy in Zimbabwe: State Autonomy, Class and

Agrarian Lobby. Afrika Focus Vol pp 201-242.

Moyo, S. (1989). Agriculture Employment Expansion: Smallholder Land and Labour Capacity Growth, ILO, Harare.

Muzaffar. C (2010). Widening income inequality: A challenge to 1 Malaysia. Retrieved October 3, 2011,

from http://www. Malaysianinsider.com

http://www.czi.co.zw/indigenisation.pdf

http://www.info.gov.za/otherdocs/2003/dtistat.pdf

http://www.thedti.gov.za/

http://www.thedti.gov.za/

http://www.fwdeklerk.org.za/


17


Nherera, C.M. (2000). Globalisation, qualifications and livelihoods: The case of Zimbabwe. Assessment in Education, 7

(3), 335-363.

Njaya, T. and Mazuru, N. (2010). Land Reform Process and Property Rights in Zimbabwe: Constraints and Future

Prospects (1980 – 2002). Journal of Sustainable Development in Africa Vol 12 Clarion University of Pennsylvania,

Pennsylvania.

Pelkman, P. and Veenswijk, M. (2008). Redefining organizational practice through narratives: Unraveling the Eskom

backstage. African Journal of Business Management. (2)2, pp 41-52.

Reserve Bank of Zimbabwe, (2012). Industry Supply-Chain Based Economic Empowerment as a vehicle to equity based

Economic Empowerment Programmes. Available at: www.rbz.co.zw

Reserve Bank of Zimbabwe, (2011). A Sectoral Approach to Economic Empowerment and Indigenization: Supplement

to the July 2011 Mid-Term Monetary Policy Review Statement. Available at: www.rbz.co.zw

Reserve Bank of Zimbabwe, (2007). Monetary Policy Statement. Available at: www.rbz.co.zw

Roslan, A. (2001). Income inequality, poverty and development policy in Malaysia, Paper presented to the Conference on

Poverty and Sustainable development, University Montesquieu-Bordeaux.

Rustomjee, Z. (1991). Capital flight from South Africa, 1970–1988. Transformation 15.

Saad S, (2012) Re-building the Concept of Nation Building in Malaysia Asian Social Science Vol. 8, No. 4; April 2012

www.ccsenet.org/ass

Sanchez, D. (2006). Socio-economic Transformation in South Africa: Black Economic Empowerment and Small,

Medium and Micro Enterprises. DIIS.

Saruwatari, K. (1991). Malaysia‟s localization policy and its impact on British-Owned enterprises. The Developing

Economies, XXIX-4, 371-386.

Schlemmer, L. (2005). South Africa economy: BEE: fact or fiction? The Economist Intelligence Unit, 21 September

2005.

Shireen, M. H. (1998). Income Inequality and Poverty in Malaysia, Rowman & Littlefield Publishers, Inc.

Stafford, D. G. (1997). Malaysia's New Economic Policy and Global Economy: The Evolution of Ethnic

Accommodation, The Pacific Review, vol. 10, no. 4, pp. 556-80.

Steenekamp, T. (1990). Discrimination and the economic position of the Afrikaner. The Southern African Journal of

Economic History, Vol 5 page 49-66.

Terreblanche, S. (1991). The need for a transformation period towards a post apartheid South Africa. Occasional Papers

number 3 (2nd

Edition). The Stellenbosch Economic Project.

Tshuma, L. (1997). A Matter of (In) Justice: Law, State and the Agrarian Question in Zimbabwe. Sapes Books Harare.

UNDP (2002) Zimbabwe land reform and resettlement: assessment and suggested framework for the future. Interim

Mission Report. United Nations Development Programme, http://www.undp.org/rba/pubs/landreform.pdf.

Van der Berg, Servaas and Louw, Megan. (2003). Changing patterns of South African income distribution: Towards

time series estimates of distribution and poverty. Paper to the Conference of the Economic Society of South Africa.

Stellenbosch, 17-19 September 2003.

Wekwete K. H. (1991), The Rural Resettlement Programme in Post-Independence Zimbabwe in Rural Planning in

Zimbabwe, edited by Mutizwa-Mangiza N. D. And Helmsing A. H. J., Aldershot: Avebury

http://www.rbz.co.zw/



http://www.undp.org/rba/pubs/landreform.pdf


18


World Bank. (1993). The East Asian Miracle: Economic Growth and Public Policy. Oxford University Press, New York.

ZNCC. (2009). A Research on Legislative Provisions Hindering Business Development in Zimbabwe. www.zncc.co.zw

accessed 7 August 2012.

Zhou, G. (2000). Public Enterprise Sector Reforms in Zimbabwe: A Macro Analytical Approach. Zambezia XXVII (ii).

www.allafrica.com – Zimbabwe: Tobacco Sales Surpass 2012 Final Output, 12 June 2013, Source: The Herald

www.allafrica.com – Zimbabwe: Windfall for Schweppes Workers, 26 July 2013, Source: The Herald

http://www.odi.org.uk: Overseas Development Institute – Key Sheets for Sustainable Livelihoods

www.doingbusiness.org: Doing Business in Zimbabwe – World Bank Group

www.nieeb.co.zw – Website for the National Indigenisation and Economic Empowerment Board

www.parlzim.gov.zw – Website for the Parliament of Zimbabwe

www.herald.co.zw, NIEEB meets fund managers, 6 March 2013, The Herald.

http://saviourkasukuwere.blogspot.com/p/issues-agenda.html: Foreign Investment in Zimbabwe: Indigenisation Issues,

presented at the Zimbabwe Capital Markets Symposium, Sandton Convention Centre, Johannesburg, 4th November

2010.

ZBC-TV (2013) – Zimbabwe the Awakening Giant, Saturdays 2030 – 2100 hrs, September 2013 Schedule

http://www.zncc.co.zw/



http://www.odi.org.uk/

http://www.doingbusiness.org/

http://www.nieeb.co.zw/

http://www.parlzim.gov.zw/

http://www.herald.co.zw/

http://saviourkasukuwere.blogspot.com/p/issues-agenda.html

An Analysis Of Zimbabwe’s Indigenisation And Economic Empowerment Programme (IEEP) As An Economic Development Approach

Documents