via Mugabe’s new threat to SA firms | African Business | BDlive BY LONI PRINSLOO, AUGUST 11 2013, 10:54
NEWS that President Robert Mugabe will continue for a seventh term has left investors white in the face — not exactly a useful colour in Zimbabwe right now.
Mr Mugabe will target the remaining 1,138 white- and foreign-owned companies left in the country, as well as local banks with foreign interests, to hand over 51% of their businesses to the Zanu (PF) government.
Zanu (PF) this week ran full-page advertisements in local papers saying that its crushing, more than two-thirds, election win was an endorsement of its “indigenisation” plans that will see all foreign-owned companies forced to give up 51% of their equity to black Zimbabweans.
News that Mugabe will continue for a 7th term has left investors white in the face – not a useful colour in Zimbabwe right now.
“Over the next five years, Zimbabwe is going to witness a unique wealth transfer model that will see ordinary people take charge of the economy,” the adverts read.
Saviour Kusukwere, one of Mr Mugabe’s ministers, revealed that the country planned to seize 51% of foreign-owned mines — worth an estimated $7bn — without any compensation.
The Zanu (PF) government warned that mines that refused to surrender more than half of their assets would lose their licences.
This is likely to scare some big South African companies with assets in Zimbabwe that now stand to be partly expropriated, including Aquarius Platinum, Standard Bank, Old Mutual, cement company PPC and SABMiller which owns Delta, the country’s largest beverage supplier.
Dzika Dhana of Renaissance Capital in Harare said the country’s black empowerment policy, or “indigenisation”, had been part of Zimbabwean policy for three months before the election.
However, Mr Dhana said that investors had hoped, before the election, that the policy would be dropped in a bid to increase foreign direct investment (FDI) into the country — regardless of which party came out on top.
FDI in Zimbabwe has dropped 76% compared with the same point last year. The country has managed to attract only $33m in FDI in 2013, despite its wealth of resources. This is unfortunate as Zimbabwe managed to attract more FDI during the previous five years, growing from $52m in 2008 to $400m last year.
Mr Dhana pointed out that Mr Mugabe’s plan to take 51% of mines without compensation would go against the country’s laws. “Currently, we are working on the willing-seller, willing-buyer principle, which means the new Zanu (PF) government would have to change the laws,” he said.
This would not be a difficult task as Zanu (PF )won the election by 61%, giving it enough control to alter the country’s brand-new constitution that came into effect in April.
Zimplats, which is 87% owned by South Africa’s Impala Platinum, was previously offered $900m for a 51% stake in its mines — but Mr Mugabe’s newest plans would see them get not a cent.
Implats refused to comment.
The Zimbabwean Stock Exchange has taken quite a beating in the past week as those who can, try to run.
On Monday, the first trading day after the announcement that Mr Mugabe would continue his reign of 33 years, the market fell 11%. The next day it fell a further 2%, and then more than 1% a day up until Friday.
This represented the largest stock market drop since 2009, when the market came to a halt, and the country had to switch to the US dollar.
• This article was first published in Sunday Times: Business Times
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COMMENTS
this is sadness dwn fall of the ecconomy
i would rather close down my busines than give 51% of my efforts to a thief
Most of these business will quietly do precisely that, leaving the ‘new’ shareholders with share certificates worth less than toilet paper !
So Mugabe confirms that he will target 1,138 white and foreign owned companies for his indigenisation program. White Zimbabweans are not Zimbabweans according to this statement. If I am not mistaken this was addressed in the new constitution where people born in Zimbabwe are Zimbabweans regardless of the colour of their skin. So what is this thief, liar, dictator going to do now, amend the constitution to segregate white from black Zimbabweans in terms of who is and who is not Zimbabwean. I would like to suggest to Zimplats and Anglo in terms of their operations in Zimbabwe, sell the 51% of their mining operations to a group of white Zimbabweans , where an internal agreement can be arranged that completely suits the mining group and they will have satisfied the indeginization laws …
Mugabe stop stealing u old age
Serves South Africans right for adopting a silent diplomacy approach. They might as well pack up and go if they don’t like the idea of half their stuff being given to “the people”. They should have known they would get themselves into some pretty unpredictable scenarios by supporting Zanu-PF. Maybe they should start bribing the Chefs like the Chinese are already doing.
Long live the Revolution, Empowerment, sticking it to Blair, etc, etc!
This is sickening, those few who have struggles through some of the toughest financial challenges are just about to face them three fold, someone has so out this maniac
MUGABE IS RIGHT TO SOME EXTENT…FOR CENTURIES THE ACTIVITIES OF FOREIGH INVESTERS NEVER BENEFITED THE PEOPLE OF AFRICA…WHY …WHAT I DONT KNOW IS WHETHER THEY WILL BUY 51%..OR DO THEY JUST TAKE THEM FOR FREE..I THINK THAT IS WRONG 51% SHOULD BE SOLD TO THE PEOPLE OF ZIMBABWE..IN AMERICA THE BLACK PEOPLE ARE CALLED AFRICAN AMERICANS BECAUSE THEY WANT TO ALWAYS REMIND THEM THAT THEIR FORE FATHERS WERE FROM AFRICA AND WHY CANT WE CALL THE WHITE AFRICAN ..EUROPEAN AFRICANS TO REMIND THEM THAT THEY CAME FROM EUROPE..SOME CALLED ZANU PF THIEVES I AGREE WITH YOU BUT BY THE SAME TOKEN WE CAN ALSO CALL THE EUROPEAN AFRICANS THIEVES ..FOR CENTURIES THEY HAVE BEEN MILKING OUR RESOURCES IN EXCHANGE FOR FOOD AID AND PEANUTS WAGES ..AT TIMES TO GIVE IS TO CONTROLL…………
Just when the economy was starting to gain speed, it’s going to do a u – turn back to the gutter. Sad stuff.
Has anyone done any business in the Arab world (GCC countries in particular)? If so, then you must know that it is the law of their countries to have their national control 51% of the ownership while their foreign partners retain 49%. Net results of such a national development schemes are in front of the world today. Case in point: Dubai and Abu Dhabi (among other countries and cities of GCC). They have dynamic and thriving economies that are the envy of the world. While Europe and America is falling apart with their debt and economical disasters, GCC countries in particular are thriving with economic regularities. So why should Zimbabwe not seek her national interest? The hell with the foreign exploitation of Zimbabwe and its national assets— the natural resources. I commend President Mugabe for his insight and vision to yank Zimbabwe out of the rut that the West has put her into. Desperate situation requires desperate measures. Zimbabwe has been subjected to the worse economic sanctions and its about time that Zimbabwe take the bull by the horn and pacify it before it goes crazy. Each and every free thinking Zimbabwean must talk hand-in-hand toward a great tomorrow for Zimbabwe will be the shiny beacon on the hill for the rest of Africa to shine its light on!
Fair enough. But does Saudi Arabia’s 51% go towards national development, or towards the kitchen redecoration of the royal family’s palaces and mansions?
I don’t think that the 51% rule is always a bad idea. Many countries have done that.
The problem is they just steal 51% of the company, and control, so probably they would just steal 100% of the company. That is the problem.