Indigenisation deadline deferred indefinitely
Saturday, 17 April 2010 19:25
CABINET on Tuesday postponed indefinitely an April 15 deadline for foreign companies to submit plans to cede 51% of their shareholding to locals pending consultations on 10 key principles that will see an overhaul of the controversial empowerment regulations. Sources revealed last week that despite political posturing by President Robert Mugabe and Indigenisation Minister Saviour Kasukuwere, cabinet was unanimous that the regulations that seek to operationalise the 2007 Indigenisation and Economic Empowerment Act cannot be passed in the form proposed by Zanu PF.
“The cabinet position is that the deadline of 45 days from March 1 for companies to provide their indigenisation plans has been set aside pending finalisation of consultations around 10 principles that are central to the
empowerment exercise,” said Gorden Moyo, the Minister of State in the Prime Minister’s Office.
The Standard understands some of the principles that are being reviewed include the hotly contested requirement that companies must cede 51% of their shareholding to locals.
The new proposals would see companies selling shares at market value and the prescribed asset value of US$500 000 would include both liabilities and assets.
Companies listed on the Zimbabwe Stock Exchange and new investors may also be exempted from the regulations.
Instead of being forced to comply with the law within five years, companies may be given up to 15 years, the new proposals have shown.
Government will also no longer impose a blanket threshold on the number of shares to be ceded as each sector would be allowed to come up with its own proposals.
An indigenisation compliance board will also be set up to assess and approve localisation plans by companies to allay fears that the empowerment process would be abused by the responsible minister to benefit cronies.
Sectoral boards for each sector such as mining, industry and retail would be set to deal with issues at micro level.
Firms that have also invested heavily on community development projects may also be excluded from the process.
“We have all accepted that there should be indigenisation but it must be broad based,” Moyo said. “The only objections were that the regulations should not be implemented in the formula they were proposed.”
In public, Mugabe and Kasukuwere have maintained that there is no going back on the regulations.
However, the law has scared investors and dampened interest in the ZSE.
BY KHOLWANI NYATHI