Wednesday, June 23, 2010

Zimbabwe Announces Changes to Economic Empowerment Law


HARARE – Zimbabwe Economic Empowerment Minister Saviour Kasukuwere on Tuesday said the government will set varying percentages of shareholding foreign-owned companies in various sectors of the economy must transfer to local blacks, a major shift from an earlier requirement that firms cede 51 percent shareholding.

Kasukuwere, who also said 600 companies have to date submitted proposals on how they plan to transfer shareholding to locals, said the government will on Friday publish new guidelines on the economic indigenisation law that has scared foreign investors and caused divisions in the fragile Harare coalition government.

The revised regulations will see the word “cede” dropped for the law and with foreign-owned firms now required to “dispose” of stake.

The amendments that Kasukuwere said were a result of extensive consultations within the unity government and involving all stakeholders will also provide for the establishment of committees that will set empowerment thresholds for the different sectors.



"The (consultation) process has led to amendments to the regulations to take into account sentiments expressed by the stakeholders," he said.



The empowerment law enacted in 2008 by Mugabe’s previous government but which Kasukuwere only moved to implement last March caused a rift within the coalition government of President Robert Mugabe and Prime Minister Morgan Tsvangirai.

The President and his ZANU PF party backed the indigenisation plan calling it an opportunity to deal the last blow to imperialism.



Tsvangirai and his MDC wanted the indigenisation scheme reviewed, saying the blanket requirement that foreign-owed firms cede controlling stake to locals was scaring away investors, while critics warned that Mugabe wanted to press ahead with transferring majority ownership of foreign-owned companies as part of a drive to reward party loyalists with thriving businesses.



But Mugabe told a mining conference last month that the government was reviewing the controversial law in a bid to shore up desperately needed investment, signaling a change of heart by the veteran leader whose agriculture empowerment scheme saw white commercial farmers expelled from the land and their farms parcelled out to blacks.



The chaotic farm redistribution programme has however plunged Zimbabwe into acute food shortages after Mugabe failed to provide black peasants resettled on former white farms with funding, inputs and skills training to maintain production.



Kasukuwere yesterday said he was in consultations with Finance Minister Tendai Biti over how to raise money for an empowerment fund that shall warehouse shares for future transfer to blacks.



But analysts say neither the cash-strapped government nor impoverished blacks will be able to raise money to buy shares in large foreign-owned mines or factories.

Among the large multinational corporations targeted by Zimbabwe’s empowerment laws are cigarette manufacturer BAT Zimbabwe, which is 80 percent British-owned; UK-controlled financial institutions Barclays Bank and Standard Chartered Bank, food group Nestlé Zimbabwe, mining giants Rio Tinto and Zimplats, and AON Insurance. – ZimOnline.