The Rise and Fall of the Indigenous Business Development Center in Zimbabwe

Bachelor Thesis , 2007 , 44 Pages , Grade: "70"

Politics - Region: Africa

Economic reform has become one of the major necessities of post-colonial African states, given years of slavery, apartheid, colonialism and underdevelopment. Many scholars have argued that Africa’s 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 Zimbabwe’s 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 Africa’s 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.

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 Zimbabwe’s 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 ‘bifurcation’^[2] 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.

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 is capitalist development-within the framework of world markets and, at best up till now, 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 specific problems that must be solved for such development to take place? What are the functions that local capitalist are called to perform? And what are the most significant characteristics of African capitalist classes for achieving whatever can be 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 to adjust 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.

Chapter 1:

1.1: The concept of Indigenization.

Indigenization of African economies after independence took many varied forms in different countries. The sole aim was to empower previously disenfranchised blacks with an opportunity to participate in trade and commerce. Whilst there has been a tendency to conflate nationalisation and indigenization and at the same time using them interchangeable, there is a need to distinguish these concepts, since they are two different terms. Adedeji observes defines indigenisation as:

…the process by which a government limits participation of in a particular industry entirely or in part to citizens of the country, thus forcing alien owners either to sell to indigenous entrepreneurs or to withdraw from participation in certain economic activities (1981: 31)

Indigenisation seeks and promotes private capital, whereas nationalization deals with the acquisition of the means of production by the state. Thus whilst nationalizations that proceeded after independence of most African states could have been viewed as indigenisation this paper has no interest in that. Thus indigenisation in this study is regarded as the transfer of productive forces into the ownership and control of blacks, in order to achieve economic independence. The Zimbabwe government defined indigenization as:

…strategy for the development of a democratic socio-economic system, nation building and poverty eradication among the majority of Zimbabweans. The master to key indigenization of the economy includes an increase of indigenous productive investment in the economy, industrialization, skills development, land redistribution and mobilization of financial resources.^[3]

The effort to undertake economic indigenisation in Zimbabwe was meant to address colonial imbalances and more so as a development strategy. This is further observed in the Government policy framework for indigenisation of the economy that “The importance of indigenizing the economy arises from the need to eliminate the socio-economic development of the past, to create employment and more wealth so as to eradicate poverty among the majority of Zimbabweans and to expand the domestic market and tax base” (1998:2). Underpinning indigenisation has been the need to achieve 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 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 formation not just as a pecuniary proposition but also as a form of racial uplift’. By participating in the international capitalist economy at the level of ownership and management, they argued, black entrepreneurs would at once enrich themselves and help to raise the prestige of ‘the race’, thereby contributing to the struggle for political 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:

During the formative years of Nationalist politics in Southern Rhodesia, in the 1950s, a central concern emerging nationalist intellectual elite was its desire for upward mobility. Through its educational achievements, professional aspirations, and social and cultural practices a significant number of this elite sought to establish 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 to trade 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.

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) commercial basis practically. If we go back to the history of all races in the world, we will find that there is no race that can be recognized without developing itself upon the lines of wealth. The race that is poor, its voice will not be heard by other races who have developed their progress upon the lines of wealth. What is needed in the world of today is that African races should come together. We do not seek in every 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 been through thick and thin and have realized that a race will never prosper without… industries 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 Vambe^[4], who admitted that they sought to protect black capitalists in the 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).

[...]

---

^[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 be itself and an individual to be his own. The line is thinly veiled and this study as such has never bothered to attempt to delve into that area for it would be another subject of enquiry that can lead to semantic stagnation.

^[3] State Enterprises and Indigenisation Department, office of the President and Cabinet Harare, “Government Policy Framework for Indigenisation of the Economy”, February 1998: 3-4.

^[4] Editor of the African Weekly, who succeeded Mnyanda.

• College: University of KwaZulu-Natal
• Grade: "70"
• Author: Tamuka Charles Chirimambowa (Author)
• Publication Year: 2007
• Pages: 44
• Catalog Number: V191065
• ISBN (eBook): 9783656156574
• ISBN (Book): 9783656156482
• Language: English
• Tags: rise, fall, indigenous, business, development, center, zimbabwe