By John Kachembere
Zimbabwe has tweaked its indigenisation policy, a recent announcement by Finance minister Patrick Chinamasa following his 2015 National Budget has indicated.
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.
Although Chinamasa insisted that the “51/49 percent ownership structure dictated in the Indigenisation and Economic Empowerment Act applies across all sectors of the economy”, he acknowledged that “government recognised that this may not be achieved overnight”.
He told a Confederation of Zimbabwe Industries post-budget review meeting Friday that “the period necessary for compliance with the (indigenisation) law will be a matter for negotiation between the would-be investor and the respective or relevant line ministry responsible for the particular sector or subsector.”
He said there was need for fresh capital injection into the economy to ensure increased production.
“Significant investment into the economy is needed for re-tooling, re-capitalisation and overhaul of the antiquated machinery, and for value addition. Given the need to continue improving our investment climate in light of the need for both domestic and foreign investment, the 2015 Budget needed to further provide clarity on our Indigenisation and Empowerment Framework,” Chinamasa said.
Also, he noted that investors’ indigenisation compliance plans would take into account circumstances prevailing in targeted sectors. “It is the responsibility of the line ministry to make the assessment on the investment concerning compliance with the Indigenisation and Empowerment Policy,” he said.
This comes as the International Monetary Fund (IMF) early this month urged Zimbabwe to provide more clarity on its black empowerment laws to investors and relax labour laws in order to restore confidence in the economy.
Newly appointed IMF Resident Representative Christian Beddies said the three “key reforms” could see Zimbabwe regain access to multilateral lenders like the International Monetary Fund and the World Bank.
“In addition to clarifying indigenisation laws and easing labour restrictions, Zimbabwe must restore confidence in the financial sector and start spending more on infrastructure and less on its wage bill,” the IMF representative said.
Zimbabwe’s economy is struggling to gain traction more than a year after President Robert Mugabe, 90, was re-elected to office, with factory closures, weak consumer spending and deflation taking hold.
The indigenisation law requires foreign and white-owned companies with assets of more than $500 000 to cede or sell a 51 percent stake to black nationals or the country’s National Economic Empowerment Board.
“Economic conditions in Zimbabwe are difficult,” Beddies said.
“Nevertheless, I believe that Zimbabwe has a strong economic potential that sound policies should help unleash.”
Zimbabwe has the world’s second-largest chrome and platinum reserves. Daily News