HARARE The Chamber of Mines has proposed that the period under which foreign-owned mining firms must sell majority stake to locals be left at five years or even extended to 10 years.In letter to Vice President Joice Mujuru, chamber president Victor Gapare wrote: We would respectfully suggest that given the current liquidity problems, the compliance period should be left at five years or extended to ten years, as it will be hard for indigenous players to raise cash in a very short space of time.
The concern is that buyers of the equity may not be able to put together financing packages for the purchase of shares given the liquidity constraints in the market.?
Zimbabwes mainstay mining sector was two weeks ago thrown into turmoil when the government announced it was beginning its controversial empowerment programme with the mining sector, giving foreign-owned mining companies 45 days to submit details of how they plan to transfer 51 percent stakes to locals by next September.
The government has threatened to prosecute all firms that fail to disclose their share-transfer plans within the stipulated period, under the economic empowerment scheme that is backed by President Robert Mugabe and his Zanu (PF) party but opposed by the two MDC parties.
The MDCs favour a gradual approach, fearing that wholesale indigenisation could wreck a fragile economy.
The International Monetary Fund warned earlier this month that the empowerment programme could damage Zimbabwes impressive but still fragile economic recovery after a decade of acute recession.
Analysts say the empowerment drive is unlikely to succeed as most local business people are unable to raise the required funding to buy shares from foreign-owned companies.
A similar empowerment drive by Mugabe in agriculture destroyed the mainstay sector, leaving once self sufficient Zimbabwe dependent on food aid after the 86-year old leader failed to provide funding, inputs and skills training to black villagers resettled on former white-owned commercial farms to maintain production.
And critics fear that the economic empowerment is a ploy by Mugabe to reward his allies and supporters with thriving businesses in the same way his top backers in his Zanu (PF) party and the military were rewarded with the best farms grabbed from whites.
Post published in: News