Deadline looms for foreign firms in Zimbabwe

Foreign companies operating in Zimbabwe have until Sunday to hand in plans to sell majority stakes to local investors, under a law that has alarmed investors, who are uncertain how the rules will work.

The government’s order for the transfer of 51% ownership has been called the final phase of “economic emancipation”, after controversial land reforms targeting white-owned farms a decade ago. But analysts are sceptical.

“There is no way the locals and the government have the money to buy shares in the companies. Everybody knows that,” said Anthony Hawkins, a University of Zimbabwe economics professor.

The indigenisation drive could hurt the economy in the same way as the land reforms, which sparked an economic nose-dive after supporters of President Robert Mugabe violently seized white-owned farms, he warned.

‘Political policy’
“My concern is that this is much more of a political policy and it will have an economic harm just like the land reforms. It looks like they are doing this for the elections,” said Hawkins about polls expected next year.

“This will reduce the amount of investment in the country as the new owners will not have the money to, for example, expand projects. The community does not have the money, as well as the workers and the government is broke.”

The push is without the violence of the land seizures, which Mugabe said was a way to correct colonial-era wrongs, but there are mixed signals on how the law will be implemented.

Indigenisation Minister Saviour Kasukuwere has warned that non-compliant companies risk nationalisation.

But certain firms have arranged their own deals and deadlines ahead of Sunday’s cut-off date, making the government appear flexible on how the law is implemented.

British insurer Old Mutual will carry out a first phase to hand 25% of its local concern to black Zimbabweans. South Africa’s Impala Platinum, Zimbabwe’s biggest foreign investor through its Zimplats subsidiary, has been given until November 15 to outline its plans.


William Black of the South African company Investec Securities said the compulsory 51% stake is too high and will put off foreign investors.

“Investors can choose globally where to put their money and countries shouldn’t make it too difficult for foreign investors if they want to attract that money,” said Black.

He said most companies can only invest in big projects in countries where there is certainty and security for their profits and operations.

Kasukuwere has argued that the law is not aimed at victimising foreign companies, but rather to fight poverty and to put control of the economy in local hands.

Empowering workers
“I want to say in many instances after having worked in many of the mines for 30, 40 years, many of our people are retired in abject poverty in rural communities. We expect to see an empowered worker in our nation,” Kasukuwere said.

But Ray Valentin, an official of Africa Minerals Resources mining company, said Zimbabwe’s indigenisation laws would “stifle” investment at a time the government is trying hard to lure foreign companies to help revive the country’s economy.

“Mining companies traditionally are looking for much larger stakes than 51% or 49%, simply because of the risk involved in project, funding issues and operating the mine, et cetera.”

Valentin said his plans to invest in Zimbabwe had to be put on hold since the push to make companies comply with the indigenisation regulations.

“At the moment we haven’t invested much at all. We were planning to invest a large amount of money in the coal mining area but we have now decided to probably focus on Mozambique,” Valentin said.

Zimbabwean Prime Minister Morgan Tsvangirai has warned that the indigenisation drive would harm the country economically. – AFP, Staff reporter

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Advertising

ConCourt settles the law on the public protector and interim...

The Constitutional Court said it welcomed robust debate but criticised the populist rhetoric in the battle between Busisiwe Mkhwebane and Minister Pravin Gordhan

Where is the deputy president?

David Mabuza is hard at work — it’s just not taking place in the public eye. The rumblings and discussion in the ANC are about factions in the ruling party, succession and ousting him
Advertising

Press Releases

Covid-19 and Back to School Webinar

If our educators can take care of themselves, they can take care of the children they teach

5G technology is the future

Besides a healthcare problem Covid-19 is also a data issue and 5G technology, with its lightning speed, can help to curb its spread

JTI off to court for tobacco ban: Government not listening to industry or consumers

The tobacco ban places 109 000 jobs and 179 000 wholesalers and retailers at risk — including the livelihood of emerging farmers

Holistic Financial Planning for Professionals Webinar

Our lives are constantly in flux, so it makes sense that your financial planning must be reviewed frequently — preferably on an annual basis

Undeterred by Covid-19 pandemic, China and Africa hold hands, building a community of a shared future for mankind

It is clear that building a community with a shared future for all mankind has become a more pressing task than ever before

Wills, Estate Administration and Succession Planning Webinar

Capital Legacy has had no slowdown in lockdown regarding turnaround with clients, in storing or retrieving wills and in answering their questions

Call for Expression of Interest: Training supply and needs assessment to support the energy transition in South Africa

GIZ invites eligible and professional companies with local presence in South Africa to participate in this tender to support the energy transition

Obituary: Mohammed Tikly

His legacy will live on in the vision he shared for a brighter more socially just future, in which racism and discrimination are things of the past

The best local and international journalism

handpicked and in your inbox every weekday