The Zimbabwean government has amended its controversial indigenization law to lift the ban on foreign firms holding majority shares in joint ventures forged with local partners.
Zimbabwe’s Indigenization and Economic Empowerment Act, effective since 2010, requires that foreign-owned firms invest more than 500,000 U.S. dollars to form joint ventures with local partners, in which the foreign firms can not hold more than 51 percent shares unless exempted by the government.
According to the amendments gazetted Wednesday, foreign businesses shall now submit indigenization implementation plans, in which they should state their intended ownership percentages, to the minister in charge of the investment sector for approval. For example, the minister of mines and mining development oversees all mining investments.
The minister shall direct an indigenization assessment of the plan and issue a certificate of compliance no later than 14 working days after the approval.
The amendments effectively empower ministers in charge of different economic departments to sideline the ministry of youth, indigenization, and economic development, which take the leading role in implementing the indigenization policy.
In the gazetted circular, the government says it “believes the inclusion of the line ministries would take into account the circumstances prevailing in the sector.”
Foreign businesses had been complaining that the indigenization policy was a major deterrent to foreign capital inflow into a country that badly needs investment to revive its ailing economy.
In 2014, the government for the first time hinted that it would amend the law, but the lack of clarity on the issue left investors confused and opting for a wait-and-see stance.