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The Rise and Fall of the Indigenous Business Development Center (IBDC) in Zimbabwe.

Tamuka Charles Chirimambowa

Submitted in Partial fulfillment of therequirements for the degree ofBachelor of Arts (Honours) in EconomicHistory and Development.


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University of KwaZulu-Natal.Durban, 2006.Abstract

Economic reform has become one of the major necessities of post-colonial African states,

given years of slavery, apartheid, colonialism and underdevelopment. Many scholarshave argued that Africas lack of development is due to the lack of African participation

within the economic sphere, especially as a business class or bourgeoisie. They contend

that African participation in business has been rare, and where granted it has been mostly

within the peripheries or petty commerce. This study will investigate Zimbabwes IBDC

with a view to going some way to answering the major question that arises out of this

argument: is creating a nationalist indigenous entrepreneurial class the answer to Africas

development problems? The focus of this study will be on the emergence of the IBDC as

a vehicle for black empowerment. It will attempt to account for its successes, its failures,

and its ultimate demise. The research will also chart how some of Zimbabwe's most

successful black entrepreneurs, some who have managed to establish a global presence,

got their start with this organization, and how they proceeded when the IBDC ceased to

exist.The study will also proceed to examine the Indigenous Business Women's

Organization and the Affirmative Action Group, similar organisations that came after the

IBDC. Crucial within this research agenda is the interrogation of the role of the state in

post colonial Africa: can it be a catalyst for economic empowerment, or is it an inhibitor?

Finally, efforts will be made to investigate the complementarities and contradictions of

efforts to create a black business class with poverty alleviation policies.

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Contents

Chapter 1: Post Colonial Period.7

Chapter 2: First Decade of Independence..13

Chapter 3: Rise and Fall of the IBDC22

Chapter 4: Empowerment for whom? ...........................................................................34

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Introduction.

This paper, which takes as its main object some aspects of the emergence of the

Indigenous Business Development Center (IBDC)1 in Zimbabwe, attempts to posit the

Rise and Fall of the IBDC historical, by contextualizing those developments from factors

that gave to, rise and demise, within Zimbabwes political economy from the colonial

period of the 1920s, proceeding to the first decade after independence until up to the-

Formation of the IBDC (1989) till its demise (1993-5) and the present (2006).

Therefore, in order to understand the development of the IBDC, it is imperative that we

posit the conditions that gave rise to the need for indigenization within the context of the

generic political economy. Such a feat enables us to appreciate the multifarious factors

influencing and surrounding the four actors involved namely:

i. The State

ii. Institutions-Interest or pressure groups.

iii. Individuals

iv. Market

The relations amongst these factors become of paramount importance specifically the

power relations and at times the bifurcation2 that existed, and how these impacted upon

each other, giving rise to a love-hate relationship. This attempt is limited by time and

space constraints, and as such any assumption or endeavour it to fully articulate the

history of the IBDC is void abnitio. The aim of this dissertation is then, to illuminate or

paint a picture on the power plays underpinning the history of the IBDC in Zimbabwe

perceived as an institution and individuals, from a historical perspective, trying to

establish parallels and trends, that gave to the rise, ultimately the fall and the aftermath.

1 A pressure group established in the 90s to advance black economic empowerment in Zimbabwe.2 The cross cutting nature between individuals institutions; that is when is an institution considered to beitself and an individual to be his own. The line is thinly veiled and this study as such has never bothered toattempt to delve into that area for it would be another subject of enquiry that can lead to semanticstagnation.

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Methodology

The study thus takes a structural frame work in trying to build this account, with the key

questions being the contestation of the state and private individuals in achieving

economic empowerment. This treatise would also seek to establish this relationship by

shedding more on the semantic discourses and philosophical underpinnings. Thus it

assumes much more of a generic or polemic approach with a bit of empiricism from

historical events, at the same time trying to run away from the pitfalls of deductive

causality. This empiricism is attempted through a media scan, primary documents (e.g.

organizational magazines, minutes, policy pronouncements and policy position papers) of

various activities and events in relation to and associated with the IBDC, its membership

and any ancillary organization. The study will therefore focus on the use of both primary

and secondary documents as when they have been available.

Justification

In discussing the role of indigenous capitalists Leys and Berman pose that; For instance

are domestic, internal, or indigenous capitalist classes necessary for development,

and if so what, in what specific ways (in Leys and Berman 1994: 2). This observation by

Leys and Berman raise significant questions about development in Africa. Given the fall

of the Berlin wall and Soviet bloc as espoused in the end of history by Fukuyama with

the triumph of capitalism the role of domestic capitalist has increasingly gained

prominence within development discourse. In this the question the role of the bourgeoisie

and state becomes under scrutiny. What has been the nature of the relationship and can it

really make Africa claim the 21st century as proclaimed by the World Bank. Leys and

Berman posit the same questions:

Given that the only kind of development that appears immediately practicable iscapitalist development-within the framework of world markets and, at best up tillnow, within the constraints of the IMF/World Bank regulation of African macro-economic policy-the key question have still to be asked: what are the specificproblems that must be solved for such development to take place? What are thefunctions that local capitalist are called to perform? And what are the most

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significant characteristics of African capitalist classes for achieving whatever canbe achieved within this framework (1994: 3).

In as much as this paper cannot boldly declare that capitalist development remains the

only viable path of development for African countries, it can not ignore the impact that

the modernity paradigm has had in shaping development theory. However the need toadjust or tinker with economies in Africa to spur growth is out of question and it is this

tinkering that necessitates this paper with particular focus on business interest groups and

state-capital relationship.

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economic sovereignty or independence. This assertion is further observed by Adedeji

who pontificates that; The primary purpose of indigenisation is economic

decolonization, the reduction of economic dependence and the achievement of an ever

increasing measure of self-reliance through internally located and self-sustaining growth

(1981:31). This partly explains somehow why the indigenisation debates and mostly in

Zimbabwe has been a racial issue. Whilst indigenisation appreciates private enterprise

and sought to promote entrepreneurship, it was also that which was marked by addressing

colonial induced injustice.

1.2: The infancy and exclusion of African Bourgeoisie

The development of an African bourgeoisie in Zimbabwe can be traced back to the

colonial days of Southern Rhodesia as early as the 1920s.Nicholas observes that There is

evidence by 1922 that a stratum of African peasant farmers was poised for transformation

into a class of capitalist farmers (1994:96). Thus the early accumulating class of

Africans was found to be within agriculture. Even though their agriculture could not be

termed capitalist there was accumulation taking place which created the rich a class that

was consolidating itself within the natives. For instance Nichols observes that With

settlement in Rhodesia the settlers relied on the indigenous population for their food

supplies to the mines (Ibid: 95). Nevertheless this process of accumulation was short

lived as European interests preceded particularly after Rhodesia became a self governing

colony in 1923.Nichols identifies colonial legislation namely the Land Apportionment

Act of 1930 (LAA), Maize Control Act of 1931 and Cattle Levy Act of 1931 that played

a critical role in militating against African entrepreneurship (Ibid:96-7). The LAA created

the Native Purchase Areas (NPAs) which different areas where black business and

farmers were obliged to pursue their economic interests. These farms are recorded to

have been acquired by elite, teachers, religious ministers, chiefs families, successful

business people, retired policemen and court messenger-interpreters (Ibid:96). According

to Maphosa it has been One of the most oppressive and discriminatory Acts passed by

the colonial Government and effectively created a cheap labourers out of the

indigenous blacks by pushing them into the ecologically marginal areas of the country,

prohibiting them from owning or leasing property in the lucrative European areas and

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prohibiting them from owning land in the overpopulated native reserves (1998: 184).

Maphosa further argues that this deprivation partly explains the lack of the development

of an indigenous class since the lack of title deeds has been the most important reason for

the lack of access to finance by many small-scale indigenous businesses (Ibid). The

Maize Control Act of 1931 set up a two tier pricing system that in effect taxed the

produce of African producers to subsidise the Europeans and the same time the Cattle

levy Act of 1931 transferred surplus cattle from the Africans to Europeans. Thus African

accumulation found greater resistance from the colonial state. However accumulation did

occur amongst Africans though in insignificant proportions as compared to their white

counterparts. More so Nicholas further observes that it was not only within agriculture

that Africans were restricted from economic participation. She observes that On the

other hand African artisanry was banished and the European artisans successfully

petitioned for the exclusion of Africans from their trade (Ibid: 96). This was actually

achieved through the use of the Industrial Conciliation Act of 1931 that excluded

Africans from the term employee, which subsequently led to their exclusion on

apprenticeship programs. This prevented Africans from gaining critical skills that would

have been useful in transforming themselves within the manufacturing sector (Ibid: 97).

It is this economic exclusion that mostly influenced Africans within the discourse of pan-

Africanism and nationalism that was emerging as of then. This discourse, though in its

infancy, manifested itself in the context of racial upliftment. West observes that:

From the outset, proponents of economic pan-Africanism saw business formationnot just as a pecuniary proposition but also as a form of racial uplift. Byparticipating in the international capitalist economy at the level of ownership andmanagement, they argued, black entrepreneurs would at once enrich themselvesand help to raise the prestige of the race, thereby contributing to the struggle forpolitical and social rights, both within particular and national states (1993: 264).

Thus racial upliftment (the call for Native participation in the economy) marked the

beginning of blacks demanding a stake in the national economy, and formed the

cornerstone of calls for Africans participation in business. Therefore black people in

Southern Rhodesia by then were not inimical to capitalist development. Their major

concern was exclusion and thus they sought inclusion, and this show that despite the

socialist rhetoric that emerged with independence most of the nationalist leaders had an

appreciation for private enterprise. Raftoplous further notes that:

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During the formative years of Nationalist politics in Southern Rhodesia, in the1950s, a central concern emerging nationalist intellectual elite was its desire forupward mobility. Through its educational achievements, professional aspirations,and social and cultural practices a significant number of this elite sought toestablish themselves, and to be seen as, an emergent middle class, even as they

sought, and succeeded in presenting themselves as a nationalist leadership (1996:2).Thus this nascent elite structure saw an opportunity for the merging of demand for access

into mainstream commerce and nationalist politics. The participation of the likes of

Joshua Nkomo (later became vice president of Zimbabwe) in the advocacy for African

capitalism as chairperson of the Bantu Cooperative Society (BCS), reinforces this notion.

He is actually noted as a businessman by West, and this shows the bifurcation of

nationalism and racial uplift of African capitalism (1993: 283). To these emerging

African elite the most important thing to them at that time was absorption or access totrade and commerce which had remained the preserve of the white minority under the

protectionist policies of the colonial regime. Nevertheless, Raftoplous notes that

Unfortunately for this nascent elite the structures, ideology of and policies of settler

colonialism seriously constrained their ambitions. However the aspirations remained

even, even during the years of the liberation struggle when the recalcitrance of settler

colonialism, the imperatives of guerrilla warfare and the determining influences of geo-

political alliances, introduced the largely rhetorical adherence to a socialist trajectory

(1996: 2). .According to West this message gained currency mostly during the great

depression years of the 1930s, when would be entrepreneurs, bereft of funds and seeking

resources to capitalize their business, through the cooperative ventures (ibid).

Interestingly this period became more marked on rhetoric on entrance into commerce

rather real business activity. It was much more a period of advocacy by the Africans as

economic participation was a preserve of the minority white sector that enjoyed subsidies

and protection from black competition by the colonial state. This period is what this

paper terms the infancy of the African bourgeoisie. To this effect West further notes that

It was not until the post-Second World War era, it seems that the idea of business

arrangements involving Southern Rhodesia and the diasapora blacks was even suggested

(1993: 265). Nevertheless most of these efforts and initiatives failed to have relative

success.

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1.3: Cooperatives and Accumulation

The colonial state of Southern Rhodesia saw no role for blacks in terms of economic

production rather than to be functional cogs in a machine that could be used only as a

source of cheap labour and at the same time easy to replace. West records that; With

most traditional avenues of capital accumulation thus closed to them, aspiring black

capitalists in Southern Rhodesia as elsewhere in the pan-African world, attempted to get

over this hurdle by turning to cooperative business ventures, both as a means of gaining

access to the savings of Africans and as a way of building up a potential consumer base

(1993:271). Thus the cooperative idea gained a lot of currency as it provided a viable

working alternative for the black bourgeoisie to accumulate. This saw the strong

emergence of the cooperative language within the pan-African movement. The face of

capitalist accumulation was masked under the banner of cooperatives. Sojini aptly

described pan-African economic thought of cooperatives arguing that:

What we mean by cooperation is to organize the black races on (a) commercialbasis practically. If we go back to the history of all races in the world, we willfind that there is no race that can be recognized without developing itself upon thelines of wealth. The race that is poor, its voice will not be heard by other raceswho have developed their progress upon the lines of wealth. What is needed in theworld of today is that African races should come together. We do not seek inevery possible way to eliminate the name boy and substitute the name man.That will be done only by Co-operating on a commercial basis. I have beenthrough thick and thin and have realized that a race will never prosper withoutindustries and wealth (in West, 1993:274).

The above words show that there was a strong quest within the emerging elite blacks to

be involved in mainstream economics. Capital accumulation was seen as a normal

phenomenon as opposed to the period from 1980 where the independent black

government saw capitalism as anathema. Developing a black business class was not thus

seen in only a materialist sense of accumulation but as a development of the black

populace. Thus African businessmen were seen as heroes and there was general

consensus to support them. West further observes that, African journalist eagerly joined

political activists and publicists in propagating the view that black capitalism was

synonymous with the common good (1993: 271). This is further buttressed by claims

from Lawrence Vambe4, who admitted that they sought to protect black capitalists in the

4 Editor of the African Weekly, who succeeded Mnyanda.

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most favourable light. We tried in every possible way to project his image as positively

as we could in the journals we published (Ibid). These efforts by the black petty

bourgeoisie during the colonial era had limited successes, as they needed up much more

confined to rhetoric or never came to fruition due to the inhibitions laid by the colonial

regime. For instance in accounting for the nature of the attitude and pessimism of

colonial authorities towards black accumulation West observes that In 1940 one official

bragged to the Prime Minister that, until he explained it to them, Africans in Bulawayo

had no true conception of what a Co-operative Society is, nor much idea of how to form

one, despite a strong desire to improve their situation by this means (Ibid: 272).

Chapter 2:

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2.1: A decade of a suppressed bourgeoisie

The repeal of the Land Tenure Act in 1979 had profound effects in facilitating the

accumulation of the black bourgeoisie in independent Zimbabwe. Nicholas observes that:

African business people were able to rent and own properties an nay businessdistrict and in the first three years following independence, the flood of settlercapital out of Zimbabwe lowered urban land and rental prices, making way for themovement of African entrepreneurs into the commercial centers of cities(1994:100).

Despite the dezoning of urban land, nothing much transpired in terms of the accumulation

of the black people in Zimbabwe. There were still many impediments that prevented

African accumulation, mostly the attitude of the state, intransigence white minority.

Raftopoulos and Compagnon observe that; One might have expected that when

independence from colonial rule was achieved, the black, nationalist government would

hasten to adopt a proactive strategy of black empowerment in the economy, providing

support and encouragement in priority to the existing black entrepreneurs (2004:16).

Thus the advent of independence had high expectation from the Africa petty bourgeoisie

that had formed during the colonial era. Nevertheless ZANU PF had a less appreciation

for private enterprise. A majority of black people during the nationalist struggles had

supported the liberation movement mostly to the chagrin of their exclusion in mainstream

economics. However the Marxist rhetoric adopted by the ZANU PF led government had

great disdain for capitalist accumulation. Private enterprise was seen as greed and thus

the government tended to push more for the cooperatives. This was more amplified in the

ZANU PF leadership code of 1984 adopted at the peoples congress of 8th- 13th of

August. It stated that, ZANU believes that a leader who concentrates on acquiring

property, or who personally engages in the exploitation of man by man, rapidly becomes

an ally of the capitalists and an enemy of socialism; and of the masses of the

population5. Therefore accumulation of capital was seen as anti-socialist and counter

productive to the economy by the then leadership and thus provided less incentives in

terms of policy and bureaucratic attitude in creating a conducive environment for

business. The leadership code, further enunciated that leaders within ZANU could not:

5http://www.insiderzim.com/Zanu-Pf%20Leadership%20Code.html, accessed 15 January 2007.

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http://www.insiderzim.com/Zanu-Pf%20Leadership%20Code.htmlhttp://www.insiderzim.com/Zanu-Pf%20Leadership%20Code.htmlhttp://www.insiderzim.com/Zanu-Pf%20Leadership%20Code.html


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own a business, a share or an interest in a business organised for profit; provided

that this shall not be interpreted as prohibiting such petty side-line activities as

chicken runs, small plots and gardens on one's residential property;

receive more than one salary;

serve as a director of a private firm or business organised for profit;

own real estate or other property, or an interest in real estate or other property

from which he receives rents or royalties;

own more than one dwelling house; except as dictated by family requirements,

but in no event shall additional houses be for purposes of earning rents;

except with respect to interest received on account of monies deposited in a

savings bank or similar institution, receive interest or other income on account ofmoney loaned to another; "No leader shall indulge in Chimbadzo"6;

own or have beneficial interest in more than 50 acres of land;

in addition to a salary, receive fees on account of lectures or professional

activities in excess of $1 000 a year;

nothing in this section prohibits a leader from receiving a fee/ or a royalty on

account of a book or work of art or patent that he personally wrote, created orinvented7.

Nevertheless this code had its own problems as the ruling elite within ZANU PF never

observed this policy, but one reality that it did was to create an anti-capital mentality

within the general populace. Thus cooperatives Mushandirapmwe8 were seen as the way

forward and at this period the government encouraged a lot of cooperative formations.

For instance for rural farmers to access loans from the Agricultural Finance Corporation

(AFC), they had to be organised into groups.

6 Some form of informal money lending which happens amongst people and is mostly common withinAfrican communities.7http://www.insiderzim.com/Zanu-Pf%20Leadership%20Code.html, accessed 15 January 2007.8 Shona word that means working together

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In as much as Compagnon and Raftouplos acknowledge the limitations imposed by the

Lancaster house agreement on speeding up access of the economy to black entrepreneurs,

they contend that the excuse was highly symbolic (2004: 17). Thus the to them the

government could have done more in terms of dealing with the empowerment of black

people mostly within land resettlement. They further argue that But legal and financial

constraints do not account for all policy short comings, in particular the governments

ability to provide enabling conditions for resettlement operations to succeed as crucial

factors were overlooked (Ibid). The government lacked clear policy objectives in terms

of empowerment of black people and focused more on consolidation of its powerbase.

Thus there was little incentive to the government to advance the accumulation of black

people. Most notable was that even the resettlement programme undertaken did little to

incorporate the modest but vibrant black small-scale farming sector, which would have

formed foundation of black farmers that would have pioneered into commercial farming

(Ibid).

More so various scholars have raised the sincerity of the Mugabe led government

to lead a genuine economic empowerment of black people. Mostly this non-commitment

to genuine indigeniosation has largely been ascribed to the fear of an economic

independent black entrepreneurial class that might later turn on to give problems to the

government. Raftouplos observes that Government feared that an autonomous black

private sector would provide alternative power-bases (Raftopoulos and Compagnon,

2004: 20). Thus the government tended to suffer from a siege mentality and as a

preventive measure sought not to promote black entrepreneurship. Indigenisation became

a rhetoric issue for the Zimbabwean government. Wild pontificates that As a result, the

publicized policy of promoting small- and medium-scale black business through the

Small Enterprise Development Corporation (SEDCO) was at best half hearted (Ibid).

Surprisingly the government was actually more pro-White accumulation, and creating

some form of alliance between the state and the white bourgeoisie. Ostergaard states that

It turned out that despite the history of ninety years of apartheid-like racial

discrimination prior to independence and the ideology of the new government, the

relationship between the new state and the settler fraction of the internal bourgeoisie was

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not contradictory. On the contrary, during the 1980s the Mugabe government, like the

Smith regime before independence, favoured the settler fraction over the interests of both

indigenous and foreign capital (1994:115). Therefore the much popular phrase in

Zimbabwe we gave them the banks and remained with the politics9. There have been

various reasons advance or to explain governments non-committal to the empowerment

of black business people. The Lancaster house constitutional limitations which privileged

white interests during the first decade of independence provided a major stumbling

especially on key sectors such as agriculture. Moyo observes that the most particular was

section 16 of the Lancaster House Constitution of 1980 that entrenched white privileges

on land through entrenching procedures that restrict state action on land (1992). The

government had to adapt to the willing buyer willing seller basis which had a fare share

of its problems in transferring land ownership to the majority black people.

In trying to account for the governments failure to promote a black entrepreneur

Ostergaard argues that whilst the state has been perceived as an instrument of the ruling

class that could have been easily accepted during the colonial era. In this case the

governments position could thus be understood in what Hirsh refers to as basic structural

constraints that shape the policy making process and to the situational logic that

predisposes government discriminate in favour of capital10. Thus among the basic

structural constraints, he emphasizes the following:

a. the general exclusion of the state from the essentially private

productive core and of the capitalist economy,

b. the dependence of state expenditure on revenues withdrawn from the

total surplus created within the capitalist economy; and

c. the governing groups in charge of the political system (notably

officials and politicians), who have a vested interest in securing capital

9 This has usual been attributed to whites commenting on their continued dominance of mainstreameconomics whilst blacks ere contented with political leadership rather control and ownership of the meansof production.10 Ostergaard, 1994:116 in Colin Leys and Bruce Berman.

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accumulation as a basic precondition of their own reproduction as

people living off politics11.

Thus according to Ostergaard this observation by Hirsch provide a useful analysis, since

the state is an excluded from the core productive processes it could only be able to accrue

revenue only when the industries were operating efficiently and productively (1994: 116).

Thus there was reluctance from the state to tamper with the clothing industry. The textile

industry also played a pivotal role in foreign currency earning, job creation as Ostergaard

observes that it employed about one quarter of the manufacturing industry sector as

whole (Ibid). Thus he terms it the goose that lays the golden egg.

On the other hand Nicholas observes that One major reason the new regime did

not begin to promote the interests of African capitalists was that, for purposes of racial

reconciliation, it abandoned a racial perspective (1994: 102). It would have seemed

nave on the Mugabe regime to go on an indigenous drive by then for there was a

possibility of it unsettling the colonial settlers and white capital. Despite by this period

there was flight of white capital uncertain of black rule and to avoid a repeat of the

Mozambican scenario every assurance had to be given to the settlers. For instance this

was the case when the government established the Venture Capital Company, in trying to

provide capital for indigenous businesses. Nicholas observes that The response from the

settler bourgeoisie was sharply against this development. They reminded the government

that racial discrimination was against the constitution of Zimbabwe and that some whites

were in fact indigenous. The government, it said had abandoned its policy of

reconciliation in favour of reverse discrimination (Ibid: 109). Therefore it was difficult

for the government to embark on any policies that could have been misconstrued as

racially motivated and this put the black bourgeoisie at a disadvantage. Ostergaard

concurs with this assertion and records that Mugabe acknowledged the difficulties he

faced in striking a balance between maintaining white confidence and also satisfying the

expectations of the independent blacks (Ibid: 118). State policy by then was more

interested in stabilizing the state and thus seemed to be more of a compromise nature. It

11 Ostergaard, 1994:116 in Colin Leys and Bruce Berman.

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these impediment that resulted in policy Luke-warm response towards the drive to create

a black entrepreneurial class.

More so Nicholas argues that the Political orientation of the Mugabe government

had disdain for capitalism. She observes that Marxist ideology was used to express and

explain the suffering of the African masses and their alienation from land during the

liberation struggle (1994: 102). This created major problems as Nicholas further observed

that there were some committed socialist among the members of Mugabes cabinet and in

the civil service. The ZANU PF Leadership Code of 198412 is a clear example of this, and

thus development could only been seen within the confines socialism rather than

capitalism. The Mugabe government also sought to redistribute national wealth

particularly from the urban areas to the rural areas. This saw the government controllingand owning a huge stake in the economy. Thus Nicholas comments that the government

saw itself as the indigenous entrepreneur (1994: 102). Government policy by then saw or

perceived less if any room for the private black entrepreneur. However Nicholas argues

that This is not to say that the government neglected indigenous business entirely. In

1983, the government created a Small Enterprises Development Corporation (SEDCO), a

parastatal that combined previous government lending institutions aimed at the

development of small-scale African enterprise (Ibid). In as much it could be observed

that the African bourgeoisie were a suppressed class and lacked support from government

during the first decade of independence, there were overtures towards its development.

It was not only within agriculture where the settler bourgeoisie had domination or

favours from the state over the black entrepreneur. In the clothing industry the same trend

is observed as this sector was not only dominated by settler fraction but it also received

tremendous support from the state. Ostergaard observes that the local textile companies

generally felt that the government was supportive of their industry as seen in the

statements of the manager of Cone Textiles at a function who publicly stated that, We

are very pleased with the way the ministry of Industry of Technology has responded to

our projects (1994: 131). This tended to be a trend within the textile industry as attested

12 The leadership code spoke against the accumulation of capital, and thus made the state apprehensive tobusiness. See http://www.insiderzim.com/Zanu-Pf%20Leadership%20Code.html, accessed 15 January2007.

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to by the chairman of CATMA (Central African Textile Manufacturers Association), who

said that, We feel government has greatly assisted us (Ibid). Generally speaking the

textile industry received a lot of support from state while there seemed to less support for

black business. Most interesting is that most of these firms that enjoyed protections of the

state against foreign capital were white owned. Riddell argues that Perhaps the most

striking feature of the post-independence period has been the continuity in policy towards

the manufacturing sector with the UDI-period (Ibid: 127). Ostergaard further argues

that despite the government assuming and expanding regulatory power it had inherited in

several areas, the operational environment for black industrialist did not improve. This

was more apparent in the import allocation system that divided foreign currency

allocation based on a quota system of 1966, as late as up to 1990 (Ibid: 127). The

business environment within the textile industry thus rewarded the old industry while at

the same time penalized new entrants. Ostergaard further argues that In addition to this

small-scale enterprises were up against a series of government regulations biased in

favour of large enterprises, they lacked access to capital , and they had insufficient

marketing and management skills-to mention but few constraints (1994: 128).

Nevertheless, the disdain for black capitalism did not preclude accumulation of black

business people. Raftopoulos and Compagnon observe that:

but evolved into numerous business links between members of the embryonicstate bourgeoisie and the white corporate sector. Many former civil servants and ZANU(PF)s political clients were recruited during the 1980s as middlemen for white-ownedcorporations at a time when political connections had become vital to operate a business,and were later co-opted as junior partners in the same companies (Ibid:19).

2.1: Implications of the Market Economy

The triumphalism of liberalism that followed the collapse of the Soviet Union meant

economic policy could only be driven in one direction, neo-liberalism. No were this

evident than in the grand end of history thesis13. Any alternatives that might have been

imagined and attempted seemed to fizzle out, especially in the third world14. In

13 Fukuyama, Francis 1992, The End of History and the Last Man, Free Press14 One such alternative was the African Alternative Framework to Structural Adjustment Policies for Socio-Economic Recovery and Transformation (AAF SAP) developed by United Nations Economic Commissionfor Africa

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Zimbabwe a decade (1980-1990) of expansion in social services and infrastructure was

pressuring the national fiscus and the government seemed to have no other way than to

turn to the Bretton Woods Institutions15, the loans and the attendant policies. More so the

failure by white capital to expand and generate more jobs and over bloated of the civil

service constrained governments resources. There were a lot of school leavers that were

coming into economy that were being churned each and every year, who needed

employment. Moyo observes that, By the late 1980s, the expansion of facilities had

begun to have a negative impact on the economy in so far as 250,000, secondary school

leavers were entering the labour market which had more than 30,000 jobs to offer a year

(1992:318). The informal Sector thus offered an alternative of hope. By then white

capital particularly through institutions such as the Confederation of Zimbabwe industries

were busy advocating for market approach to the economy against the central planning

socialist model adopted at independence. Brautigam et al observe that The major player

in the successful negotiations over adjustment policies in the late 1980s was the

Confederation of Zimbabwe Industries (CZI). Known until independence as the

Association of Rhodesian Industries, CZI is an `encompassing' umbrella organisation

representing manufacturing interests (predominantly large, white-owned firms) i n a

number of sectors (2002: 15). When the IBDC came in as well pressing for

liberalization of the economy and arguing for a stake for black farmers it gave a major

push to government from business. This fitted in well with the governments adoption of

the Economic Structural Adjustment Program (ESAP) in 199116. That turn impelled a

radical reform of the economy entailing the liberalisation of markets, privatisation of

state owned enterprises and utility companies, and to focus the role of the state on policy

development, regulation, and the provision of basic services17.

Chapter 3:

3.1: The Emergence and Rise of IBDC and the 1990s

15 Others argue that Zimbabwe could still have avoided courting the WB/IMF. See Manyanya, Simba andBond Patrick 2002,Zimbabwes Plunge: Exhausted Nationalism, Neo-Liberalism and the search forSocial Justice, Weaver Press, Harare16 It was soon euphemised as the Accelerated Program for the Suffering of African People as de-industrialisation set in, retrenchments followed and real wages dropped.17 Government of Zimbabwe 1992, A Framework for Economic Reform, 19911995, Harare

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Taylor records that an initiative called the Indigenous Business Development Center

was launched in 1990 by a group of Harare-based businesspeople with the endorsement

of government (249). Raftopoulos and Compagnon pontificate that When originally

approached by a group of black entrepreneurs as early as 1988, Mugabe jumped at the

idea to act as an official godfather to the creation of the indigenous Business

Development Center IBDC in 1990 (2004: 21). The formation of the IBDC has been

credited to government in some circles (see, Nicholas, 1994:108). The IBDC managed to

popularize the indigenization debate and it was soon adopted by government as a policy

and led to various initiatives being undertaken within the state. Raftopoulos concurs with

this assertion and contends that, Indeed, the IBDC's lobbying interventions have been, to

a significant extent, the catalyst which brought indigenization to the forefront of

Zimbabwean political debate (1996 :).

For the government to adopt the discourse of

indigenization it could thus be argued it was mostly to the efforts of the IBDC given that

the government had been apprehensive to the growth of an African business class. The

adoption of ESAP and Market driven economic policies created an opportunity for the

accumulation of the black bourgeoisie, as the anti-capital attitude of the government that

characterized the first decade of independence had faltered away. Indigenisation became

a major issue with the introduction of ESAP. It became clear that, due to historical

reasons, most blacks could not participate in expanding economic activity. The

government established the Indigenous Business Development Corporation in 199018.

There was need for the government to address economic questions that it had negated,

nevertheless it had no capacity by then to deal with the issues at stake and the discourse

of economic Indigenisation provides a relief to it. According to Raftouplos there were

three major factors that gave the impetus to the rise of the indigenization debate in

Zimbabwe. These were mainly:

First, the clear limitations of the 1980s accumulation model were placing

pressures on the state to redirect its economic policies. An increasing budgetdeficit, limited foreign investment, and growing unemployment were some of themajor factors which increased internal business forces' criticism of the state andexternal pressure from international financial institutions, resulting in the 1990introduction of the Economic Structural Adjustment Programme [ESAP].The newlegitimacy which this program provided for capital accumulation meant thatfrustrated aspirations of the emerging African elite could no longer be

18http://www.ulandssekretariatet2.dk/site/oplysning/Zimbabwe%20report.pdf

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ideologically repressed. The way was opened for the forces of indigenousaccumulation to press their demands with greater openness and legitimacy.

Second, demands for greater African participation in ownership of the economywere made against a background of continuing racial inequalities in the post-colonial economy. For example, by 1991, 50% of the population received less

than 15% of total annual incomes and about 15% of total consumption, while therichest three percent of the population received 30% of total incomes and wereresponsible for 30% of total consumption19

Finally, the retreat from socialist rhetoric linked to the broader internationalconsequences of the 1989 debacle in Eastern Europe left the ruling party withouta mobilizing ideology. The ideology of Indigenization combined certaincontinuity with nationalist demands of the past, with renewed attempts to captureand control the more recent demands of, an aggressive and expanded African elitefor a greater share of the post-colonial promise. For the ruling party, this was alsoa political imperative as the emergence in the late 1980s of opposition partiessuch as the Zimbabwe Unity Movement and the Forum Party had demonstrated

the potential for political opposition from disconcerted sections of the Africanmiddle class (1996).

Kanyenze observes that the governments policy for Indigenisation was the deliberate

economic empowerment of indigenous Zimbabweans through economic expansion and

the strategy included;

creating an enabling macro-economic environment;

industrialisation of the economy;

land redistribution;

increasing indigenous private investment in the economy; mobilisation of financial resources;

skills development;

review of legislation that constrain indigenous participation.20

The government had managed to jump on to another rhetoric mantra that would have

resonated with the people as the socialist ideology had been swept away by the fall of the

eastern block as well emerging global political and economic relations. Maphosa states

that in 1991 the government set up a deregulation committee to explore ways of relaxing

various laws and regulations which inhibit the development of small scale indigenous

business sector (1998:183). These policy initiatives at government level as seen through

the establishment of such a committee shows that there was now a shift in government

policy and attitude towards the creation of a black business people. The deregulation

committee played a crucial role in identifying various pieces of legislation that were

19 . [ World Bank, Poverty in Zimbabwe: Current Knowledge and Issues for the Future, 1995.]20http://www.ulandssekretariatet2.dk/site/oplysning/Zimbabwe%20report.pdf

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impeding the emergency of a black middle class. Maphosa further observes that in 1993,

a Deregulation Project Team was set up to identify among other things, all legislation

affecting the entry and growth of businesses in the private sector and to make

recommendations to the Deregulation committee to either amend, outright repeal or

improving the legislation in question (Ibid). As of February 1994 the Deregulation

Committee identified 28 Acts that presented obstacles to the entry of indigenous-business

people into private business. It observed the Land Apportionment Act of 1930 was

largely responsible for the underdevelopment of a Black entrepreneurial class in

Zimbabwe. It further observes that out of the 28 Acts 13 of them needed urgent priority

attention and these included:

Companies Act of (Chapter190)

The Factory Act (Chapter 218)

Urban Councils Act (Chapter 241)

Rural District Council Act (No. 8 of 1988)

Regional Town, and Country Planning Act (No. 22 of 1976)

Liquor Act (No. 9 of 1984)

Public Health Act (Chapter 328)

Food and Food Standards Act (Chapter 321)

Traditional Beer Act (No. 25 of 1984)

Second Hand Goods Act (Chapter 293)

Land Survey Act (Chapter 147)

Banking Act (Chapter 188)

Customs and Excise Act (Chapter 117), and

Income Tax Act (Chapter 181), (Maphosa 1998: 184)

These pieces of legislation mainly inhibited the entry of small scale sector through

cumbersome bureaucratic procedure and at the same time excessive demands on

standards. Thus the Deregulation Committee found these to perpetual entrench white

privileges at the expense of indigenous business people. This is further alluded to by a

World Bank Discussion Paper No. 379 which observed that; Although a program is in

place to address the myriad outdated regulations and restrictions that evolved during the

colonial era, progress have been slow and piecemeal. These regulations include building

codes, health regulations and zoning regulations, with small scale sector generally unable

to meet the high costs of compliance, with the small sector generally unable to meet the

high costs of compliance, both in terms of time and money (Kapoor et al 1997 16). The

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key entrant strategy for the IBDC was to solicit government support to promote black

entrepreneurs through creating enabling policy framework as well as availing

concessionary financial loans to deal with issues of capitalization and finance.

Raftopoulos notes that:

the IBDC sought the decisive support of the state to promote blackentrepreneurs through state-led policy reforms and the allocation of stateresources to blacks on preferential terms. Their demands included: thederegulation of laws and procedures hindering black enterprises; directives tofinancial institutions to finance black businesses; access to finance at well belowmarket interest rates; preferential allocation of government contracts and marketsto blacks; land redistribution designed to build a strong black commercial class inthe agrarian sector; and anti-trust legislation to control the monopoly position ofwhite capital (1996:)

The IBDC thus played a pivotal role in giving voice to an African bourgeoisie that had

been suppressed for a long time. It was through the IBDC efforts that the Business

Extension Advisory Service (BESA) was created. BESA was an organization meant to

facilitate the training of small-scale enterprises. According to Moyo the IBDC has been

relatively successful using what he terms the entryst approach to lobbying, involving

close contact with top level state and party officials, members of parliament and business

executives in the private sector (in Raftopoulos 1996: 4). It is further observed that during

the 1995 cabinet reshuffle the IBDC managed to have two members appointed to deputy

ministerial posts (Ibid). Nevertheless nothing much is record on the contribution of these

IBDC members back in advancing the embourgeoisement of the African. It could

however be possible that the adoption was rather more of Mugabes carrot strategies in

dealing with dissent as happened with the war veterans when they became vociferous.

Taylor alludes to this position and observes that Mugabe co-opted the IBDC leadership

and left calls it starved of funds and hijacked the indigenization agenda (1999: 254).

Raftopoulos argues that the gains made by the IBDC have been negligible (ibid). He

however concedes that the IBDC managed to push the state to advocate for partnership

mostly in the construction sector. Although the IBDC counts several state initiatives -

such as the Set-Aside program in the construction sector which requires that at least 30%

of the contract value of all large-scale building contracts be sub-contracted to small- and

medium-sized enterprises - among its successes (Ibid). Nevertheless Raftopoulos

further contends that these initiatives were seen as insufficient by the indigenous business

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people. The IBDC also managed to build itself into a credible organization and managed

to attract the support of the donor community. This was largely credited to its educated,

technocratic leadership which had the likes of Strive Masiyiwa (Taylor, 1999: 254).

However, the success of the IBDC has been difficult to asses given the limited nature of

available data on the institutions activities. It could thus be argued that its best

achievement has been the popularization of the debate and placing the African

bourgeoisie at center of the national economic development question as opposed to the

previous eras where they have played a secondary role to settler capital.

3.2: The fall of the IBDC and mushrooming of splinter groups.

The fall of the IBDC is attributed to various factors ranging from party politicization of

the pressure group, hostile economic environment, lack of political will from government

and an intransigence white capital. Raftopoulos and Compagnon note that part of the

reasons that led to the power struggle within the IBDC has mainly been interference from

various factions within the ruling party ZANU PF as they sought control (in Darnolf and

Laakso, 2004: 21). The motive sucking in the ruling party could not be clearly

established, but mostly it could be speculated that as power positioning of factions within

ZANU PF to maintain influence over society. The internal feuding within the IBDC got

nasty as factions sucked in the ruling party. Taylor observe One IBDC official who had

supported the Siziba faction pleaded to a reporter: My friend, I want to live peacefully in

this country. Right now my life is at stake and I have been ordered [by a cabinet minister]

to stay out of IBDC business (1999: 253). With such kind of threats flying in within the

feuding parts it actually did scare some members and affected the organization.

Raftopoulos and Compagnon observe the fact that it was perceived correctly and or

not- as ethnically polarized, leading the late Joshua Nkomo to support Chemist Sizibas

faction publicly, and the amount of abuse exchanged in public meetings or through

government press report suggest that there was more to it than the usual wrangling

between rival ambitions (Ibid). Raftopoulos and Compagnon further state that it seemed

the confrontation was precipitated by high ranking politicians in ZANU PF. For instance

Kamushinda is noted to have had close links with Mugabe and his aides. Taylor observed

that It is widely believed that the government helped to instigate the struggle by backing

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alternative candidates (namely, the Kamushinda faction) and forcing individuals whom it

opposed out of the of the leadership and eventually out of the IBDC altogether (1999:

253). There were several reasons of the motives of government to delve into the IBDC

power struggles. Thus at this juncture the IBDC started to lose its legitimacy it had

managed to build and more so with the taking over of the like s of Kamushinda the scope

changed focusing much more on assets of white capital. Thus there was a diversion from

the original, charter of the IBDC, as nationalism took center stage. As the IBDC grew in

its influence and became popular, changing from a mere political grouping to a potent

organization, interest for organizational leadership from members grew. This created a

ripe situation for internal feuding as parties sought control of the organization.

Raftopoulos and Compagnon observe other factors fuelling the conflict might have

been the ability to attract funding from foreign donor agencies, hence its potential central

role in accessing financial resources, and the perception that the IBDC was a channel for

political appointment within the power structure. Thus these potential incentives created

a tussle within the leadership with the hope of controlling resources. Taylor also concurs

with this position and observes Throughout these debates, widespread accusations of

mismanagement of funds persisted, as did speculation that the cause of the leadership

wrangle was a dispute over which individuals would control the disbursement of funds

(1999: 253). In as much as the state played a role in the demise of the IBDC its prospect

as a vehicle of accumulation played resulted in tensions amongst the African bourgeoisie.

It is observed that the World Bank earmarked Z$700Million dollars loan scheme to

small-scale business (Raftopoulos 1996: 6). Whilst it can not be exactly stated that these

resource might have acted as a catalyst for the feuding within the IBDC, its history of

acting as a springboard for businessmen associated with the ruling party vindicates the

assertion. One factor that also led to the demise of the IBDC is poor membership, and

institutional weakness. Raftopoulos observe In addition the actual membership base of

the IBDC is not clear. Attempts to obtain a list of members and their actual economic

activities proved fruitless (1996: 4).

The general economic conditions of the 1990s were one of the undoing factors to

the efforts of the IBDC. The economy was generally declining and the country was also

hit by a drought during the 1992-4 season which further compounded fiscal and monetary

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problems. Nicholas concurs with this position and observes The government switched to

supporting the African capitalists at a time when the economy was undergoing

liberalization, thus submitting new enterprises to international competition, whereas

protectionist policies have generally been needed to nurture the development of infant

domestic industries (1994: 109). Thus while the initial IBDC leadership sought a market

driven reform, it was apparent that the neo-liberal paradigm adopted by government as

espoused in ESAP was very limited in scope. It exposed small firms to competition from

established foreign corporations and multi-national corporations and consequently led to

the pushing out of smaller players as they struggled to survive in business. The required

state intervention to nurture and incubate African enterprises till they reach a competitive

stage was no-existent, and this was contrary to the observation that Ostergaard made in

the development of textile industry in Zimbabwe. He observes that the government acting

on complains by the Zimbabwe Clothing Council on the impact of competitive imports

from Botswana on sectors of the clothing industry imposed some restrictions (Ibid: 125).

The then minister of Industry Simba Makoni is quoted having said that government

adopted several measures to support and maintain the production level in the industry.

One of these was to wage an ongoing battle against the importation of clothing (Ibid).

It is this crucial support that was lacking to the IBDC, which would have been necessary

to ensure easy entry and development of the small-scale entrepreneurs.

The IBDC also faced competition from other interest groups within the economy

as competition for increasingly scarce resources intensified. The World Bank called for a

restrain on indigenisation with emphasis on adopting market led economic reform. The

World Bank stated that it is important that changes to assets ownership are based on

efficiency criteria, but there are no mechanisms built into the proposals so far put forward

that would ensure that new owners of such assets would be efficient managers - an issue

which generally the market is much better at revealing than any administrative

mechanism. There is therefore a risk that such asset reallocation will lead to individuals

with privileged access to decision makers being favoured . . . (in Raftopoulos, 1996: 6).

Whist the argument raised by the World Bank that reallocation might lead to cronyism

had some credence; the argument that the market could deliver was somehow misplaced.

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The white settler capital was very intransigent to change and much more keen to protect

its privileges than advance any major economic reforms. Raftopoulos observe that:

On the one hand, white business takes the perspective which leaves indigenizationlargely at the discretion of the private sector and totally subordinate to market

driven growth. State interventions into the process are considered largelydisruptive of the white business view of `racial harmony' which is centrallyconcerned with the least possible disruption to white privilege in the Zimbabweaneconomy (1996: 7).

This presented the state and the indigenisation lobby groups in dealing with challenges of

black embourgeoisement and at the same time without any racial overtones perceived.

However this was the case. For instance Nicholas observe that, when Barclays announced

intention to sell 25% of its shares to the public, the director of the IBDC Mercy Zinyama,

argued that the government should buy the shares and eventually turn them over to the

IBDC, to allow indigenous business people greater control over the financial sector. The

reaction from the CZI was that it was outrageous and defeated the logic of a limited

government. More so the settler bourgeoisie was quick to point out how this militates

against the policy of reconciliation (1994: 109). These factors mirror how intransigent the

settler bourgeoisie, and given their control of the economy it was bound to create

problems for African capitalists to have easy entry. This was more evident in the racial

spats that came over mainly from the blank indigenous pressure groups. Taylor states that

The current IBDC leadership claims that a media smear campaign led by the

government-owned herald newspaper and Zimbabwe Broadcasting Company, under the

influence of white backer, undermined the relationship. Specifically, they claim that the

campaign against the IBDC was backed by foreign interests and local whites, but

spearheaded by ministers in the government who benefit from connections to local

whites (1999: 252). Even though there has not been empirical evidence, this might not

be surprising given sometimes the hostile relations between the IBDC and white

dominated business groups, since they were rivals in competing for a stake in the

economy. Taylor also asserts this position and observe that One implication that emerge

from this and other studies is that white business interests allied with certain

governmental/ state interests to undermine the potential of the IBDC to act as a vanguard

of an indigenous bourgeoisie class (1999: 254). However Taylor acknowledges that

evidence to support this assertion has been very limited.

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Nicholas observe that the governing group feared a challenge from the rise of

a black industrial bourgeoisie. Had an indigenous black bourgeoisie arisen, however, it

might have been able to penetrate the state apparatus and contest the protected position of

the governing group (1994: 117). The creation of independent African elite had the

potential to challenge the incumbency in terms of state power and while the state

appreciated the need for indigenization the potency of this threat might have led it to be

less committed to the full development of the IBDC. Thus the state would have only been

comfortable with the development of the IBDC so long as it could control and influence

the organization. For instance when Phillip Chiyangwa21 was asked why the IBDC had

failed to assist Strive Masiyiwa in the fight for a licence to operate mobile cellular; he

replied that We have advised Strive Masiyiwa not to confront the government. Rather, if

you cannot beat the ZANU PF system, join it. That is the only option and that is how the

system works. We told him so22. This shows that the government was not really

committed to the growth of indigenous entrepreneur, as it would reduce their dependency

on the state. Taylor records that When the organization began to flourish and became

more independent of state influence, however, Mugabe government moved in quickly to

weaken its popular appeal and diminish its potential threat (1999: 250).

The relationship between the government and IBDC soured as time progressed

due to differences over policies and implementation of programmes. This saw the IBDC

becoming more vocal and criticizing government. Taylor observes that a series of public

disputes soon put the IBDC and the government at loggerheads. These disputes centered

on NERF. Government was insisting that 75 percent of the disbursement should go to

new business, a constraint that disqualified existing black entrepreneurs, who formed the

core of the IBDC membership and in need of capital injection (1999: 251). This created

animosity between the IBDC leadership and the state and gave the government more

determination to destabilise the IBDC. Criticism of government was viewed as rebellious

and confrontational as seen in Chiyangwas prior comments and the government was

only willing to work with those who do not criticize it. IBDC main contention was the

interest rate and time taken to disburse the funds were unfair as compared to the

21 Affirmative Action Group Founder (AAG) (an empowerment lobby that emerged towards the decline ofthe IBDC), Former Mashonaland West ZANU PF Province Chairperson, Nephew to Mugabe and one ofthe businessmen strongly connected to the ruling party.22 Matikinye, Ray Young Achievers defy state cronyism to make it to the top Daily News 15 April 2002

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favourable treatment that there white counterparts had got. Taylor states that the rate

of interest on NERF loans was set at 15 percent. The IBDC and its constituent argued that

the conditions placed on the NERF facility were unfair, especially when compared with a

similar loan scheme that benefited the white communityThe farmers were able to

borrow at a rate of 5 percent, well just below market rate. Furthermore, the farmers

facility was disbursed in just two days, whereas the NERF took two years (1999: 251).

This gave the IBDC the impression that they were being misled by government and the

banks. Therefore the IBDC started to become critical of government and ruffled many

feathers in government. Chemist Siziba23 commenting on ESAP IN 1993 stated that We

have already demonstrated that we are fearless when it comes to criticizing shortcomings

in the implementation of ESAP. [At first,] we were treated as heretics, but we were

vindicated when President Mugabe recently repeated similar concerns about the

management of our national economy (in Taylor 1999: 252). Such kind of talk did not

endear Siziba with to the cabinet, and Taylor records a minister telling the IBDC

leadership that You are a threat to ZANU PF (Ibid). This might have marked the

drawing of daggers towards the IBDC leadership, and thus put pressure to reform the

institution and put in more compliant and loyal leaders. Thus the power struggles that

ensued within the IBDC drew in the factional fighting n ZANU PF. The undermining of

pressure groups through funding of factions is not a new strategy to ZANU PF.

Raftopoulos and Compagnon note that Indeed, the stimulation of factionalism is one of

Mugabes preferred techniques of control both within the ruling party and towards civil

society, as experienced by trade unions, student unions and various NGOs in the past

(2004: 22). For instance after facing increasing criticism and worker protests from the

Zimbabwe Congress of Trade Unions (ZCTU); ZANU PF sponsored the formation of the

Zimbabwe Federation of Trade Unions (ZFTU)24 and has also been keeping on trying to

undermine the ZCTU Leadership.

Raftopoulos states The continuing debilitating crisis within the IBDC and

apparent stasis in new government initiatives on the indigenous program led to the

23 IBDC Vice President.24 This was led Alfred Makwarimba and by war veterans leader Joseph Chinotimba a municipal policemanand one of Mugabes lieutenant leading the farm invasions. The ZFTU has been getting preferentialtreatment within the state media and always held counter programmes to ZCTU, whilst the latter hasalways been always been pilloried in the state media.

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formation of a new organization of indigenous business persons in July 1994 (1996:4).

This saw the birth of the Affirmative Action Group (AAG), led Phillip Chiyangwa a

Mugabe relative and Roger Boka of the Unite Merchant Bank. The AAG was very

radical and adopted anti-white rhetoric as part of it advocacy campaigns to acquire stake

in white owned firms. Selby notes At the heart of the AAG was Roger Boka,

who leapt to prominence as a champion of black empowerment. Bokas

demands for access to the gold, finance and tobacco sectors became

symbolic of calls for wider economic nationalism, and attracted support

from black business and broader society (1996: 249). The AAG served

more as a vehicle just to champion the accumulation of individuals rather

than the empowerment of black Zimbabweans. Raftopoulos notes In a

statement reminiscent of the Malcolm X, the AAG president warned:Those who wish to become uncle Tom or the field Negroes or the

window-dressed or the Mr. Nice Guys are using their sense of

professionalism to defend the indefensible at the expense of the

nation25be warnedAAG will expose themThus the AAG sharpened

more the anti-white rhetoric that had been adopted by the IBDC, and even

managed to get the nod of President Mugabe. Block notes President

Mugabe defended Mr. Boka's often hate-mongering language and praised him in

speeches as a patriot and black-empowerment pioneer. The state-controlled media

whipped up support for his endeavors26. Not much was done by the AAG rather than

going on anti-white crusade. Raftopoulos observe Once again the beyond the bravado of

public statements the membership base of this organization remain unclear. Indeed, not

only is the AAG program similar to that of the IBDC but they appear to be attempting to

forge an even closer alliance with the ruling party (1996: 5). It was not just only the

membership base that was unclear, even a perusal into the archives showed that there was

no clear programme that could have been attributed to the AAG besides the intimidation

of white capital.

25 The AAG thus saw itself as defender of black interest and did this invoking limited historicism withoutqualifying whose nation they were talking about.26 Robert Block, September 8, 1998 http://web.nps.navy.mil/~relooney/3041_623.htm, accessed on22/01/07

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The Indigenous Business Women Organisation was an empowerment Lobby

group set up to advance the cause of women business founded in 199427. IBWO identified

itself as a non-governmental, non-profit making organisation whose main existence is to

economically empower Zimbabwean women28. This was more expressed in its mission

statement that read creation of wealth for all indigenous women through economic

empowerment29. Raftopoulos and Compagnon record it as an affiliate organisation of the

IBDC that associated itself with the wave of politically connected leaders and the

creation of satellite organisations (2004: 23). This organisation did not change much, if

anything in terms of the indigenisation discourse in Zimbabwe. It was rather much more

a feminization of the racial diatribes pushed by ZANU PF and IBDC. Just like its

predecessors IBWO argued that the financial sector imposed stringent requirements and

blocking previous disadvantaged groups from access to capital. For instance Jane

Mutasa30commenting on the disbursement of a world Bank $700 million loan stated that

The women of Zimbabwe cannot be expected to stand by and watch while they are

being disadvantaged by the recently released $700 million World Bank facility whose

lending conditions are designed to maintain the status quo, and she further argued that

As women we should fight for our rights by boycotting those financial institutions that

seek to discriminate against the majority of the people by imposing unwarranted ending

rights which prohibit the participation of the indigenous sector in such facilities.31

Saunders records IBWO arguing that government has gone out of its way to protect

multinationals and ex-settler businesses against competition from outside, so that they

can consolidate their hold on this economy (1996: 4). Thus old wine in new wine

skins. IBWO claims to have benefited a lot of women in its programmes, mostly rural,

but a perusal through most of the projects it boasts of were mainly in the informal sector

the usual cross boarder trade, poultry, piggery and dress making trade32. During its

operations IBWO established a trust fund with Zimbank33. The trust fund was to be used

27 IBWO Mirror (organizations official magazine), Volume 3, March/April/May 1997: 728 Indigenous Business Women Organisation Proposal for pre-Budget Discussion (Undated document).29 Ibid.30 IBDC founding president and still president. She is also a top ranking ZANU PF member.31 IBWO Mirror (organizations official magazine), Volume 3, March/April/May 1997: 232 See, Rural Women Benefit from IBWO, and Women Find Hope in IBWO, IBWO Mirror, Volume 3,March/April/May 1997:8 and 9.33 A commercial bank in which the government has a stake.

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to seek independent investment, on behalf of members who would have joined it.

However little is know about the trust fund and its investment activities and what became

of it, but IBWO, is noted to have made investment in companies such as Telecel

Zimbabwe34. There is less information available on IBWO since the organisation fizzled

out just like AAG and IBDC, and a visit to its offices in showed that there was no

business taking place with office equipment just heaped in one room where it was being

auctioned slowly. More so the offices are being manned by a care taker without any

administrative staff.

Chapter 4:

4.1: Clientilism, Neo-patrimonialism, The State and Accumulation

34 See, Herald Mystery surrounds War Vets Associations Telecel Shares 12 January 2007.

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The embourgeoisment of the Africans in Zimbabwe can be best understood within the

context of clientlism and patronage developed by ZANU PF. The potential of the IBDC

as a harbinger fro the economic advancement of the African bourgeoisie has been

surprising given the period the impact it managed to make. This paper however posits

that this fall was precipitated by the adoption of neo-patrimonial strategies by the ZANU

PF. Taylor argues that Neo-patrimonial regimes facilitates and strengthen the

development of a dependent state based capitalist class-a bureaucratic bourgeoisie-

rather than an independent classAs a result they set about weakening all independent

centers of power (1999: 240). This aptly sums the fairytale of the IBDC as certain

officials within government perceived the indigenous lobby group as a threat to ZANU

PF35. Van de Walle identifies neo-patrimonialism as:

the thesis that most African states are hybrid regimes, in which patrimonial practices coexist with modern bureaucracy. Outwardly the state has all thetrappings of a Weberian rational-legal system, with a clear distinction between the public and the private realm, with written laws and a constitutional order.However, this official order is often subverted by a patrimonial logic, in whichoffice holders almost systematically appropriate public resources for their ownuses and political authority is largely based on clientelist practices, includingpatronage, various forms of rent-seeking and prebendalism36.

However Taylor concedes that labeling Zimbabwe as a neo-patrimonial state can be

misgiving since Zimbabwe contradicts Braton and van de Walles classification of the

country as a multiparty polyarchy in the sense conveyed by Dahl (1999: 240). Taylor

mainly argues that Zimbabwe is multiparty and polyarchic in name, as elections are

proscribed, and the ruling party using intimidation, harassment, and fraud to restrict

participation to political interests (Ibid). Therefore Taylor argues that there is need to

adapt Bratton and van de Walles model to fit the post 1989 period and the Zimbabwean

case in particular. This construct helps in understanding the political economy of

indigenization process in Zimbabwe post independence and mostly post 1990. At the

same time it also tries to give accounts and make one understand the tensions that ensued

between the government and the IBDC and subsequently its demise. It further helps to

account for the emergence of a parasitic bourgeoisie in Zimbabwe as seen in the growth

35 See Taylor Race, Class and Neo-patrimonialism in Zimbabwe, 1999: 252.36 Nicolas van de Walle, The Impact of Multi-Party Politics in Sub-Saharan Africahttp://democracy.stanford.edu/Seminar/Walle.htm

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of the empire of the late Roger Boka and at the same time the struggle of Strive

Masiyiwas Econet to get a mobile phone operating license. Thus this paper concurs with

Taylor that neo-patrimonialism was one of the major factors that led to the demise of the

IBDC, and this provides us with insights on why the state never seized such an

opportunity to embark on a serious programme of indigenization to augment the rhetoric

of its new found gospel.

Raftopoulos and Compagnon observe However, for the new power elite, the

long-term socialist transformation of the economy was no longer the primary aim of the

state control: the bloated public sector was above anything else, a valuable resource for

Mugabes political patronage, as it offered a good number of lucrative positions for party

cadres, political cronies and family members (2003: 20). Thus Mugabe saw black

advancement as channel to enrich his party and family members. It was more of a

strategy of buying loyalty and so long as you were in favour, with him your business

would easily get away with a lot of illegal activities. Thus the patronage was embedded in

some kind of corruption and illegality by a parasitic bourgeoisie dependent on the ruling

party rather than entrepreneurship. This was more evident in the operations of Roger

Boka who had close links with the Mugabe regime and got a lot of preferential treatment

from authorities. Robert Block a staff reporter of the Wall Street Journal observes:

Mr. Boka also financed politicians and the ruling Zanu-PF party, according tofamily members and Zimbabwean investigators. An official at the ZimbabweanReserve Bank, which led an investigation into United Merchant Bank and otherBoka companies, says Mr. Boka approached cabinet ministers to ask whether theyneeded any financial assistance. Mr. Boka, his associates and his family haverepeatedly referred in government correspondence and in interviews to prominentpeople who owed his bank money. He also often boasted to journalists and friendsthat he financed the political campaigns of important politicians in the last generalelection.37

The activities of Mr. Boka in the development of his business empire have been well

publicized in Zimbabwes media and the collapse of his United Merchant Bank (UMB),

confirms that a large number of ZANU PF and cabinet officials benefited in preferential

loans from the UMB. In providing such financial assistance to the ruling elite, he

managed to have a parasitic relationship in which he managed to have preferential

treatment through the awarding of tobacco merchants license, and the easing of

37 Robert Block, September 8, 1998 http://web.nps.navy.mil/~relooney/3041_623.htm, accessed on22/01/07.

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conditions for him in 1995 to acquire a banking license38, (see Raftopoulos and

Compagnon, 2003: 27). Thus the state has acted as a vehicle of accumulation for this

parasitic bourgeoisie, and it is quite evident in the conduct of their business. For instance

during the trial of some ENG Capital directors Phillip Chiyangwa standing in as witness

told the magistrate I am wealthy enough, if I wanted I could have paid all their creditors.

The excited policeman who brought these allegations, I will deal with him at some stage

(Herald 2004)39. Most notable in this statement is the intimidation of the judiciary and

law enforcement agency by a ZANU PF official and also self-styled indigenous

proponent. The indigenization debate in Zimbabwe has thrust to the centre mostly two

types of entrepreneurs that is one dependent on the state and the other on its own business

acumen. Raftopoulos and Compagnon observed that Mugabes patronage gave Bokas

business ventures a tremendous boost. Mostly the political protection at the highest level

saved from public scrutiny for various deals that he committed (2003: 27). They further

state that this was achieved mostly by granting generous loans to the ruling class (Ibid).

Thus Boka owed the expansion of his bank largely to patronage; otherwise it would not

have enjoyed the rapid rise it had.

Raftopoulos and Compagnon observe that in a bid To avoid insolvency, Boka

resorted to forgery and sold Z$1 billion of fake commercial paper in the name of the

government-owned Cold Storage Company, and at the same time illegally transferred

US$21 million to an offshore bank account (2003:27). These shoddy dealings exposing

the extend to which the indigenous discourse was used by Mugabes clique to accumulate

wealth. Thus liberalization of the 1990s provided an opportunity for Mugabe to reward

his cronies who have been loyal to him. Moreover the indigenization agenda driven by

Boka was highly racialised and focused more on denigrating white capital. This fitted in

well with Mugabe rhetoric and endeared him with the state. For instance Selby observe

that Boka On 31 March 1996, he published a full-page advert in several national

newspapers, reproducing an old photograph of a black Kenyan man carrying a white man

across a swollen river. The caption read White Zimbabweans idea of a good African,

adding. We want our country Zimbabwe and our economy. No dogs or guns will stop

38 Robert Block, September 8, 1998 http://web.nps.navy.mil/~relooney/3041_623.htm, accessed on22/01/07.

39 The Herald,http://www.theherald.co.za/herald/2004/01/20/news/n26_20012004.htm, accessed 23/01/07

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the peoples revolution (1996:250). Thus Boka managed to exploit race relations as a

way of getting preferential treatment from government for his various business dealing.

By then government rhetoric on indigenization had swung towards dishing out racial

diatribes on the increasingly insecure white capital as a strategy to divert the nation from

its failed economic policies. Carmody and Taylor observe there was a concerted

attempt to capture urban support in the 1996 presidential election by resorting to an

increasingly virulent anti-white rhetoric as President Mugabe and his handlers sought to

shift the blame for urban decline to white farmers and industrialists. This effort did not

convince many, as the government commitment to indigenization was by that time highly

discredited and seen to benefit only a narrow black elite40. However this period

epitomized the collapse of the indigenization agenda in Zimbabwes political economy.

4.2: Indictment of Indigenisation Agenda.

The case of Econet Wireless has been a drama of shuffling between the judicial chambers

and law firms as it sought to acquire an operating license. This case shows governments

determination to thwart an initiative by a black Zimbabwe and also former founder

member to establish a telecommunications company. The case of Econet Wireless was an

indictment to the whole Indigenisation agenda in Zimbabwe. This included all the

business pressure groups that purported to represent black businessmen, as well as the

state. Taylor notes The PTC, like most parastatal organizations in Africa, is notoriously

inefficient and incompetent. Although Zimbabwe is relatively more developed than many

of its neighbours, its communication infrastructure is among the worst in sub-Saharan

Africa, with fewer than 12 telephone main lines per, 1000 people (1999: 256). Given the

huge demand of telephone services that was within the country Masiyiwas established a

company called Econet, which according to Taylor offered made two distinct advantages

to Zimbabwean economic and social development, namely:

i. Consistent with the spirit and letter of ESAP, Econet was an example of a

private sector individual, using privately secured funds, to initiate a business

that would provide employment and vital infrastructure.

40 Padraig Carmody and Scott Taylor, Industry and the Urban Sector in Zimbabwes Political Economy.http://www.africa.ufl.edu/asq/v7/v7i2a3.htm,accessed on 18/06/06

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Ibdc Paper.

Documents

Transcript of Ibdc Paper.