The Empowerment Corporation is now backtracking on selling the 40% Telecel stake to government as it had initially agreed on disposing. This sudden change of goalposts just comes after ED Mnangagwa took reigns and James Makamba immediately returning in the country from self-exile.
Government’s decision to acquire the remaining 40 percent in Telecel Zimbabwe hit a snag after the Empowerment Corporation declined to give up their stake. It holds 60 percent of the company with the Empowerment Corporation having the remainder. Minister of ICT and Cyber Security Supa Mandiwanzira delivering oral evidence before the Parliamentary Portfolio Committee on ICT, Media and Cyber Security said EC was at first interested in selling the stake. Government was after the 40 percent to wholly own Telecel.
“We were focused first on securing the balance 40 percent shareholding as per government’s mandate. The negotiations had gone very well and we had actually commitments from most of the shareholders that they actually wanted out and they wanted to dispose,” he said.
But some holders of the 40 percent clung onto their stake after Operation Restore Order which ushered President Emmerson Mnangagwa into power. “Just immediately after Operation Restore Order we had U-Turns by some of those who had expressed willingness to sell. They were now saying they want to stay in the business or they want to run the business themselves, things like that. “But those are shareholder issues we are addressing internally. We have asked those who are running the enterprise on behalf government take of that because we believe that as shareholders we need to take on some of those development,” said Mandiwanzira.
Empowerment Corporation of Zimbabwe Background
The Empowerment Corporation of Zimbabwe is a local consortium of businesses and individuals that was established for the establishment of Telecel Zimbabwe in 1998. The Empowerment Corporation of Zimbabwe owns 40% of the shares in a local telecoms company Telecel Zimbabwe. The other 60% shares are owned by Telecel International.
The Empowerment Corporation of Zimbabwe was established by a Zimbabwean business guru and politician James Makamba. It was created under the banner of the Zimbabwe Wealth Creation Council in 1996. It was made up of a consortium small scale indigenous organisations which included the War Veterans Association, the National Miners Association, the Zimbabwe Farmers Union and the Indigenous Business Women Organisation. According to information put before Parliament by Mutasa in 2011, when Empowerment Corporation was issued with a telecommunications licence, shareholding was as follows:
- Kestrel – 15% stake.
- Integrated Engineering Group (Owned by Leo Mugabe) – 10%
- ZF – 9%
- Indigenous Business Women Organisation – 9%
- National Miners Association – 9%
- Affirmative Action Group – 9%
- War Veterans Association – 9%
- Warehoused shares – 30%
Magamba eChimurenga is part of various groups that came together under the banner of the Empowerment Corporation, including Indigenous Business Women Organisation, led by Jane Mutasa, and Mines of Zimbabwe Association led by one Munyoro, as part of government initiatives to uplift the indigenous people.
One of the main reasons behind the formation of the corporation was to empower local Zimbabweans with the much needed economic and financial tools needed in the local economy. This resulted in the corporation targeting local groupings who needed assistance and these included small-scale miners, indigenous farmers, and traders. This resulted in a formidable corporation which went on to control a significant 40% shares state in the telecoms giant, Telecel Zimbabwe. In this regard, the Empowerment Corporation of Zimbabwe presented the locals with the golden opportunity to be shareholders in the mobile network service provider.
There was a rift between Telecel Zimbabwe and government in 2013 when the company was forced to abide to the indigenisation policy which stipulated that all companies operating in the country should cede at least 51% of their share to locals. At this time, Telecel Zimbabwe was under the 60% share deal with Telecel International which was not a local company. Hence this was contrary to the government’s policies.
Patrick Zhuwao was appointed managing director of Empowerment Corporation, the 40% shareholder in Telecel Zimbabwe, on July 1, 2013. Makamba is the major shareholder of Empowerment Corporation. The coming in of Zhuwao, who is nephew to former leader Robert Mugabe was seen as a strategic move to re align the company’s relations with the government at a time when the government was pursuing its indigenisation policy.