CENTRAL bank chief, Gideon Gono has said failed farmers must not benefit from the takeover of foreign companies under the country’s indigenisation programme and warned the government against a rushed and wholesale transfer of equity to locals.

In a statement on indigenisation accompanying his monetary policy review last week, Gono – who has previously stated that the current approach would only benefit the well-connected few -- dismissed suggestions that he was against the programme.

“It has been suggested that the Reserve Bank of Zimbabwe, in particular this Governor, is against the indigenization and economic empowerment legislation,” Gono said.

“This of course is absolutely nonsensical. To begin with, the Governor is not a Member of Parliament, and, therefore, has no jurisdiction or powers to reverse legislation formulated, debated and passed by the country’s August House.”

Gono urged a review of the current approach to indigenisation and insisted that beneficiaries of the country’s land reforms should be kept away from companies acquired under the programme.

“There ought to be a deliberate bias towards or in favour of those who have not benefited from other Government programmes before, so that a broad-based empowerment
model can be achieved,” he said.

“It would be wrong to continue to concentrate new and scarce resources and opportunities on a few individuals, some of whom are even struggling to utilize what they already have to the economy’s advantage.”

The RBZ chief said government must especially ensure that failed farmers are blocked from the country’s mines and other economic assets targeted for indigenisation.

“This economy is littered with cases of productive farms lying idle, farms which have been turned … Our view is that it is time we became tough with economic non-performers in whatever field they are,” he said.

“Where an individual has benefited from the historic Land Reform Programme, and was allocated a farm(s) which they are not making full use of, those people, in our view, should not be allowed to go and multiply that failure into other sectors such as mining, manufacturing and many others, unless that beneficiary is starting his or her own entity afresh!”

Gono also repeated his criticism of the equity-based approach being pursued by the government arguing it would only benefit the privileged few and potentially harm the country’s economy.

Under current indigenisation laws, foreign companies are required to transfer at least 51 percent of their shareholding to locals.

“Recognizing the fact that that only a few can fit or benefit from the equity-ownership model (currently) being pushed the Central Bank is advocating for an (alternative) which is premised on the participation of a broad spectrum of the population, through the supply and distribution chain of the country’s economy, as opposed to primarily focusing on equity holdings,” he said.

“The model also envisages a gradual approach to attainment of the company ownership thresholds by indigenous Zimbabweans, in a manner that ensures sustainable empowerment, inflows of much-needed foreign capital and minimal disruption to economic activity.”

“Equity or shareholder benefits also only when dividends are declared, which is normally annually, bi-annually or even at longer intervals, thus depriving indigenous people of much-needed immediate and basic requirements,” he said.