HARARE Zimbabwes controversial indigenisation rules become effective tomorrow amid fears the regulations could open floodgates for another round of.........disruptive company takeovers and an exodus of foreign capital.
Indigenisation Minister Saviour Kasukuwere said the regulations to force foreign firms to offload controlling stake to local blacks will come into force on March 1 while consultations continued on the rules which have caused anxiety among both local and foreign investors.
Under the regulations, foreign-owned firms will be required to cede 51 percent of shareholding to indigenous Zimbabweans within the next five years.
Kasukuwere last week brushed aside objections by Prime Minister Morgan Tsvangirai and local industrialists, insisting the government cant have gatherings every time to finalise this matter.
“The Act will become effective March 1 as already stated.
Consultations will always be there, but the law will become effective Monday,” said the 39-year-old minister who mysteriously made his fortune as a Central Intelligence Organisation operative in Mutare.
The regulations were gazetted on February 5 in line with an Indigenisation and Economic Empowerment Bill passed by the then Zanu (PF)-controlled Parliament in 2007 and signed into law by President Robert Mugabe in March 2008.
Tsvangirai has opposed the regulations, saying they were invalid because they were never discussed and adopted by Cabinet, while business leaders have been lobbying government to shelve implementation of the law they say will only help reinforce perceptions of Zimbabwe as a high political risk investment destination.
Critics say the new indigenisation rules could trigger another violent grab-mania similar to the decade-long chaotic invasion of white-owned farms.
Respected economic consultant John Robertson rubbished the notion that the methodical nature of the process, together with the threats of severe penalties for non-compliance, would avoid the chaos of previous programmes and ultimately result in the elusive economic empowerment.
It wont. Governments principal achievement, if all this happens, will be the disempowerment of the countrys most important productive sector investors, he said.
He warned that existing foreign investors would lose interest in their companies and allow operations to deteriorate in preparations for their eventual exist from Zimbabwe.
The exodus of existing foreign investors would put paid to Zimbabwes drive to lure much-needed investment to finance the countrys reconstruction programme.
An industrialist told The Zimbabwean On Sunday that the imminent enforcement of the controversial indigenisation law was equally causing concern among white Zimbabweans who also feel threatened by the whole saga.
I know of a number of white-owned companies that have already started making enquiries in neighbouring countries, with a view to relocating them, said the industrialist who declined to be named for fear of victimisation.
He said the white Zimbabweans were looking at moving their businesses to Zambia, Malawi or Mozambique.
Under the empowerment regulations foreign-owned businesses operating in Zimbabwe, including banks, mines and factories will be forced to sell majority stake to locals by March 2015.
The regulations provides for foreigners to be compelled to sell stake to local Zimbabweans but are silent on where impoverished locals will get money to pay for stake in large mines and industries.
Many had hoped the law and other controversial laws including repressive press and security laws to be repealed following formation of the power-sharing government.
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