Zimbabwean Ruling Party Will Meet Tomorrow on Empowerment Law

The Zimbabwean ruling party’s senior members will meet tomorrow to discuss changes to a law that compels foreign companies to turn over majority stakes to local investors, said Administration Secretary Didymus Mutasa.

The meeting of Zimbabwe African National Union-Patriotic Front’s politburo, its highest decision-making body, follows an announcement by Finance Minister Patrick Chinamasa in April that the southern African nation will soften regulations that discourage investors. The cabinet last week agreed to amending the laws and the changes must also win parliamentary approval.

Foreign currency shortages in the country are making it harder for businesses to pay workers and buy imports and factories are operating at 40 percent of capacity, pushing the economy toward recession. Zimbabwe is still recovering from an economic crisis that ended in 2009 when the government stopped hyperinflation by abandoning the local currency, allowing the use of foreign currencies.

Under national law, non-Zimbabweans and white-owned companies with assets more than $500,000 must be 51 percent owned by black Zimbabweans or the country’s National Economic Empowerment Board.

Chinamasa said April 23 that there’s no “one size fits all policy” for empowering black Zimbabweans and the country “wouldn’t be taking 51 percent of anyone’s money.”

Indigenization Minister Francis Nhema plans to take proposed legislative amendments to Zanu-PF’s politburo before discussions in parliament, Chinamasa said.

The country plans to adopt a production sharing model that allows investors to recoup the cost of their investment before sharing the profit, Zimbabwean Information Minister Jonathan Moyo told the state-controlled Sunday Mail on May 25.

Nhema didn’t answer calls to his office or mobile phone when Bloomberg News sought comment today.

To contact the reporter on this story: Godfrey Marawanyika in Harare at gmarawanyika@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net Sarah McGregor, Karl Maier

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