Regulating Against Business "Fronting" to Advance Black Economic Empowerment in Zimbabwe: Lessons from South Africa

Authors

DOI:

https://doi.org/10.17159/1727-3781/2017/v20i0a735

Keywords:

Black economic empowerment, indigenisation, business fronting, Zimbabwe, South Africa, distributive justice

Abstract

This article examines Zimbabwe’s indigenisation legislation, points out some of its inadequacies and draws lessons from South Africa’s experiences in implementing its own indigenisation legislation. Both countries have encountered challenges relating to an upsurge in unethical business conduct aimed at defeating the objectives of their black economic empowerment programmes, policies and legislation. This practice is called business fronting. However, while South Africa has succeeded in enacting a credible piece of legislation aimed at addressing this issue, Zimbabwe has yet to do so. The article points out that the failure to regulate against business fronting poses the most significant threat to the attainment of the laudable aims and objectives of the indigenisation programme and related legislation. In order to avoid becoming a regulatory regime that is notorious for not only being functionally ineffective but also for tacitly permitting racketeering in reality, the article argues for the adoption of anti-fronting legislation in Zimbabwe using the South African legislation as a model.

 

Google_Scholar_58.png  ScienceOpen_Log034.png

Downloads

Download data is not yet available.

Metrics

Metrics Loading ...

Author Biographies

Tapiwa V Warikandwa, University Fort Hare

Tapiwa V Warikandwa. LLB, LLM, LLD (Fort Hare). Post-doctoral Fellow, Department of Mercantile Law, Nelson R Mandela School of Law, University of Fort Hare, South Africa. Email: TWarikandwa@ufh.ac.za.

Patrick C Osode, University Fort Hare

Patrick C. Osode. LLB (Jos), BL (Nig), LLM (Lagos), SJD (Toronto). Professor and Head, Department of Mercantile Law, Nelson R Mandela School of Law, University of Fort Hare, South Africa. Email: POsode@ufh.ac.za.

References

Bibliography

Literature

Alvarez and Barney 2008 SEJ

Alvarez SAand BarneyJB"Opportunities, Organisations and

Entrepreneurship"2008 SEJ171-173

Andreasson 2003 JCAS

Andreasson S "Economic Reforms and 'Virtual Democracy' in South Africa

and Zimbabwe: The Incompatibility of Liberalisation, Inclusion and

Development" 2003 JCAS371-384

Andreasson "Indigenisation and Transformation"AndreassonS

"Indigenisation and Transformation in Southern Africa"Paper

prepared for the British International Studies Association Annual

Conference(15-17 December 2008 Exeter)

Andreasson 2010 PG

Andreasson S "Confronting the Settler Legacy: Indigenisation and

transformation in South Africa and Zimbabwe" 2010 PG424-433

Andreasson 2011 B&S

Andreasson S "Understanding Corporate Governance Reform in South

Africa: Anglo-American Divergence, the King Reports, and Hybridization"

B&S 647-673

Arrowsmith

"

National and International Perspectives"

Arrowsmith S "National and International Perspectives on the Regulation of

Public Procurement: Harmony or Conflict"in ArrowsmithS and Davies A

(eds) Public Procurement: Global Revolution(Kluwer Law International

London 1998) 5-26

BEE Commission

National Integrated Black Economic Empowerment

Strategy

Black Economic Empowerment Commission A National Integrated Black

Economic Empowerment Strategy(Skotaville Press Johannesburg 2001)

Bogopane 2013 JSS

Bogopane LP "Evaluation of Black Economic Empowerment Policy

Implementation in the Ngaka Modiri Molema District North West Province,

South Africa"2013 JSS 277-288

Carmody "Ecolonization"

Carmody P "Ecolonization and the Creation of Insecurity Regimes: The

Meaning of Zimbabwe’s Land Reform Programme in Regional Context" in

Palloti A and Tornimbeni C State, Land and Democracy in Southern Africa

(Routledge New York 2016) 169-182

Carter and Wilton 2006 JEC

Carter S and Wilton W "Don't Blame the Entrepreneur, Blame Government:

The Centrality of the Government in Enterprise Development; Lessons from

Enterprise Failure in Zimbabwe" 2006 JEC65-84

Cheadle, Thompson and Hayson Inc et alBlack Economic Empowerment

Cheadle, Thompson and Hayson Incet al Black Economic Empowerment:

Commentary, Legislation and Charters(Juta Cape Town 2005)

Chekera and Nmehielle 2013 AJLS

Chekera YT and Nmehielle VO "The International Law Principle of

Permanent Sovereignty over Natural Resources as an Instrument for

Development: The Case of Zimbabwean Diamonds" 2013 AJLS69-101

Chiduza 2014 PELJ

ChiduzaL"Towards the Protection of Human Rights: Do the New

Zimbabwean Constitutional Provisions on Judicial Independence Suffice"

PELJ 367-418

Chitereka and Hamauswa 2014 ZJPE

Chitereka G and HamauswaS"Mining Rights and Mineral Related

Corruption in Zimbabwe: The Case of Gwanda, Kwekwe and Chiadzwa

Mining Areas"2014 ZJPE69-83

Chowa and Mukuvare 2013 RJE

Chowa T and Mukuvare M "Zimbabwe's Indigenisation and Economic

Empowerment Programme (IEEP) As an Economic Development

Approach" 2013 RJE 1-18

Fargher The Herald

Fargher M "Whitewashed equality" The Herald Zimbabwe(4 November

10

Fredriksson and Svensson 2003 JPE

Fredriksson P and Svensson J "Political Instability, Corruption and Policy

Formation: The Case of Environmental Policy" 2003 JPE 1383-1405

Gallagher 2015 JMAS

Gallagher J "The Battle for Zimbabwe in 2013: From Polarization to

Ambivalence" 2015 JMAS27-49

Gamble Crisis Without End?

Gamble A Crisis Without End? The Unravelling of Western Prosperity

(Palgrave Macmillan Victoria 2014)

Genev 2005 EEPS

Genev VI "The 'Triumph of Neoliberalism' Reconsidered: Critical Remarks

on Ideas-centered Analyses of Political and Economic Change in Post-

communism" 2005 EEPS 343-378

Goko Daily News Zimbabwe

Goko C "Honour 2006 Plan, Zimplats Urges Govt"Daily News Zimbabwe

(29 April 2014) 12

Government of Zimbabwe First Report of the Thematic Committee

Government of Zimbabwe First Report of the Thematic Committee on

Indigenisation and Empowerment on the Operations of the Community

Share Ownership Trusts and Employee Share Ownership Schemes SC

(The Government Harare 2015)

Gumede Corruption Fighting Efforts

Gumede W Corruption Fighting Efforts in Africa Fail Because Root Causes

Are Poorly Understood

(Foreign Policy Centre Washington DC 2012)

Harvey 2006 GA

Harvey D "Neo-liberalism as Creative Destruction" 2006 GA 145-158

Helmsing Perspectives of Local Economic Development

HelmsingBPerspectives of Local Economic Development: A Review

(International Institute of Social StudiesThe Hague2010)

Kalula and M'Paradzi 2008SJ

Kalula E and M’Paradzi A "Black Economic Empowerment: Can There be

Trickle-down Benefits for Workers?"2008 SJ 108-130

Kaplow "General Characteristics of Rules"

Kaplow L "The General Characteristics of Rules"in Bouckaert B and De

Geest G (ed) Encyclopedia of Law and Economics (Edward Elgar

Cheltenham 2000) 512-513

Leal-Arcas International Trade and Investment Law

Leal-Arcas R International Trade and Investment Law: Multilateral, Regional

and Bilateral Governance (Edward Elgar Cheltenham 2010)

Leon 2009 JENRL

Leon T "Creeping Expropriation of Mining Investments: An African

Perspective" 2009 JENRL 33-40

Libby and Woakes 1980 ASR

Libby R and Woakes M "Nationalisation and the Displacement of

Development Policy in Zambia" 1980 ASR 33-50

Mabhenaand Moyo 2014 IOSR-JHSS

Mabhena C and Moyo F"Community Share Ownership Trust Scheme and

Empowerment: The Case of Gwanda Rural District, Matebeleland South

Province in Zimbabwe"2014IOSR-JHSS 72-85

Madhuku 2002 JAL

Madhuku L "Constitutional Protection ofthe Independence of the Judiciary:

A Survey of the Position in Southern Africa"2002 JAL232-258

Magure 2012 JCAS

Magure B "Foreign Investment, Black Economic Empowerment and

Militarized Patronage Politics in Zimbabwe" 2012 JCAS 67-82

Magure 2014 JAE

Magure B "Land, Indigenisation and Empowerment: Narratives that Made a

Difference in Zimbabwe's 2013 Elections"2014 JAE 17-47

Makoni 2014 COC

Makoni PL "The Impact of the Nationalisation Threat on Zimbabwe's

Economy" 2014 COC 160-179

Matunhu 2011 AJHC

Matunhu M "A Critique of Modernization and Dependency theories in Africa:

Critical Assessment"2011 AJHC 65-72

Matunhu 2012 SAPRJ

Matunhu M "The Indigenisation and Economic Empowerment Policy in

Zimbabwe: Opportunities and Challenges for Rural Development"2012

SAPRJ 5-20

Mazingi and Kamidza "Inequality in Zimbabwe"

Mazingi L and Kamidza R "Inequality in Zimbabwe" in Jauch H and

Muchena D (eds) Us Apart: Inequalities in Southern Africa(Open Society

Initiative of Southern Africa Johannesburg 2011) 322-383

Mbeki Architects of Poverty

Mbeki M Architects of Poverty: Why African Capitalism Needs Changing

(Picador Africa Johannesburg 2009)

Mhiripiri 2009 JLS

Mhiripiri N "Legitimising the Status Quo through the Writing of Biography:

Ngwabi Bhebe's Simon Vengesayi Muzenda and the Struggle for and

Liberation of Zimbabwe"2009 JLS83-98

Monibot How Did We Get into This Mess?

Monibot G How Did We Get into this Mess? Politics, Equality, Nature(Verso

Books London 2016)

Moyo "Land Reform and Redistribution"

Moyo S "Land Reform and Redistribution in Zimbabwe since1980"in Moyo

S and Chambati W Land and Agrarian Reform in Former Settler Colonial

Zimbabwe (CODESRIA Dakar 2013) 29-78

Moyo "Political Economy of Transformation"

Moyo S "The Political Economy of Transformation in Zimbabwe:

Radicalisation, Structural Change and Resistance" in Sall E (ed) Africa and

the Challenges of the Twenty-first Century: Keynote Lectures Delivered at

the 13th General Assembly of CODESRIA (Rabat Morocco, December,

(CODESRIA Dakar 2015) 23-46

Moyo "Primitive Accumulation"

Moyo S "Primitive Accumulation and the Destruction of African Peasantries"

in Patnaik U and Moyo S (eds) The Agrarian Question in the Neoliberal Era:

Primitive Accumulation and the Peasantry (Fahamu Books and Pambazuka

Press Cape Town 2011) 61-85

Moyo "Scramble for Land in Africa"

Moyo S "The Scramble for Land in Africa" Paper presented at the Round

Table Dialogue on Land Reform, Land Grabbing and Agricultural

Development in Africa in the 21st Century (17-18 June 2013 Addis Ababa)

Munyedza 2011 BEJ

Munyedza P "The Impact of the Indigenisation and Economic

Empowerment Act of Zimbabwe on the Financial Performance of Listed

Securities" 2011 BEJ 1-14

Murombo 2010 SAPL

Murombo T "Law and the Indigenisation of Mineral Resources in Zimbabwe:

Any Equity for Local Communities" 2010 SAPL 568-589

Murombo 2013 LEDJ

Murombo T "Regulating Mining in South Africa and Zimbabwe:

Communities, the Environment and Perpetual Exploitation"2013 LEDJ 31-

Ncube Sunday Times

Ncube T "Empower the Majority, Not a Select Few"Sunday Times(1 August

17

Ndlela Financial Gazette

Ndlela D "Scandal Rocks Zuva Petroleum"Financial Gazette(20 February

2

Ngwerume and Massimo2014 JPAG

Ngwerume KJ and Massimo ET "Contribution of the Bindura Community

Share Ownership Trust to Rural Development in Bindura Rural District

Council of Zimbabwe"2014 JPAG 1-17

O'Connel Vindicating Socio-economic Rights

O'Connel P Vindicating Socio-economic Rights:International Standards

and Comparative Experiences(Routledge London 2012)

Osode "Advancing the Cause of Black Economic Empowerment"

Osode PC "Advancing the Cause of Black Economic Empowerment through

the Use of Legal Instruments"in Osode PC and Glover G (ed) Law and

Transformative Justice in Post-Apartheid South Africa (Spekboom Louis

Trichardt 2010) 261-290

Osode 2004 SJ

Osode PC "The New Broad-Based Economic Empowerment Act: A Critical

Evaluation"2004 SJ108-114

Philip 2012 JPS

Philip M "The Land Grab Corporate Food Regime Restructuring" 2012 JPS

-701

Posner 1997 Harv JL & Pub Pol'y

Posner E "Standards, Rules, and Social Norms"1997 Harv JL & Pub Pol'y

-117

Quinot and Arrowsmith "Introduction"

Quinot G and Arrowsmith S"Introduction"in Quinot G and Arrowsmith S

(eds) Public Procurement Regulation in Africa(Cambridge University Press

Cambridge 2013) 1-22

Raban 2010 PILJ

Raban O "The Fallacy of Legal Certainty: Why Vague Legal Standards May

be Better for Capitalism and Liberalism"2010 PILJ175-191

Raftopoulos "State, NGOs and Democratisation"

Raftopoulos B "The State, NGOs and Democratisation" in Moyo S,

Makumbe J and Raftopoulus B (eds) NGOs, the State and Politics in

Zimbabwe(SAPES Books Harare 2000) 21-45

Raftopoulos and Moyo 1995 EASSRR

Raftopoulos B and Moyo S "The Politics of Indigenisation in Zimbabwe"

EASSRR 17-33

Ratnapala Jurisprudence

Ratnapala S Jurisprudence(Cambridge University Press Cambridge 2009)

Rawls Theory of Justice

Rawls A Theory ofJustice(Belknap Press of Harvard University Press

Massachusetts 1971)

Raz 1972 Yale LJ

Raz J "Legal Principles and the Limits of Law"1972 Yale LJ823-841

Rood 1976 JMAS

Rood L "Nationalisation and Indigenisation in Africa" 1976 JMAS427-447

Rood 1977 JMAS

Rood L "The Impact of Nationalisation" 1977 JMAS489-494

Scalia 1989U Chi L Rev

ScaliaA"The Rule of Law as a Law of Rules"1989 U Chi L Rev 1175-1181

Schauer Playing by the Rules

Schauer F Playing by the Rules(Clarendon Press Oxford 1991)

Selby Commercial Farmers

Selby A Commercial Farmers and the State: Interest Group Politics and

Land Reform in Zimbabwe(D Phil-thesis Oxford University 2006)

Sibanda 2014 IJPLP

Sibanda A "The Corporate Governance Perils of Zimbabwe's Indigenisation

Economic Empowerment Act 17 of 2007" 2014 IJPLP 24-36

Sithole and Chikerema 2014 ZJPE

Sithole AK and Chikerema A "Property Ownership by Zimbabwean Women:

A Myth or a Reality?" 2014 ZJPE 84-96

Southall 2007 RAPE

Southall R "Ten Propositions About Black Economic Empowerment in

South Africa"2007RAPE 67-84

Stark 2010 BC Third World LJ

Stark B "Jam Tomorrow: Distributive Justice and the Limits of International

Economic Law"2010 BC Third World LJ3-34

Stark "Jam Tomorrow"

Stark B "Jam Tomorrow: A Critique of International Economic Law"in

CarmodyC, Garcia F and Linarelli J (eds) Global Justice and International

Economic Law:Opportunities and Prospects(Cambridge University Press

Cambridge 2012) 261-272

Sustein 1995CLR

Sustein CR "Problems with Rules"1995 CLR 1021-1032

Tebbit Philosophy of Law

Tebbit M Philosophy of Law: An Introduction 2nded (Routledge London

Tekere Lifetime of Struggle

Tekere E A Lifetime of Struggle(SAPE Books Harare 2007)

Warikandwa and Osode2014 SJ

Warikandwa TV andOsodePC"Legal Theoretical Perspectives and Their

Potential Ramifications for Proposals to Incorporate a Trade-labour Linkage

into the Legal Framework of the World Trade Organisation"2014 SJ 41-69

Zikhali, Ncube and Tshuma 2014 IJHSS

ZikhaliW,NcubeGand TshumaN"From Economic Development to Local

Economic Growth: Income Generating Projects in Nkayi District, Zimbabwe"

IJHSS27-33

Zimudzi 2012 JCS

Zimudzi TB "A Predictable Tragedy: Robert Mugabe and the Collapse of

Zimbabwe" 2012 JCS 508-511

Zuma "B-BBEE Not Just About Benefiting a Few Individuals"

Zuma J "B-BBEE Not Just About Benefiting a Few Individuals"keynote

Address to the Broad-Based Economic Empowerment Summit (3 October

Midrand)

Case law

Asia

AMCO v Republic of Indonesia (Merits) 1992 89 ILR 368

Bharat Cooperative Bank (Mumbai) Ltd v Employees Union2007 4 SCC

Hamdard (Wakf) Laboratories v Deputy Labour Commissioner 2007 5 SCC

Himalayan Tiles and Marble (P) Ltd v Francis Victor Coutinho 1980 3 SCC

Mahalakshmi Oil Mills v State of AP 1989 AIR 335

NDP Namboodripad v Union of India 2007 4 SCC 502

Published

16-03-2017

How to Cite

Warikandwa, T. V., & Osode, P. C. (2017). Regulating Against Business "Fronting" to Advance Black Economic Empowerment in Zimbabwe: Lessons from South Africa. Potchefstroom Electronic Law Journal, 20, 1–43. https://doi.org/10.17159/1727-3781/2017/v20i0a735

Issue

Section

Articles