HARARE, October 6 (The Source) – Zimbabwe’s President Robert Mugabe on Thursday told Parliament that his government’s controversial empowerment law will be amended to reflect softened local ownership demands on foreign mines and banks which he announced in April.
Back then, Mugabe intervened in a damaging public row pitting Indigenisation Minister Patrick Zhuwao on one hand and Finance Minister Patrick Chinamasa and central bank governor John Mangudya on the other, over implementation of the law to the key resource and financial sectors.
Analysts and critics of the policy — a centrepiece of Mugabe’s campaign in the last two elections — have called for the outright repeal of the indigenisation law, which they blame for Zimbabwe’s inability to attract foreign capital, a major reason for the country’s listless economic performance.
The International Monetary Fund (IMF) this week projected that Zimbabwe’s economy would contract by -0.3 percent this year and by a further -2.5 percent in 2017.
Chinamasa has revised the government’s 2016 growth forecast from 2.7 percent to 1.2 percent, citing a bad 2015/16 farming season, weak commodity prices and low levels of investment, among other factors.
In April, Mugabe admitted that conflicting interpretations of the Indigenisation and Economic Empowerment Act — passed in 2008 to compel foreign companies, including mines and banks, to transfer at least 51 percent shares to black Zimbabweans — had caused confusion among current and existing investors.
Nearly six months have passed since Mugabe’s policy statement and analysts have been pressing for the clarification to be backed by the statutory intervention the president has now promised.
“It will be recalled that I issued a statement to clarify government’s position regarding the Indigenization and Economic Empowerment Policy on 11th April, 2016. The relevant Act will thus be amended to bring it into consonance with enunciated policy,” Mugabe said in the National Assembly as he officially opened its latest session.
In terms of the April policy tweak, existing mines 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.
Foreign miners with operations in Zimbabwe include Impala Platinum, which owns Zimplats, along with Mimosa, which it shares with Sibanye Gold, and Anglo Platinum, which owns Unki Mine in Shurugwi.
Foreign banks will be allowed to retain control of their institutions, with government dropping its hardline demand that they surrender majority stakes. Barclays Bank, Standard Chartered, Stanbic, BancABC and Ecobank are the major foreign-owned financial institutions operating in the country.
In April, Mugabe said government and its designated entities would however, seek to hold a 51 percent stake in new investments in the natural resources sector, with the remaining 49 percent belonging to partnering investors.
Zimbabwe has lagged regional peers in attracting foreign direct investment due to poor rankings on the ease of doing business and structural issues in the economy largely blamed on the controversial indigenisation policy.
Foreign Direct Investment (FDI) to Zimbabwe declined by 23 percent in 2015 to $421 million and is seen falling further this year. Neighbours Mozambique and Zambia received $3,7 billion and $1,6 billion in FDI in 2015.