Deadline looms for “foreign” business takeovers

via Deadline looms for “foreign” business takeovers | SW Radio Africa by Tererai Karimakwenda  December 9, 2013

Foreign business owners, operating in sectors that are reserved for so-called indigenous Zimbabweans, are reported to be in a panic and confused as the government-announced deadline approaches for them to shut down, comply, or risk prosecution for operating without a certificate.

According to the Financial Gazette, hundreds of foreign shop owners approached the National Indigenisation and Economic Empowerment Board (NIEEB) in the last week seeking to “regularise” their operations ahead of the January 1st deadline.

Zweli Lunga, the compliance manager at NIEEB, told the Gazette that they had “well over 200 applications to process” in just one week and even more were expected. He also reportedly stressed that “no one would operate without a certificate”.

The rush follows an announcement by the permanent secretary for Indigenisation, George Magosvongwe, who last month told legislators on the Indigenization Portfolio Committee that those who fail to comply with laws governing “specific sectors” would be arrested.

But economic analyst John Robertson said government has not laid out specific plans as to how the shares within these companies will be controlled or just how the takeovers would be conducted.

“There is a lot of confusion. Some people say they might be able to claim indigenous status because they have the right work permits or residence permits. It’s not very straight forward. There is a great deal of uncertainty,” Robertson told SW Radio Africa on Monday.

The specific sectors reserved for locals include retail and wholesale businesses and small shops that serve as barbershops, beauty salons, bakeries, grain millers and employment agencies. The majority are owned by Nigerians, Indians and the Chinese.

As the deadline approaches, trusted sources told SW Radio Africa that some small business owners have been warned “verbally” that the deadline set by government still stands. It is not clear how government plans to deal with those business owners who operate from their homes.

Meanwhile, a survey by the respected financial advisory firm Ernst & Young has listed Zimbabwe among a group of countries considered “relatively high risk environments” that show no “particularly exciting growth characteristics”.

The survey, titled “Africa by numbers: Assessing market attractiveness in Africa”, put Zimbabwe along with Cameroon among a group described as “the obvious markets to say no to”, with Mauritius topping the list of 54 African countries.

The World Bank also rated Zimbabwe poorly in a survey conducted in October this year. The country was ranked 170 out of 189 economies, dropping two places in the World Bank’s “Ease of Doing Business” survey.

Zimbabwe attracted only $400 million in foreign direct investment in 2012, a tiny amount compared to neighbour Mozambique’s over $5 billion and South Africa’s $4,6 billion. In addition companies continue to close, leaving more people on the unemployment list.

But despite all indications that their indigenization policies, corruption, mismanagement and politically motivated human rights abuses are driving away potential foreign investment and destroying the economy, ZANU PF continues to deny responsibility, blaming foreign powers for all that is wrong in Zimbabwe.