via Bulawayo24 NEWS | Zim industry calls for review of indigenisation policy by Tawanda Musarurwa 04 March 2014

Industry has called for the Government to exclude the manufacturing sector from the indigenisation policy.

The call was made by Surface Investments chairman Narottam Somani while addressing the Parliamentary Portfolio Committee on Industry and Commerce during a tour of the company today.

“You may reserve the sectors like mining and agriculture, but allow industries to be open 100 percent for foreign direct investment, we have 85 percent unemployment,” he said.

Somani contends that excluding the country’s manufacturing sector from indigenisation will help it in accessing increased capital, technology and expertise from foreign countries.

Surface Investments – potentially the country’s largest cooking oil manufacturer – is a joint venture initiative between the Industrial Development Corporation of Zimbabwe (IDCZ) and Midex Global of India, with an equity split of 26 percent and 74 percent, respectively. The company has since submitted its indigenisation compliance plans to the Government and now awaits approval.

Part of their compliance plan includes listing on the Zimbabwe Stock Exchange. Zimbabwe’s Indigenisation and Economic Empowerment Act (2007), which was enacted in 2010, mandates all foreign companies operating in the country to secure 51 percent ownership of shares by indigenous Zimbabweans through partnerships with business people, community share trusts and worker share trusts.

Somani, however, told the Parliamentarians that the wording of the policy was not investor-friendly.

“The wording of the Indigenisation Act is wrong. Please call it Foreign Direct Investment (FDI) Policy because investors are naturally afraid of indigenisation. By calling it an FDI Policy this ensures that the focus is on attracting investment,” he said.

However, statements by the Minister of Youth, Indigenisation and Economic Empowerment Francis Nhema indicate that a review of the indigenisation policy is unlikely.

Concerns by industry are that indigenisation has had a negative impact on new investment inflow into the country.

But a recent study by Consultancy Africa Intelligence (CAI) shows that foreign direct investment (FDI) inflows into Zimbabwe since 2010 have not reacted negatively to the implementation of the Indigenisation and Economic Empowerment Act (2007). – See more at: http://bulawayo24.com/index-id-business-sc-companies-byo-43734.html#sthash.vIJEgASC.dpuf