Zim to clarify indigenisation policy

HARARE - Zimbabwe is working on announcing and gazetting the Indigenisation Law’s updated framework templates and procedures aimed at clarifying the controversial policy, a Cabinet minister has said.

Indigenisation and Empowerment minister Patrick Zhuwao said the new frameworks are meant at bringing clarity to the law that has been blamed for repelling Foreign Direct Investment (FDI).

“These frameworks and guidelines seek to clarify the position on the indigenisation of businesses in the resource sector and the position on the indigenisation of businesses in the non-resource sector,” he said in a paper titled The National Economic Empowerment Strategy and Frameworks, Procedures and Guidelines for Implementing the Indigenisation and Economic Empowerment Act.

Zhuwao added that the framework was also going to shed more light on the stance on the reserved sector as well.

This comes as the investment-starved country is desperately trying to attract FDI and access international lines of credit to revive its moribund economy.

However, market watchers say investors and financiers are wary of the country’s economic policies, particularly the Indigenisation law, which compels foreigners to cede majority shareholding to black locals.

Zhuwao said the proposed framework was going to outline procedures for ensuring compliance with the empowerment legislation, articulate on empowerment levy and describe the indigenisation compliance flow.

The youthful minister said in the resource sector, 51 percent shareholding was to be held by black Zimbabweans, effected through the resource being exploited at no monetary cost to government.

“The designated entities, which will acquire the 51 percent equity in business exploiting natural resource in lieu of the resources, include Community Share Ownership Trust at 10 percent, Employee Share Ownership Trust at 10 percent and the National Indigenisation and Economic Empowerment Fund (Nieef) receiving the remaining equity,” he said.

However, the minister said the manufacturing sector was to be given leeway to phase the implementation if indigenisation such that in the first year the lesser share at 26 percent and 36 percent in the second year, 46 percent in the third and 51 percent achievable in the fourth year.

He said in the reserved sectors, non-indigenous businesses were to pay the full amount of the Empowerment Levy — which will be charged at 10 percent of the business’ gross turnover as part of measures designed to ensure compliance with the indigenisation legislation.

Zhuwao’s sentiments come in the wake of Finance minister Patrick Chinamasa’s announcement in his 2016 National Budget that consultations towards strengthening and clarifying the processes of implementing the indigenisation policies in the other sectors of the economy outside the resources sector have since been completed.

“To this end, the minister of Youth, Indigenisation and Economic Empowerment, will be announcing and gazetting before Christmas the frameworks’ templates and procedures for implementing the indigenisation policies in a manner that both promotes investment and eliminates discretionary application of the law.

“Such measures will contribute immensely towards the ease of doing business in the country and will render the services sector of our economy conducive for foreign direct investment,” Chinamasa said.

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