JOHANNESBURG – Zimbabwe’s controversial economic indigenisation drive could force top South African retailer Massmart to quit the country, chief executive officer Grant Pattison told the media yesterday.
Massmart, South Africa’s third-largest retailer by value is target of acquisition by US giant Wal-Mart. The South African retailer operates two of its Makro shops in Zimbabwe, but does not consolidate them into its financial results.
“Should the indigenisation act be implemented in its current format, Massmart will have to reconsider its position in Zimbabwe,” Pattison was quoted as saying.
Should the US$4 billion takeover deal go through it will see Wal-Mart establishing a strong presence in Africa with huge benefits expected for consumers in countries where Massmart is established or will expand into.
Under the empowerment regulations, foreign-owned firms are required to cede significant stake to local blacks by 2015 and those failing to comply risked losing their operating licenses.
President Robert Mugabe, whose then sole ruling ZANU PF party passed the Indigenisation and Economic Empowerment Bill in 2007, had initially wanted all foreign-owned firms to cede 51 percent stake to locals.
He backed down after Prime Minister Morgan Tsvangirai opposed the requirement to force all foreigners to surrender control of their investments and the Harare coalition government later modified the rules to allow varying percentages of shareholding foreign-owned companies in various sectors of the economy must transfer to local blacks.
The committees appointed to recommend to the government the various shareholding thresholds are yet to report back to Indigenisation and Empowerment Minister Saviour Kasukuwere.
Analysts say the empowerment drive is unlikely to succeed as most local blacks are unable to raise the required funding to buy shares in foreign-owned companies.
A similar empowerment drive by Mugabe in agriculture destroyed the mainstay sector, leaving once self sufficient Zimbabwe dependent on food aid after the 86-year old leader failed to provide funding, inputs and skills training to black villagers resettled on former white-owned commercial farms to maintain production.
Other bi name foreign-owned firms that are set to be affected by the empowerment laws include 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
