Indigenization law brings more uncertainty (The Africa Report n°35 – November 2011)

Mining companies have been the first to comply with new ownership regulations in Zimbabwe.

More than 700 foreign companies, including Standard Chartered Bank and Barclays Bank, missed the 25 September deadline for creating final plans to meet Zimbabwe’s new indigenization law, The law which says that at least 51% of all foreign-owned companies has to be transferred into the hands of black Zimbabweans, is far from popular with many key politicians and appears to have split the cabinet. The Movement for Democratic Change is calling for the law to be struck off. Prime Minister Morgan Tsvangirai, on a trip to the US to drum up investment for the still-reeling Zimbabwean economy, called the policy « toxic », saying that it is « looting by a greedy elite ». Finance minister Tendai Biti said that the scheme was discouraging investment.

Head of the economic empowerment board Wilson Gwatiringa announced that the government would conduct an audit across the whole economy, and those firms who have failed to comply will be fined or have their operating licenses cancelled.

Indigenization minister Saviour Kasukuwere said that most of the larger mining houses, such as Zimplats and River Ranch, have already started to meet the requirements. But many critics question the opacity of the scheme and wonder to whom the equity will be transferred, as there are currently no legal agreements between foreign companies and the government. Kasukuwere is reported to be asking chief executives to setup community trusts, the beneficiaries of which are not clearly indicated. In the case of Zimplats, Kasukuwere and other ministers are slated to take charge of a trust set to receive l0% of the company’s shares.

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