via Indigenisation: Moyo confirms rethink 25/05/2014 by AFP NewZimbabwe
THE government is planning to tone down the controversial equity law which forces foreign companies to cede a majority shareholding to local investors, a cabinet minister said Sunday.
Zimbabwe’s controversial 2007 indigenisation law states that foreign firms must hand a 51 percent shareholding to local partners.
The law spooked investors and was a source of conflict between President Robert Mugabe’s allies, with some maintaining a hard-line stance while others opposed the measures.
“We are reviewing and tightening the indigenisation and empowerment policy by being pragmatic without being dogmatic about it,” he told the state-owned Sunday Mail.
“(Foreign) investors will be allowed to recover their initial capital investment, an appropriate return on investment and operational costs before the sharing of production outputs or profits,” Moyo said.
Moyo however, insisted that this did not mean government was ditching a policy blamed by critics who say it was hurting prospects of attracting much-needed investment.
“It would be sheer folly for anybody to imagine that we would abandon or ditch a policy or programme that was overwhelmingly endorsed by the electorate in unprecedented numbers as recent as 31 July 2013,” he said.
“We are reviewing and tightening the indigenisation and empowerment policy by being pragmatic without being dogmatic about it. There has been some confusion and misunderstanding over the modalities for achieving (the 51 percent threshold.
“Consequently, we pointed out that, going forward there is a need to review, tighten and strengthen both the law and policy so that among other things, we clarify the fact that the indigenous Zimbabweans cannot be expected or required to buy back their God-given natural or economic resources.”
Under the law, foreign owners of Zimbabwean mines were given an ultimatum to surrender more than 50 percent of their shares and find local partners or risk nationalisation.
Mugabe said the law, which followed controversial land reforms, was meant to reverse imbalances which resulted from colonialism.
But critics including opposition leader Morgan Tsvangirai said it would enrich Mugabe’s allies and scare away foreign investors.
Ministers have issued conflicting statements over the policy in recent days and Moyo admitted authorities needed to do a better job of articulating the government position.
“… Yes, it is self-evident that business, diplomatic and media communities have continued to assert that the Government’s position on indigenisation lacks clarity and is inconsistent,” he said.
“This is a serious situation and so we accept that we need to do something about it and we are committed and determined to engage and communicate the indigenisation and empowerment policy to implement Zim Asset in the national interest.”