WE welcome Britain’s endorsement of Zimbabwe’s refined indigenisation regulations and hope other European nations will follow suit and plough much needed investment into the country’s economy. The Indigenisation and Economic Empowerment Act has been maligned by the West since its inception with investors seeking clarification on a number of salient points before committing their money in various sectors of the economy.
Their concerns centred on fears that the Act was a one size fits all where foreigners were compelled to cede 51 percent of their shares to locals. However, the government moved to allay those fears earlier this month when the Minister of Finance Cde Patrick Chinamasa and his Indigenisation and Economic Empowerment counterpart Patrick Zhuwao addressed a joint press conference where they clarified the regulations.
Under the refined regime, a March 31, 2016, deadline for all foreign companies to submit indigenisation compliance plans was put in place. The ministers also announced new measures to restrict foreign businesses from operating in reserved areas such as retail and agriculture. The government is also set to introduce an empowerment levy, with companies that have a large foreign shareholding paying a greater amount.
Shares disposed of by foreign companies will be acquired by, among other organisations, entities such as the National Indigenisation and Economic Empowerment Fund, the government’s Sovereign Wealth Fund, Employee Share Ownership and Community Share Ownership Trusts, the Zimbabwe Mining Development Corporation and any other company incorporated by government.
The new guidelines outline reserved areas for investment by locals and these include retail, agriculture, bakeries, advertising agencies, cigarette manufacturing, milk processing and fuel retailing. “No new non-indigenous businesses will be allowed to invest in the reserved sector unless under special cases as determined by line ministries and approved by Cabinet,” reads part of the new guidelines.
The government also pledged empowerment credits and corporate social responsibility as part of the measures through which to achieve indigenisation. The new guidelines say “empowerment credits may be taken into account in achieving the 51 percent indigenisation threshold in order to support economic empowerment of indigenous Zimbabweans through achieving socially and economically desirable objectives”.
The undertaking of specified development work in communities, beneficiation to a specified extent of raw materials extracted in Zimbabwe, the transfer to a specified extent of new technology to Zimbabwe and the employment to a specified extent of local skills or the imparting of new skills to Zimbabweans will also be considered as part compliance with indigenisation.
Yesterday, our sister paper, The Sunday News reported that Britain had endorsed the refined indigenisation regulations in a major sign of thawing of relations between London and Harare. It said the stance could trigger renewed investments from the Europeans that have previously attempted to denigrate Zimbabwe’s empowerment programmes.
The British embassy in Harare said the United Kingdom welcomed the government’s move to clarify the indigenisation regulations. “The United Kingdom welcomes the intention by the government of Zimbabwe to simplify and clarify the indigenisation regulations. “Policy consistency on the implementation of the Act is fundamental to the ability of Zimbabwe to attract much needed investment.
“. . . We therefore welcome the Zimbabwe government’s plans to consult further with the business community,” the embassy said via email.
We applaud Britain’s stance and hope that its acknowledgement of the need for indigenisation and economic empowerment of locals will lead to further engagement between the governments of Zimbabwe and the UK.
We are also confident that Zimbabwe is poised for significant economic stimulating activity this year. The country has already struck mega deals with China and Russia and several business delegations visited Zimbabwe last year.
Funding negotiations with the Bretton Woods institutions were also opened last year. The future looks bright for the country and the fine tuning of indigenisation regulations will certainly lure more foreign direct investment.