Forceful empowerment drive abandoned

via Forceful empowerment drive abandoned 10/01/2014  by M&G

THE government has retreated from its bellicose indigenisation stance and taken a conciliatory approach as it seeks foreign capital to revive faltering industries and stimulate a fragile economy.

A Confederation of Zimbabwe Industries economist said the government had softened its stance after engaging with industry representatives, who expressed concern about the difficulty in courting foreign investment owing to indigenisation concerns.

“There have been a number of meetings with Indigenisation [and Economic Empowerment] Minister Francis Nhema. We had discussions and proposals were made and he promised feedback,” said the economist, who asked not to be named because he is not authorised to speak to the media.

“[Nhema] needed to discuss it with the Cabinet before coming with a position but our understanding is that there is clarity on the new approach based on pronouncements by [Finance Minister Patrick] Chinamasa.”

In the December budget statement, Chinamasa said that Zimbabwe was desperate for foreign direct investment, which he said required “policy certainty and consistency” on several issues, among them indigenisation.

He said Zimbabwe faced perception challenges related to indigenisation. These had not helped the country’s bid to mobilise offshore money to bail out struggling industries.

New indigenisation rules

Chinamasa said there were new rules for indigenisation of all ­economic sectors, except mining. These rules no longer compelled all foreign-owned firms to indigenise within prescribed time frames.

He added that only resource-based companies such as mines would be compelled to comply with a 49% shareholding for minorities, with 51% held by indigenous entities whose contribution would be the natural resources.

“With respect to the other sectors of the economy, the 51%-49% share structure still applies. However, what needs to be clarified in this connection is that the 51% stake for Zimbabweans is not available for free where the enterprise does not benefit from a natural resource or raw material derived from Zimbabwe,” said Chinamasa.

“In the same vein, where the enterprise does not benefit from a natural resource or raw material derived from Zimbabwe, the ­business partners in the investment are free to make their own decisions on how and when, within the ­gazetted framework, the 51% contribution is to be financed or achieved,” he said.

This is in sharp contrast to the previous stance under which the government had said all sectors of the economy should have complied with the indigenisation law by March 2015.

A document circulated to companies by the ministry of indigenisation and economic empowerment before the elections last year had said foreign proprietors in the manufacturing, tourism, mining, finance, transport, communication, construction and energy sectors had until January 1 to submit themselves for assessment of compliance with the controversial law.

‘New thinking’

Nhema could not be contacted for comment, but an official said his appointment had brought “new thinking and … a new paradigm”.

Before Chinamasa’s statement, several transactions known to the Mail & Guardian, and that appear to have disregarded initial indigenisation thresholds, had already been concluded.

These include the selling of a 63.25% government stake in Zimbabwe Stock Exchange (ZSE)-listed Astra Holdings to Japanese firm Hemistar Investments and the sale of the government’s 67% stake in ZSE-listed food manufacturing firm Cairns Foods.

Several other transactions that did not comply with the indigenisation law have also been approved.

These include Mauritian-headquartered AfrAsia taking a ­controlling stake of 65.38% in AfrAsia Kingdom Holdings after its indigenous partner, Nigel Chanakira, agreed to sell his 30% in September because he did not have cash to capitalise the financial institution.

ZSE-listed seed manufacturer Seed Co is close to sealing a deal for the disposal of its cotton planting seed unit, Quton, to Indian firm Mahyco.

Courting British investor

The Cotton Company of Zimbabwe, which was renamed AICO after a restructuring in December, is courting a British investor to take up 49% of the business.

The company already has foreign or nonresident shareholders on its books holding significant scrip. Chinamasa said foreign direct investment “is most welcome, and vigorously promoted”.

John Robertson, an independent economic consultant, said: “There’s recognition that this indigenisation model does not work [but] while there is now a more gentle approach, this doesn’t alter the fact that 51% is still to be sold to indigenous people. I still feel there is no justification for a law that forces people to sell their businesses and lose control.”

He said the softening approach “proves the stupidity of the indigenisation approach”.

Unlike in the past when the National Indigenisation and Economic Empowerment Board could chose an indigenisation partner for a foreign shareholder – a ­situation Robertson said was “a licence to conduct corrupt trans­actions” – Chinamasa said investors now have the “privilege of choosing their Zimbabwean partner”.

“Only where this arrangement has failed would the government assist,” he said.

 

COMMENTS

WORDPRESS: 10
  • comment-avatar

    excuse my language again the B…. are being squeezed.

  • comment-avatar
    Clive Sutherland 8 years ago

    Zanupf have no clue, why would anyone trust them? Rules for indigenizing keep changing! Zanupf will change the rules to suit their own thieving ends as and when they see fit there are no guarantees for investors.

    • comment-avatar

      Clive welcome back brother. This is what we have been saying. If we snooze we lose. If we keep quite even worse. You have to keep on. If some of what were once our people have moved on to go somewhere else so be it. Their children might think that where they are is home. That is the way the cookie crumbles. But you by being on this web site site shows that you care about your country. You might never see Zimbabwe again for various reasons including leaving this earth. But is not this what humanity is about. I am fighting for grand children not born yet. My friend you would do well to do the same. I am Doctor do little and it don’t matter if you black or white.

  • comment-avatar

    Until we see the removal of ZANUPF from Government how can any one
    guarantee that any deal they conclude will be not be altered and therefore stolen by Mugabe and his thugs.
    Investors stay away, your turn will come once we have political sanity in Zimbabwe.

  • comment-avatar
    simon 8 years ago

    here here…Doctor do little and Neil!!! I concur. Get rid of the old rot and Zim needs a new slate and faces to match that have brains and a positive vision to make Zim a gem again for all Zimbabweans black white orange purple doesn’t matter. What matters is a democracy and rule of law for all.

    M- murderer
    U- unmatched
    G- grabber
    A- antique
    B- brutal
    E- excellent thief

  • comment-avatar

    Yep it’s ok per ZANU PF now says you can choose your partner. And after another 33 years they will say f..k the 51% we will TAKE 100%. So beware investors best stay away. I want to see ZANOIDS collapse period. They are thieves period

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    Tiger Shona 8 years ago

    Under Zanu PF rule no meaningful investment will come in because nobody trusts them. Reason, they have broken so many Bilateral investment agreements.
    Minister Bihma was honest enough to say that.

    Zanu PF is not in government because they want to improve the lives of our people.

  • comment-avatar

    Suddenly a need for foreign and domestic investment appears and ZANU turns down the volume on the 51%. Rather like telling the farmers they could keep a farm each until that didn’t suit the political objectives.
    Seriously, does anybody believe that those businesses owned by whites and Asians won’t be taken for free. The foreign investor may get a reprieve, for now, but the local investor won’t and the foreigner will lose his investment in the future.
    The duplicity of ZANU knows no boundaries but with Mugabe it is always best to watch what he does not what his underlings say. Wait and watch my brothers and prepare to shed bitter tears.

  • comment-avatar
    bingo wajakata 8 years ago

    When policy changes like the weather why should anyone be surprised that no one even me a Zimbabwean would be fool hardy to invest my hard earned pounds in Zimbabwe as doing so is as good as donating it to ZANU PF while my kids and family suffer every day.

  • comment-avatar

    I have said before and I will say it again. The majority in government are HIV positive. People with HIV have in their brains and this affects their ability to be rational. Everyone wanting to get into politics must be HIV NEGATIVE first. That is what’s going on. Ask Webster Shamu and chiangwa to go off testing just to name a few