via Reinert urges Zim to adopt the Swiss strategy on foreign investors March 5, 2014 by Tarisai Mandizha NewsDay
VISITING Norwegian development economist Erik Reinert has urged Zimbabwe to adopt the Swiss strategy of splitting up share capital on voting and non-voting stock when implementing the indigenisation and economic programme to attract foreign investors into the country.
Reinert told delegates at a Confederation of Zimbabwe Industries public lecture in Harare last week that the Swiss model would calm the nerves of potential investors.
Under the country’s indigenisation and economic programme, foreign-owned companies with a net asset value of $500 000 or more should sell at least 51% shareholding to locals.
“Zimbabwean companies issue two kinds of stock, voting stock and non-voting stock like Swiss companies traditionally do. The foreign-owned stock will all be voting stock while only half of the indigenised stock will be voting stock because people are not going to come in as long as they feel somebody will be directing what to do with their money,” Reinert said.
“The 49% or 51% on indigenisation doesn’t matter that government is saying not now, but in five years’ time. Investors will still feel that there is a sword above their heads.”
Non-voting stock provides the shareholder very little or no vote on corporate matters while voting stock or voting shares is common stock of a corporation that entitles the owner to a vote at the corporation’s annual meeting.
He, however, said the private and public sectors in Zimbabwe need to come together and have a strategy on how the world works.
“The private and public sectors of Zimbabwe need to get together and create a common understanding of how the world works. Only if these two sectors aid and assist each other will Zimbabwe be able to realise the enormous potential of the country.
He added that for Zimbabwe to be able to retain its human capital outside the country it has to bring back manufacturing on its feet again.
“If you want as many as possible Zimbabweans to live in Zimbabwe, create manufacturing. Currently there are so many Zimbabweans outside the country, but to bring them back, we have to create manufacturing,” he said.
Speaking at the same event Confederation of Zimbabwe Industries president Charles Msipa said the Swiss strategy deserved further exploration as the next important thing the country needs was foreign direct investment.
“We need to understand what’s important, what works for our investors and how we find each other in the middle. The strategy deserves a further exploration, the next important things the country needs is foreign direct investment,” Msipa said.
The implementation of the indigenisation policy has presented headaches in government as there is no consensus on how the policy should be applied especially in the banking sector.
Analysts have warned against using a haphazard approach that would scare away foreign investors.
In the period 2010-2013, the National Indigenisation and Economic Empowerment Board (NIEEB) processed 1 471 indigenisation plans.
To date, NIEEB through the National Indigenisation and Economic Empowerment Fund holds 16% in Blanket Mine and 9,7% in Portland Holdings following the indigenisation of the two institutions.
Payment for the shares would be done through forfeiting future dividends.
COMMENTS
Appeasement is not a solution. Let the numbskulls eat a full measure of their indigenisation.
F..k off you bloody foreigner. Go back yo your socialist purce of shot country and leave Zimbabwe develop just like any free country. Bloody socialists work for government because it’s safe and sheltered employment dick head. You would not survive out in the free market place.
This is the very reason why Africa is in the doldrums specifically because of people like you. You don’t need to use force and abusive language to express your point you neanderthal, we are in a civilised world and one should argue their point academically not the rubbish you are vomitting here -what do you know?. This is an senior on economic matters who has studied loads of economies and how they have managed to turn around, you can use his advice or not – no barbarism, chill buddy.
The expert hit the nail on the head. The biggest impediment in Zimbabwe is failing to realise how to implement workable solutions. We are just failing to realise what other countries are doing successfully. Take the example of attracting foreign investment, improving transportation, water, employment.
Even this salarygate issue. What is lacking is implementing efficient oversight. Some people in Zimbabwe think it is normal to have 49 roadblocks from Harare to Bulawayo ! Why accept some deliberate inconvenience. Those of us who have lived overseas, know for sure, have never come across a roadblock in my 12 years in Canada ! I will surprise Chihuri, that police in Canada are way more efficient in fighting crime.
Socialist jerk.
It doesnt matter what anyone says people will NOT invest when you start by giving away 51% and the new partner buggers you around.