Regulating against business “fronting” to advance black economic empowerment in Zimbabwe: Lessons from South Africa

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 specifically 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 not only for 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.