Zim Indigenisation Act amendment stalls

Published: 03 October 2017

The lack of progress in amending the Indigenisation Act to bring it in line with the policy clarification that President Robert Mugabe made last year continues to hinder efforts to improve the attractiveness of the country as an investment destination, a Cabinet Minister has said.

In April last year, President Mugabe made a policy intervention following a row that was playing out in the public between Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwawo and Finance Minister Patrick Chinamasa over application of the law to the natural resources and financial sectors.

On issuing the clarification, President Mugabe acknowledged that the conflicting positions on the interpretation of the empowerment law created confusion among existing and potential investors.

In the policy clarification, President Mugabe said existing mines which were yet to indigenize would be exempted from the 51 percent local ownership requirement but would be required to retain 75 percent of total earnings locally in the form of wages, taxes and procurement.

However, in new investments in the mining sector, the government and its designated entities would hold a 51 percent stake with the remaining 49 percent belonging to partnering investors.

In the financial sector, foreign banks would continue operating under the Banking Act which is regulated by the Reserve Bank of Zimbabwe.

But, more than a year later, the local empowerment law is yet to be aligned with the policy clarification.

"Aligning the clarification by His Excellency to the law remains unattended (to) and continues to be an embarrassment to us but these are issues we will address more forcefully now than before," Chinamasa said.

He acknowledged that a clear stance on the Indigenisation Act would assist in improving foreign direct investment.

The Zimbabwe government promulgated the indigenisation laws to enable the indigenous population to participate in the mainstream economy through ownership and control of the means of production.

- New Ziana