via Government to crack whip on foreign firms February 11, 2014 NewsDay
Government will soon crack the whip on foreign firms fronting locals to register as indigenous companies in order to continue operating in the reserved sectors of the economy, a senior government official has said.
Secretary for Youth, Indigenisation and Economic Empowerment George Magosvongwe warned that it was a punishable criminal offence for any individual or company to misrepresent to the ministry for the purposes of operating in the reserved sectors.
He added that there were various cases where foreigners were fronting locals as owners of entities in the reserved sectors, a move that was punishable by a fine or imprisonment for a period not exceeding five years or both.
Magosvongwe was speaking at the Parliamentary Portfolio Committee on Indigenisation and Empowerment meeting recently.
“Fronting and the furnishing of false information in the declaration form or provisional indigenisation implementation plan shall be a criminal offence and punishable by a fine not exceeding level 12 or imprisonment for a period not exceeding five years or both,” he said.
Magosvongwe said some sectors of the economy had been reserved for investment by indigenous Zimbabweans and anyone requiring a licence under the Zimbabwe Investment Authority (ZIA) would have to apply for approval from the ministry responsible for the Indigenisation and Economic Empowerment Act and the minister responsible for the administration of ZIA.
“We have some of our own people pretending to be owners of the same entities and in certain areas we have observed they are fronting. We reverse the proposals and ordered them to come back to the drawing board to resubmit the correct information,” he said.
Magosvongwe said the reserved sectors were agriculture, primary production of food and cash crops, transportation, passenger buses, taxes and car hire services, retail and wholesale trade, barber shops, hairdressing and beauty salons, employment agencies as well as estate agencies.
The other reserved sectors include valet services, grain milling, bakeries, tobacco grading and packaging, tobacco processing, advertising agencies, milk processing, provision of local arts and craft marketing and distribution.
Government last year gave foreigners operating in the reserved sectors an ultimatum which was expected to expire at the beginning of this year.
The law also compels foreign-owned companies to sell 51% of their shares to locals.