Zimbabwe to amend foreign ownership law – finance minister

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By the Source on May 28, 2014. No Comments

Government will amend its indigenisation law, which requires foreign owned firms to cede 51 percent shares to local blacks, following a Cabinet decision to revise it to become more investor friendly, finance minister Patrick Chinamasa said in Parliament on Wednesday.

Chinamasa did not give specific details on the proposed changes, saying the responsible minister had been tasked to come up with a policy paper.

The proposed changes, which also remove discretionary powers that the current law gives officials, including the minister overseeing the Act, were largely based on President Robert Mugabe’s recent policy pronouncements signaling the need to balance asserting ownership and attracting investment, Chinamasa said during Parliament’s question time.

“Cabinet yesterday took a decision that we should align the investment laws, indigenisation law, the empowerment laws to our polices as pronounced by his Excellency (President Mugabe). To this extent, Cabinet directed the Minister of Youth and Indigenisation to take up this issue with a view to aligning the law to the policy pronouncements and has been asked to start clarifying that position at the (ZANU-PF) Politburo,” he said.

“We recognise that investors who come here are not philanthropists but we are also saying as they come to make money using our money, we want to reap the benefits of exploitation of those assets. Cde Nhema is going to do a paper to align our policy pronouncement to the law or the law to the policy pronouncements,” he said.

Chinamasa said the proposed amendments would seek to make the law clearer after what he described as confusion, misunderstanding and misinterpretations surrounding the policy.

“How do we share the fruits? If you are coming to lay a golden egg, how many eggs are you laying to leave in Zimbabwe?

That is what is going to be the issue,” he said, adding that this will apply to all sectors.

Chinamasa said there was need for transparency with the law to prevent corruption through dealing with various ministers and officials.
“We also hope that underlining the alignment of policy pronouncements to the law, we also expect that we remove as much as possible any discretionary powers that we give to officials which could be a source of corruption,” he said.

He said exploitation of land, minerals would be regulated by the policy.
Mugabe’s government passed the Indigenisation and Economic Empowerment Act in 2008, which seeks to transfer control of foreign-owned firms to local blacks in a move the veteran leader says is meant to address ownership imbalances wrought by colonial rule.

Critics of the policy blame it for Zimbabwe’s stalling economic recovery following a decade in which its economy shrank by as much as 40 percent between 2000-2009.

The economy, which went through a crisis that culminated in hyperinflation that reached 500 billion percent in 2008, rebounded in 2009 after Zimbabwe dumped its inflation-ravaged currency for multiple foreign currencies and Mugabe forged a power-sharing government with the opposition after the previous year’s disputed elections.

At an investment conference in Harare, the government’s investment promotion agency said it was lobbying for the state to give miners 30 years to comply with empowerment regulations, instead of the current five years to attract more foreign direct inflows.

“We are aiming for the fact that (mining) companies should be allowed to recover (after complying with the regulations) because mining is long term so it is not going to recover under the five year demarcated period,” the Zimbabwe Investment Authority chairman, Nigel Chanakira told delegates.

Chanakira said ZIA had received funding from trade bloc, Comesa, to carry out studies on which empowerment models could catapult the country’s economic growth.