Zimbabwe indigenisation: a rich country tackling inequalities and unlocking wealth

Zimbabwe indigenisation: a rich country tackling inequalities and unlocking wealth

By Bernard Bwoni

Let’s start by unpacking a recent ‘survey’ by New World Wealth (Zimbabweans among Africa’s poorest, survey) which boldly and bogusly claimed that Zimbabwe was among the poorest countries in Africa because of the country’s ‘controversial indigenisation policies’ and ‘due to the erosion of ownership rights’. The survey defines wealth per capita as ‘a measure of the net assets held by individuals including real estate, shares, business interests and intangibles, while excluding primary residences’. The survey gives a random and inaccurate figure of US$570 as Zimbabwe’s wealth per capita which is quite interesting to note as it conveniently ‘excludes primary residences’ as net assets. The figures being peddled here by New World Wealth are random numbers with no sources or references. If you just dig a little deep into New World Wealth on www.new-wealth.com you will find a bare-bone website fronted by one individual, no data, no figures, no statistics and absolutely nothing!

According to the Credit Suisse Global Wealth Databook (2013: 25) Zimbabwe’s wealth per capita is in fact US$1,456 and South Africa’s is US$11,867. The data and statistics on www.credit-suisse.com have sources and references and the estimation method used to derive that data is available and mostly used a regression analysis. The Credit Suisse Data Book also gives you a clear indication of the quality of data used for each individual country as it highlights an important aspect of the random noise or error term in each data set. In the year 2000 Zimbabwe had a wealth per capita of US$467 and it increased gradually to US$606 in 2001, US$810 in 2002, US$1350 in 2003 and the figures declined significantly between 2004 and 2010. However the figures picked up from 2011 to US$1,233, 2012 US$1310 and currently it is US$1,456. Zimbabwe has a mean wealth per adult of US$2913 and the country is ranked in the top on the African continent.
The question to ask is how come this survey is originating from South Africa a country that was recently ranked the most unequal country with the highest gini coefficient ranking on the African continent? The survey was most probably funded by those who do not wish to see the Zimbabwe economic empowerment and indigenisation succeed. Bogus surveys like the New World Wealth aim to dismantle the heart of the real African economic biogenesis which is the indigenisation and empowerment and hence it warned ‘Should Zimbabwe continue with its controversial indigenisation programme which requires foreign companies to cede 51% shareholding in their companies to locals, its citizens’ wealth would continue to be eroded’. How is it possible to erode wealth when you empower people with ownership?
South Africa is the most unequal country in Africa and that is what surveys from these duplicitous New World Wealth should be confronting and addressing. In South Africa the top deciles of the population accounts for 58% of the country’s income whilst the bottom deciles account for 0.5% and in large this is an enduring legacy of the apartheid system in that country which  denies black people the chance to accumulate capital in any form be it land, finance and skills (World Bank Report, 2012). In South Africa the top 10% of the population earn 110 times more than the bottom 10% and 74.8% of all wealth is owned by the richest 10% of the population (Credit Suisse Global Wealth Databook, 2013:p146). Such inequalities are not addressed in the per capita wealth calculations.
The Gini Coefficient is a mathematical measure of inequality and the higher it is the more extreme the nation’s wealth inequality is. The gini coefficient is a ratio between 1 and 0, where 0 shows perfect equality and 1 shows perfect inequality. The closer to 1 a country’s gini coefficient is, the greater the inequality. South Africa has a gini coefficient of 69.1 or 0.69 which is the highest on the African continent and among the top in the world (UN Human Development Report, 2013). The issue of wealth per capita calculations can be misleading and does not necessarily reflect the general state of wealth to the ordinary person on the street. What this ‘survey’ by New World Wealth used is a dubious measure to say the least. Per Capita wealth which is the mean of the people in any economic unit is calculated by taking a measure of all sources of income in the aggregate such as GDP and dividing that by the total population. In the ‘developing countries’ it is not unusual that more than 80% of total assets are held in the form of non-financial assets including primary residences, farms and small business assets. As countries develop and also as they make the transition to a market economy the importance of non financial assets tends to decline. In the richest countries of the world, financial assets typically account for more than half of the household wealth (UN Human Development Report, 2013). In the survey you will find that in Zimbabwe the informal sector is not accounted for in these per capita calculations. There is the Zimbabwe Diaspora which has contributed a whooping US1.6 billion annually to the Zimbabwe economy and per capita calculations do not capture those revenue sources.
The strength of Zimbabwe’s land redistribution programme lies in giving black people land as primary residences, people in rural areas live and farm on their primary residences and excluding primary residences in the calculations means that is also not captured. The Zimbabwe government’s indigenisation and land reform are addressing inequalities whereas the high per capita wealth figure of US$11,687 for South Africa only serves to deceive and pacify the masses from clamouring for what is rightfully theirs. Zimbabwe is rich and no amount of illusory spurious surveys will change that. Zimbabwe still has 90% of all its natural resources still in the ground and that is diamonds, platinum, gold and coal. The most profitable platinum mine in the world is in Zimbabwe. Agriculture is on the rebound as evidenced by the buoyant tobacco sector and that is on the backdrop of the necessary and successful land reform process. In Zimbabwe people with homes are unleveraged and have a 100% equity position in their homes which means there is a lot of capital to be unlocked there.
Zimbabwe is rich, there is nothing controversial about the country’s indigenisation laws and is only unlocking wealth and addressing historical inequalities.

Bernard Bwoni can be contacted on bernardbwoni.blogspot.com or bernardbwn@aol.com