The controversial so-called empowerment law is already being implemented in the mining sector, where South Africa’s Impala Platinum was forced to hand over majority shareholding in its Zimplats unit to a state fund, employees and local communities.
Speaking at the Atlantic Center, a think tank and public policy group, Biti said while he agreed on the need for Zimbabweans to participate in the broad economy, the initiative being spearhead by President Robert Mugabe’s ZANU-PF party would only benefit the black elite.
“The transfer is for value, which is good, but in a situation where the majority are poor, you are just transferring shares from a few rich white people to a few rich black people,” said Biti.
“It wasn’t well thought. Due process not being followed, we need to go back to the drawing board and say how can we empower our people. The best way to empower our people at this present moment in time is to expand our economy to create as many sectors as possible.”
The exercise is widely seen as a ploy by ZANU-PF to win votes in elections that must be held by next year with political reforms and a new constitution in place.
Mugabe was forced into a power-sharing deal with long-time foe Morgan Tsvangirai, now the prime minister, after the 2008 election, which Western powers said was marred by ZANU-PF violence and intimidation.
The government, which plans to have completed the empowerment program in the mining sector by the end of this month, has given no indication how much it plans to pay for any stakes in Zimplats.
Zimbabwe has the world’s second largest platinum deposits.
There is also pressure on the four foreign banks to hand over 51 percent of their shareholding, which is being vigorously opposed by both Biti and central bank governor Gideon Gono.
Illustrating what he said was the “absurdity” of the empowerment program, Biti said the four banks – which include Britain’s Barclays and Standard & Chartered – have an average market capitalization of $60 million each.
To start a bank in Zimbabwe, the minimum capital requirement is $12.5 million, which means that anyone buying 51 percent of any one of the banks’ shares would need to pay about $30 million.
“If you have $30 million, why not just start your own bank? The program has not been well thought out. … How we are trying to do it is a disaster.”
Biti, who was in Washington for the International Monetary Fund/World Bank spring meetings, told Reuters the government did not have money to hold an election this year, as being demanded by Mugabe.
“We didn’t budget for elections, so there is no money for elections, we can’t even pay our civil servants” higher salaries, Biti told Reuters.
He also criticized the United States’ policy of non-engagement with Harare because of policy differences with Mugabe.
“Your foreign policy could be better, you don’t deal with trouble states by disengaging. You must engage strategically to assist the people of Zimbabwe,” he said.
“Don’t look at politicians, don’t look at Robert Mugabe and ZANU-PF, look at the ordinary people. The wait-and-see attitude is very retrogressive.”
Zimbabwe is being crushed by a $9.1 billion debt and needs $14 billion for infrastructure, Biti said. Its debtors range from the African Development Bank to the World Bank, which is owed about $1.2 billion, and the Paris Club, which is owed $3 billion.
Zimbabwe defaulted on its debt in 1999.
“This is part of the things we are battling with on this trip. How do deal with the issue of the crippling sovereign debt? There is no way that we are going be able to generate these funds,” he said.
He said Zimbabwe had the potential to become a $400 billion economy, given its vast mineral wealth. Diamond sales had been projected to bring in $600 million this year, but “nothing” was received in the first quarter.
“We have a short-fall of 92 million U.S. dollars, part of the explanation is that there were no auction sales recently,” Biti told Reuters.