Zimbabwe’s government has withdrawn a controversial law that would have seen foreign firms forced to cede 51% of their shares to locals, an official said Tuesday.
Speaking after a Cabinet meeting on Tuesday, a spokesperson for Prime Minister Morgan Tsvangirai said the government had declared the
so-called indigenisation law “null and void”.
“Cabinet is directed that the directives as announced in the law are null and void,” said James Maridadi.
“Cabinet has also instructed all the parties involved to go and consult more on the issue,” he said.
The law, which came into force on March 1, would have affected foreign-owned firms valued at $500 000 or more.
They had been given 45 days to report their efforts at complying.
The biggest targets included local subsidiaries of British banks Barclays and Standard Chartered, as well as mining companies such as Impala Platinum, AngloPlatinum and Rio Tinto.
Long-time President Robert Mugabe had argued the law was necessary to correct the economic imbalances created by Zimbabwe’s colonial past.
But Tsvangirai, Mugabe’s partner in a fragile power-sharing government formed last year, complained the regulations were crafted behind his back and passed without his approval.
Zimbabwe is still struggling to recover from an economic collapse that saw the country grind to a halt in the face of world-record hyperinflation, a melt-down caused in part by Mugabe’s policy of seizing white-owned farms.
The often violent and haphazard land reforms were blamed for a slump in food production that reduced the former regional breadbasket to dependence on foreign aid.
The crisis helped force Mugabe, Zimbabwe’s ruler since independence in 1980, into a power-sharing deal with rival Tsvangirai in a bid to restore stability.
Analysts had warned the indigenisation law would have put the country’s nascent recovery at risk.
In the first month after the law was published, Zimbabwe’s stock market tumbled about 10%, while mining shares plunged 20%. – AFP