Both Old Mutual and Zimplats have been threatened by Kasukuwere over what he called ‘inadequate’ plans to indigenise their shareholding, under the controversial ZANU PF led empowerment scheme. The Indigenisation Act, which analysts have warned will be a serious blow to investment in Zimbabwe, requires foreign owned firms, including mining and banking groups, to cede 51% of their shares to Zimbabweans.
Kasukuwere on September 1 gave Old Mutual a seven day deadline to submit a “progress report” on how it planned to meet indigenisation standards, warning that “no further indulgences shall be granted,” after that time.
This was in response to a plan made by Old Mutual last year that it would cede 27% of its equity to its employees, 17% to Zimbabwean pension funds and about 7% to the National Indigenisation Trust Fund (NITF). But this plan has since been rejected, and Old Mutual is now reportedly renegotiating. Chief executive officer Luke Ngwerume on Wednesday said the company had a plan in place that had been approved by its board of directors and was being implemented.
“We believe that the board-approved plan meets the requirements of the relevant legislation. We will continue to engage the minister and his team on the ongoing implementation process,” Ngwerume told NewsDay newspaper.
The demand for Old Mutual to meet the full 51% shareholding restructure has come as a surprise to many, because of the group’s involvement in different joint venture investments with state companies. This includes an 18% shareholding in the state owned Zimpapers, as well as an indirect business interest in the Mbada Mining Firm. Mbada is a joint venture with the parastatal Zimbabwe Mining and Development Corporation (ZMDC) mining at the controversial Chiadzwa diamond fields.
Economic analyst John Robertson told SW Radio Africa that it is not a surprise “in terms of what government people are looking for.” He explained that government officials who stand to benefit from the indigenisation drive “are looking for prizes of magnitudes worth taking,” even if they can’t pay for it.
“They want ownership of major companies, and if you look across the sky line in any city in Zimbabwe, most of the property belongs to Old Mutual. It’s surprising that they think they can get it without having the means to pay for it,” Robertson said.
He added: “They (the government) have become very belligerent and aggressive and very intimidating towards Old Mutual. That they seem to think that intimidation and threats will allow them to gain the assets and get away with it, is very surprising.”
Zimplats meanwhile is also said to be renegotiating its indigenisation plans, after Kasukuwere this week threatened to cancel its mining licence. It is understood that Zimplats had proposed a 26% share handover, with a further 25% to be awarded through social credits. But, again, this was rejected by Kasukuwere.
Mines Minister Obert Mpofu came to Zimplats rescue this week by refusing to endorse Kasukuwere’s threats. Kasukuwere then released a statement saying: “Our teams are now working with some mining companies that have asked for more time to work on their new proposals and we will keep the public updated on the developments,” apparently in reference to Zimplats and Mimosa, jointly run by Zimplats and Aquarius Mining. – SW Radio
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