Imbabwe
government is amending the indigenization and Economic Empowerment act to
reflect its policy position that the 51-49 percent requirement only applies to
natural resource-based investments. In this investment area, which is
classified as the natural resources sector, foreign investors are required to
have 49 percent shareholding, while Zimbabweans own 51 percent.
The policy position is contained
in a Presidential statement that was issued by former president, Robert Mugabe
on April 11 2016, where he carried conflicting positions on the interpretation
of the empowerment law. Presidential spokesperson Mr. George Charamba told The Herald
that the new President Emmerson Dambudzo Mnangagwa instructed the Chief
Secretary to the president and cabinet, Dr. Misheck Sibanda, yesterday that the
law be urgently amended to reflect government policy. In doing so, Mr. Charamba
said, President Mnangagwa emphasized that speed and urgency were of essence.
“One talking point especially on
the investors world has always been related to the indigenization law and we
found ourselves in an invidious position where the law, as presently
constructed, promised empowerment for the indigenes without delivering it on
the other hand, while creating discomfort or even suspicion to would-be
investors on the other”, he said.
“Either way, we remained with
the paradox of a promise which could not be fulfilled and a need which could
not be filled and this difficult situation did not arise from a lack of policy
clarity on the part of the leadership. If anything, that clarity was spelt out
in black and white by the previous president, except that statement well-intentioned
though it was, was not translated into law, which means on our statutes we
still had the law unchanged.
“Thankfully, this morning, the
new president instructed the chief secretary to the president and cabinet (Dr.
Sibanda) to ensure that the indigenization law is amended to reflect the
correct position spelt out in the policy as agreed to by Cabinet, and he
emphasized that time and speed are of essence. The cabinet office is close to
unveiling a new investment framework, which will be clear cut in terms of
what’s on offer to both domestic and foreign investors.”
Mr. Charamba said the policy
also sought to accommodate Zimbaweans int eh Diaspora. In this regard, Mr.
Charamba said President Mnangagwa appreciated the value of Zimbabweans in many
respects.
“The President appreciates their
four-four-fold value,” he said.
“One, they wield skills that are
critical to economic recovery. Secondly, they may have made some savings which
if pooled together will make a difference. Thirdly, they may have struck partnerships
with well-resourced foreigners who might want to consider Zimbabwe as an
investment destination. Finally, they can vouch for their homeland as a good
and safe destination for investment-in other words, they can play an
ambassadorial role.”
In his presidential statement
clarifying government position on the indigenization and economic empowerment
act, former president Cde Mugabe said implementation of the law would be done
in three distinct sector; namely: natural resource sector, non-resource sector
and reserved sector. Said Mugabe:“Pertaining to the natural resource sector, it
should be emphasized that Government attaches great importance to the
indigenization of this sector. Business in this sector deals with the
exploitation of our natural and depleting resources, such as minerals.”
“Government has, therefore, a
sacrosanct duty to ensure that such resources are exploited in a manner that
safeguards the best interests of the country’s current and future generations.
As such, in terms of policy, Government and/or its designated entities, will
hold a 51 percent stake in businesses in natural resources sector, with the
remaining 49 percent belonging to the partnering investor(s).
“The need for investors in this
sector to comply with the prescribed indigenization obligations is therefore
non-negotiable. For existing businesses where government does not have 51
percent ownership, compliance with the indigenization and economic empowerment
policy should be through ensuring that the local content retained in Zimbabwe
by such businesses is not less than 75 percent of gross value of the exploited
resources. Local content here refers to the value retained in Zimbabwe in the
form of wages, salaries, taxation, community ownership schemes and other
activities such as procurement and linkage programmes.”
The non-resource sector covered
beneficiation of raw materials, transfer of appropriate technology to Zimbabwe
for the purposes of enhancing productivity, creation of employment and
imparting of new skills of Zimbabweans, granting of ownership and/or employee
shar ownership for value to indigenous Zimbabweans, as may be agreed between an
investor and indigenous Zimbabwean partner(s), and developing and creating
linkage programmes, enterprise development, value chain and any other desirable
objectives as may be defined by the responsible line ministers for the purposes
of attracting foreign direct investment into Zimbabwe.
Businesses under the reserved
sector are reserved for Zimbabwean entrepreneurs, except for existing
businesses and where a special dispensation is granted by the relevant line
minister. Such businesses include retail and wholesale trade, transportation
(passenger buses, taxis and car hire service), estate agencies, grain milling,
bakeries, tobacco processing, advertising agencies, valet services, employment
agencies and provision of local arts and crafts and marketing and distribution
of the same.
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