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10 Feb 2010 12:46
Foreign-owned businesses operating in Zimbabwe, including banks and mines, will be forced to sell a majority stake to locals within the next five years under government regulations due to take effect in March.
But Prime Minister Morgan Tsvangirai said the rules, which are seen as a serious blow to efforts to lure foreign investors, were null and void because they were published without being reviewed by him or the Cabinet.
The dispute reflects growing tension in the country’s year-old coalition government formed between Tsvangirai’s Movement for Democratic Change (MDC) and President Robert Mugabe’s Zanu-PF.
According to a copy of the regulations, seen by Reuters on Wednesday, indigenous Zimbabweans should hold a controlling interest in foreign-owned businesses with asset values above $500 000.
Zimbabwe’s Parliament in late 2007 passed an Indigenisation and Economic Empowerment Bill, which was signed into law by Mugabe in March 2008.
But the formation of the unity government last February raised hopes among foreign investors that the legislation would be repealed.
“These regulations are framed with the general objective that every business of or above the prescribed value threshold must within the next five years ... cede a controlling interest of not less than 51% of the shares of interest therein to indigenous Zimbabweans,” according to the regulations.
The regulations will come into effect on March 1.
The latest move could rattle foreign investors, especially in the mining sector, and drive a further wedge between Zanu-PF and the MDC, whose uneasy coalition is mired in trouble over how to share executive power and the pace of democratic reforms.
“I am in charge of all policy formation in Cabinet and neither myself nor the Cabinet were shown these regulations before they were gazetted,” Tsvangirai said in a statement.
“They were published without due processes detailed in the Constitution and are therefore null and void.”—Reuters
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