Mugabe may close 9,000 foreign firms
Posted Monday, July 26 2010 at 19:38
HARARE, Monday
Zimbabwe has threatened to close 9,000 foreign owned firms after they
ignored a deadline to submit plans on how they intend to release some of
their shareholding to locals.
President Robert Mugabe’s government wants the foreign owned companies with
a value of over $500,000 to transfer 51 per cent of their shareholding to
locals.
The tough regulations which were initially introduced in March were reviewed
last month after causing a split in the unity government.
But despite the changes to the legislation that allow for exemptions to be
made on companies who do considerable community service, the government has
done little to re-assure sceptical investors.
The Zimbabwe Stock Exchange (ZSE), which was consistently among the top
performing bourses in Africa at the height of the country’s economic
problems has lost about US$1 billion in revenue since March.
State media reports indicated that only 480 out of a provisional list of
9,577 companies had submitted proposals on how they intend to empower
locals.
Youth Development, Indigenisation and Economic Empowerment Minister Savious
Kasukuwere said the companies that continued to defy the law would be closed
down.
“If the companies do not comply, we will take legal action,” he told The
Sunday Mail newspaper. “Currently we are in the process of sending forms to
companies to comply within 30 days.
“If they don’t comply within 30 days, we will cancel their licenses, if they
are in trading.
“They will also appear before the courts.”
He said the majority of the companies in the mining industry had not
complied with the regulations.
The regulations have also been blamed for the slow pace of the country’s
economic recovery with Finance Minister Tendai Biti being forced to revise
the projected economic growth from seven percent to 5,4 per cent this year.
The southern African country is just emerging from a decade of economic
decline blamed on President Mugabe’s policies that included the seizure of
white owned farms that started in 2000.