/ 23 April 2014

Zim govt says it won’t seize foreign investment capital

Zimbabwe's newly appointed Finance Minister Patrick Chinamasa.
Zimbabwe's newly appointed Finance Minister Patrick Chinamasa.

Zimbabwe will not take any foreign investment capital as part of its controversial indigenisation policy, Finance Minister Patrick Chinamasa said on Tuesday.

The indigenisation law, introduced in 2010 with the aim of empowering local people, forces foreign companies to cede majority shares to Zimbabwean partners.

So far it has only been applied to mines, but critics say the policy has been a deterrent to badly needed investment.

"We are not going to get 51% of anyone's money, it's not the policy of this government," Chinamasa told reporters.

"What is sometimes peddled [is] that you bring in your $21-million and we take 51% of that, it's nonsense … We have never said it and we will not do it."

Veteran President Robert Mugabe vowed after winning last year's elections by a landslide to pursue controversial indigenisation policies with "renewed vigour".

'Sector by sector'
But Chinamasa told the government was drawing up a "comprehensive plan, which will handle this issue sector by sector". 

In January, a Confederation of Zimbabwe Industries economist said the government retreated from its bellicose indigenisation stance and took a conciliatory approach as it sought foreign capital to revive faltering industries and stimulate a fragile economy. He said at the time that the government softened its stance after engaging with industry representatives, who expressed concern about the difficulty in courting foreign investment owing to indigenisation concerns.

In the December budget statement, Chinamasa said that Zimbabwe was desperate for foreign direct investment, which he said required "policy certainty and consistency" on several issues, among them indigenisation.

He said Zimbabwe faced perception challenges related to indigenisation. These had not helped the country's bid to mobilise offshore money to bail out struggling industries.

Chinamasa said there were new rules for indigenisation of all economic sectors, except mining. These rules no longer compelled all foreign-owned firms to indigenise within prescribed time frames.

He added that only resource-based companies such as mines would be compelled to comply with a 49% shareholding for minorities, with 51% held by indigenous entities whose contribution would be the natural resources. – AFP, additional reporting by Kennedy Maposa.