Zim 'tweaks' indigenisation policy

HARARE - Zimbabwe has tweaked its indigenisation policy, a recent announcement by Finance minister Patrick Chinamasa following his 2015 National Budget has indicated.

This comes as the empowerment law compelling foreign investors to cede 51 percent shareholding to black locals — has been widely viewed as the greatest obstacle to attracting capital into the investment-starved country.

Although Chinamasa insisted that the “51/49 percent ownership structure dictated in the Indigenisation and Economic Empowerment Act applies across all sectors of the economy”, he acknowledged that “government recognised that this may not be achieved overnight”.

He told a Confederation of Zimbabwe Industries post-budget review meeting Friday that “the period necessary for compliance with the (indigenisation) law will be a matter for negotiation between the would-be investor and the respective or relevant line ministry responsible for the particular sector or subsector.”

He said there was need for fresh capital injection into the economy to ensure increased production.

“Significant investment into the economy is needed for re-tooling, re-capitalisation and overhaul of the antiquated machinery, and for value addition. Given the need to continue improving our investment climate in light of the need for both domestic and foreign investment, the 2015 Budget needed to further provide clarity on our Indigenisation and Empowerment Framework,” Chinamasa said.

Also, he noted that investors’ indigenisation compliance plans would take into account circumstances prevailing in targeted sectors. “It is the responsibility of the line ministry to make the assessment on the investment concerning compliance with the Indigenisation and Empowerment Policy,” he said.

This comes as the International Monetary Fund (IMF) early this month urged Zimbabwe to provide more clarity on its black empowerment laws to investors and relax labour laws in order to restore confidence in the economy.

Newly appointed IMF Resident Representative Christian Beddies said the three “key reforms” could see Zimbabwe regain access to multilateral lenders like the International Monetary Fund and the World Bank.

“In addition to clarifying indigenisation laws and easing labour restrictions, Zimbabwe must restore confidence in the financial sector and start spending more on infrastructure and less on its wage bill,” the IMF representative said.

Zimbabwe’s economy is struggling to gain traction more than a year after President Robert Mugabe, 90, was re-elected to office, with factory closures, weak consumer spending and deflation taking hold.

The indigenisation law requires foreign and white-owned companies with assets of more than $500 000 to cede or sell a 51 percent stake to black nationals or the country’s National Economic Empowerment Board.

“Economic conditions in Zimbabwe are difficult,” Beddies said.

“Nevertheless, I believe that Zimbabwe has a strong economic potential that sound policies should help unleash.”

Zimbabwe has the world’s second-largest chrome and platinum reserves.

 

Comments (6)

I wonder who is buying or being ceded the 51%, is it the poor villager from Gokwe or Mukumbura?

cde Pombi - 1 December 2014

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GALLERYCARTRIDGES - 2 December 2014

The Minister has unfortunately not clarified the Indigenisation policy. The investor needs to know the specific number of years required to achieve a certain local ownership threshold. For clarity's sake the Minister must review the policy to indicate for instance that the first 5 or 10 years 5 to 10% cascading up to 20% or whatever the case maybe depending on the Sector in question ie. Mining, Agriculture, Manufacturing, Tourism , Transport etc. As it the policy is still ambiguous. FDI is a scarce commodity and Zimbabwe is not the only investment destination. Lets make it attractive, clear, concise and bureaucracy free. Lets think in a business like manner while not losing the need to protect Zimbabwe;s interests, ie. local labour, local materials, local procurement and many others.

Kambiri - 2 December 2014

The IMF representative needs to understand the difference between 'key reforms' and 'clarifying' the indigenisation policy. Key reforms in my book would need for the indigenisation law to be repealed or changed where necessary. Investors will not be fooled by what the minister has 'clarified'

saundy - 3 December 2014

Get real Chinamasa, the only tweaking that investors want to see or hear is that the indigenisation program has been scrapped all together. You cant get clearer than that.

ronaldos - 4 December 2014

as much as they say the Indigenisation policy is for black empowerment its doing no good than harm as its obviously scaring away potential investors with it in play our country will never realise its full economic potential as we have been richly endowed with mineral wealth and fertile lands . the minister has also not clarified anything as it still does not assure investors protection of their businesses

anonymus - 12 December 2014

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