Oliver Kazunga Acting Business Editor
THE government has announced a new template and procedures for implementing the Indigenisation and Economic Empowerment policy that seeks to promote investment and eliminate discretionary application of the law.
In a statement yesterday Finance and Economic Development Minister Patrick Chinamasa said discretionary application of law would be eliminated by providing guidance on the implementation of the Act in three broad categories namely resource-based sector, non-resources sectors and reserved sectors.
“Further, the paper outlines procedures for ensuring compliance with the legislation, articulate the empowerment levy, describe the indigenisation compliance process flow, highlight the National Indigenisation and Economic Empowerment charter, and outline measures for ensuring compliance with procurement requirements of the legislation,” he said.
Cde Chinamasa said the Indigenisation and Economic Empowerment (General) Regulation (2010) provides a broader definition of natural resources that include the following air, soil, waters and minerals in Zimbabwe; mammal, bird, fish and other animal life in Zimbabwe; the trees, grasses and other vegetation of Zimbabwe.
“General Notice 114 of 2011 provides for indigenisation in the mining sector by requiring that businesses operating within this sector must dispose of 51 percent equity to designated entities while taking into account the State’s sovereign ownership of the mineral or minerals exploited or proposed to be exploited by the non-indigenous mining business concerned.
“To reflect the broad-based objectives of the government’s empowerment policy, the designated entities which shall acquire the 51 percent equity in businesses exploiting natural resources include National Indigenisation and Economic Empowerment Fund, Sovereign Wealth Fund, Employee Share Ownership Trusts, Community Share Ownership Trust, Zimbabwe Mining Development Corporation (ZMDC), Zimbabwe Consolidated Diamond Company (ZCDC), and any other company incorporated by government or in which government has a controlling interest.”
In the tourism sector any businesses wholly dependent upon and exploiting natural resources must comply with indigenisation to the extent of 51 percent.
On non-resources sectors, he said the legislation requires that at least 51 percent of the shares of every business shall be owned by indigenous Zimbabweans as stipulated in section 3(1) paragraph (a) of the Indigenisation and Economic Empowerment Act [Chapter 14:33].
The non-resource sectors of the economy include the manufacturing, financial services, tourism, construction and energy among others.
Chinamasa said in respect of the non-resources sectors, predetermined framework such as the provision of longer period for compliance and provision of a lesser share of indigenisation shall be implemented with immediate effect.
“A non-indigenous business may hold the majority shareholding for a period ranging up to five years (except for the energy sector which can go up to 20 years), which period may be extended upon application in terms of Section 3 (a) of the Indigenisation and Economic Empowerment regulations. Further, empowerment credits . . . shall be taken into account in achieving the 51 percent indigenisation threshold in order to support the country’s socially and economically desirable objectives,” he said.
On the provision for dilution of equity in resource-based sectors, he said:
“The 51 percent equity held by designated entities in the resource-based sectors of the economy may be diluted to the extent of injection of additional capital by foreign shareholders on a pro-rata basis. This is subject to the condition that the designated entities shall be entitled to buy new shares in order to restore their shareholding to 51 percent within a period ranging up to five years, which period may be extended upon application . . .”
In 2008, the government promulgated the Indigenisation and Economic Empowerment Act, which was meant to address the economic disparities created during the colonial era.