AFRICANGLOBE – The ZANU PF led Empowerment Ministry is planning to legalise the unpaid takeover of foreign owned companies in Zimbabwe, in the latest push in the country’s indigenisation campaign.
According to the Sunday Mail newspaper, the Ministry is working closely with the Attorney General’s office to make key amendments to the Indigenisation and Empowerment Act, which currently stipulates that shares be bought by the government at fair market value.
The amendments, according to the Sunday Mail, are being designed to ensure that ‘the people of Zimbabwe benefit fully, and without cost whatsoever, from enterprises that exploit their God-given natural resources’.
The indigenisation campaign, spearheaded by Robert Mugabe’s party, requires foreign owned firms to cede 51% of their shares to Zimbabweans. Companies that have complied with the indigenisation rules have done so with agreements that they would be compensated.
Mining giant Implats, for example, in its Indigenisation agreement, said it will transfer 20% of its local Zimplats shares to employee and community trusts and 31% to a state-run National Indigenisation and Economic Empowerment Fund. Implats agreed to ‘sell’ this majority stake for $971 million, by loaning Zimbabwe the money that would be paid back with interest.
This agreement saw Indigenisation Minister Saviour Kasukuwere land in hot water with President Mugabe, who told the state media in March: “That is the problem, they gave us 51 per cent saying that it is a loan that we are giving you, and we are paying for you in advance and then you can pay us back tomorrow.”
He added: “I think that is where our minister made a mistake. He did not quite understand what was happening, and yet our theory is that the resource is ours and that resource is our share, that is where the 51 per cent comes from.”
Kasukuwere has since said that Mugabe’s position is the correct one, and Implats needs to take the President’s comments into account.
Critics such as economist Masimba Kuchera told reporters on Tuesday that it was this situation that has led to the indigenisation legislation being amended, saying it proves “the government was not sincere at all with the indigenisation plans.”
Kuchera also warned that this latest development will have a serious impact on the already fragile investment market in Zimbabwe, because there is no clarity about what the empowerment rules are.
“This lack of clarity means Zimbabwe’s economy will be hamstrung vis a vis investment, because investors are not sure about how the law will be interpreted (if they invest),” Kuchera said, adding: “It puts everyone in a difficult position.”
By: Alex Bell