Minister defends Indigenisation Act

HARARE - Zimbabwe's indigenisation law is not responsible for the lack of Foreign Direct Investment (FDI) in the country, a deputy minister has said.

Mathias Tongofa, deputy minister of  Indigenisation was  addressing legislators last week saying although the law was being blamed for lack of FDI in the country, “no one had facts to that effect” adding that his ministry had no power to amend the controversial law.

“Madam Speaker, there is no one who can bring facts, empirical evidence, which points to the fact that the Indigenisation and Economic Empowerment Act is the one which is really preventing Foreign Direct Investment.

“There is no one here who has empirical evidence to prove that. There are so many issues which affect the coming in of foreign direct Investment; the ease of doing business, the operating environment,” he said.

Tongofa claimed there were many things affecting investor sentiment, telling legislators that “the country’s empowerment laws were not a cause of concern”.

“There are so many things that affect, so pointing to that Act alone, to me is not very true ... if anyone has proposals for changing the Act, they should bring them forward, but as far as we are concerned, we are administering the Act and we are going to embrace the ministries to also participate in this process,” he said.

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.

Last year, Finance minister, Patrick Chinamasa, announced Zimbabwe had tweaked its indigenisation policy, to accommodate investment saying there was need for fresh capital investment to ensure increased production

Tongofa’s remarks come in the wake of researches by the World Bank, the International Monetary Fund (IMF), analysts and other non-governmental organisations who have recommended that Zimbabwe tones down the empowerment rhetoric.

Last year, several business delegations from abroad expressed concern over the policy, with Chinamasa promising them government was going to “fix the law”

Zimbabwe’s FDI inflows plummeted by 53 percent to $146, 6 million in the 10 months to October 2014 compared to $311,3 million recorded in same period in 2013, on the back of policy uncertainty.

The World Bank has said that five years of investor-friendly policies in the mining sector alone could increase annual output by $5 billion.

Investors have failed to react to Zimbabwe’s policies as the country’s FDI figures last year stagnated at $400 million, as shown by a United Nations Conference on Trade and Investment (UNCTAD) World Investment Report for 2014.

Comments (2)

Zimglass in Gweru, the only glass-making company in the land closed shop because IDC could not find a 49% partner to bring in the cash. Is this deputy minister Zimbabwean? One wonders!

Mutongi Gava - 16 February 2015

"Locally Legalizing” GRAND LARCENY is standard procedure for Zanu PF . For some bizarre reason these thieves believe that the world owes them a living and endless undeserved wealth. Anyone who invests in Zimbabwe is an certifiable idiot.These kleptmaniacs renege on any agreement if it suits them. ONE EXAMPLE – Multiple violations of Bilateral Investment Promotion and Protection Agreements (BIPPA's)

Canine Mugumira - 16 February 2015

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