Deal with indigenisation: Investors told

HARARE - Foreign investors should accept and deal with Zimbabwe’s indigenisation policy, financial advisory firm Lynton Edwards Stockbrokers (Les) says.

Zimbabwe is implementing an empowerment policy — compelling foreign-owned firms to cede 51 percent shareholding to black locals — that recently re-elected President Robert Mugabe vowed to aggressively pursue during his seventh term in office.

In the recent past, the 89-year-old leader threatened to expropriate shares in foreign mining firms without compensation.

“Whether one agrees with the policy (Indigenisation) or not is neither here nor there, but what is now certain is that there are clear parameters for doing business. Policy direction is a key component in doing business,” said Les.

The firm noted that there were still chances of making good returns in Zimbabwe, whose economy is still suffering a hangover from a decade-long economic recession.

“Just as the Zimbabwean government is looking, so foreign investors must also look for genuine partners.

“Now that there is clarity on what policies the Zanu-PF-led government will pursue, it’s time for investors to engage in fundamental analysis of the business opportunities they can venture into and make good returns,” said Les.

This comes as most foreign investors have been off-loading stocks in listed firms following Mugabe’s July 31 elections victory.

So far, the offshore investors have sold off shares worth more than $70 million while in turn they have only bought shares worth $19,4 million.

The Zimbabwe Stock Exchange (ZSE) has been depressed since Mugabe’s election win.

The bourse’s key industrial index has dropped from highs of 233,18 points achieved on August 1 to 183,53 points as of yesterday, a 20 percent decline.

The overall market’s capitalisation also slumped from $5,98 billion on July 30 to $4,7 billion.

Les noted that “when investors are considering investing in any business venture, let alone in another country, one of the key things that they consider before committing their resources is the risk involved.”

In Zimbabwe, for the past decade or so, investors have been hesitant to do business in the country due to political risk coupled with a tough economic environment.

However, basing on what Mugabe said in his inauguration speech, this uncertainty could be a thing of the past.

“Plans to resuscitate our ailing industries never took off, largely because of internal contradictions during the era of the inclusive government. That era is gone and we must now move purposefully,” said Mugabe before reiterating that indigenisation is a “set policy, our chosen path.”

Comments (7)

It is foolish advice from LES. They clearly have no insight into how their clients earn the money they invest. I am a surgeon and spend many sleepless nights earning my money. This takes me away from friends and family for many years which I consider an opportunity cost. To then advise recklessness with my hard earned money is purely selfish of these brokers

munhu - 27 August 2013

The Key word in any investment is knowing your stake. The days of 100% looting are over in Zimbabwe. You have to be a genuine partner. By the way even a 10% ownership makes money even for e surgeon.

Magwendere - 28 August 2013

This is a good move. Zimbabweans should have control of their own economy,so as the British,the Americans,the South Africans and many others.Most of the foreign companies operating in Zimbabwe have their headquarters out of Zimbabwe.What it means is that all the money is getting out of the country and leaving nothing for the economy of Zimbabwe.

EVANCE MASHONGANYIKA - 28 August 2013

land reform is a good policy.....but its how it's implemented the determines success or failure, the same goes for empowerment, property rights, application of law and security.

joe - 28 August 2013

This stockbroking company is a ZANU project meant to campaign for them this INDEGINISATION policy of theirs in the business community.The reckless statements by these politicians affects the man on the streets coz if companies close it is them who suffer,INVESTORS are needed that is no secret in exchange they need viable policies & security for their DOLLAR.LES should just service the ZANU PF investment portfolio and leave foreign investers with their money,

CASHTALK - 28 August 2013

Indigenisation in its present form will not redeem Zimbabwe's economy because it is a vindictive policy intended to retaliate against smart sanctions being endured by Mugabe and his inner circle. He said it himself last year that indigenisation is our answer to sanctions. So for a poor stockbroker to come from any part of the planet making it sound a sound policy in its present form is delusional and reckless. Mugabe is spending millions on sanitising his legacy. Some lobbysts are laughing the whole way to the bank with Mugabe's money. Look at the men appearing in the US courts for promising him they can get sanctions lifted. He is desperate. Strive Masiyiwa is a shining example of what real empowerment means and he did not get it from Kasukuwere and Co, but with the good blessings of Dr Joshua Nkomo who liked young people to Think Big! See this Press TV show in which I participated:http://www.presstv.com/Program/319870.html

Clifford Chitupa Mashiri - 28 August 2013

Whatever policy in Zimbabwe, what we need is transparency so that every one can benefit. How come that some people have 20 farms, 100 stands, 60 residential houses, 30 flats, more than ten companies ... while the other cde doesn't have one residential stand. Farm inversion policy can only work if the farms are used for there purposes. Go to Zambia now the farms are well fenced where they are farms but here in Zimland the opposite now. We have money here lets empower people by money through business loans baked by the government giving people who want to state there own businesses.

Muchemi - 29 August 2013

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