Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Black Zimbabweans to take control of white-owned companies


From The Daily Telegraph (UK), 10 February

Black Zimbabweans to take control of white-owned companies


By Peta Thornycroft in Harare and Sebastien Berger


White-owned companies in Zimbabwe are to be forced to hand majority control to black businessmen in a move that could lead to chaos rivalling the seizure of the country’s commercial farms. The new regulations demand that all foreign and locally owned companies hand over at least 51 per cent ownership to black Zimbabweans. Thousands of firms, including the Zimbabwean operations of giants such as Barclays Bank, Standard Chartered Bank and the mining company Rio Tinto, will be affected, and they must submit their plans to comply by March 1. Owners who fail to comply could be jailed. The new law plunged the unity government into deeper crisis.


Morgan Tsvangirai, the leader of the former opposition Movement for Democratic Change turned prime minister in the coalition, told The Daily Telegraph the move had been made without his knowledge. “I am in charge of all policy formulations by cabinet and these regulations were gazetted without being seen by either myself or cabinet,” he said. “They were published without due process and in contravention of the global political agrement [which set up the coalition] and constitution of Zimbabwe and are therefore null and void.” The new law will come as a huge blow to the efforts of Tendai Biti, a former opposition politician who is now finance minister in the coalition government, to persuade foreign investors to pour money into the country to rebuild its shattered economy.


The move dates back to an indigenisation bill passed by the previous parliament, in which President Robert Mugabe’s Zanu PF party had a majority, before the violence-wracked election of 2008 in which the MDC won control of the legislature. The law had been on hold until supplementary regulations were drawn up by the government, which quietly published them in an official gazette at the end of last week, with no formal announcement. Indigenous Zimbabweans are defined as anyone who before independence in April 1980 was “disadvantaged by unfair discrimination on the grounds of his or her race and any descendant of such person”. As such white Zimbabweans are excluded, and the position of Zimbabwean Asians, some of whose families have been in the country for generations, is open to question.


Whites are barred from some sectors altogether, including agriculture, retail and transport, as well as barbers, bakeries and beauty parlours. Harare’s business community was left in shock by the development. A banker who did not want his name or his bank identified said: “This is absolute madness.” A fuel trader, who asked not to be identified, said: “These regulations are theft of any business in whites have an interest, it’s just like the farms.” Nick Cobban, a spokesman for Rio Tinto, described the regulations as “draconian and unworkable”. The company operates a small diamond mine in Zimbabwe which it considers has potential for expansion, but it has not taken a decision to do so “partly because of the uncertainty”. Some sectors could win an exception from the 51 per cent requirement, he pointed out, and the Chamber of Mines was negotiating on the issue. “We remain encouraged by the fact that there still is dialogue,” he said. But he added: “This will have to be eventually agreed by the indigenisation ministry though.”


Alistair Smith, director of media relations for Barclays Group, said the firm was “considering the implications”. Under the rules avoiding black majority shareholdings will be a criminal offence and while companies have five years to comply, the effects will be felt long before then. Daniel Ndlela, Zimbabwe’s most eminent regional economist said: “There will be no foreign investment into Zimbabwe. Why would anyone come into Zimbabwe with $100 and be left with $49? It sends a very wrong message and those who might have invested in Zimbabwe will now never come.” Another economist, John Robertson, said many local industries will go bankrupt. “They will have to bring in people who know nothing about their businesses which will put off investors and demotivate company owners.”


It is not clear exactly how the 51 per cent stake is supposed to be acquired. But under neighbouring South Africa’s black empowerment programme, banks have leant large sums to black businesses to enable them to buy shares in major companies, often at a discount. Zimbabwe’s unity government is already deeply troubled, with the MDC accusing Zanu PF of not keeping to the political agreement that set it up, and the regulations amount to a political slap in the face for the former opposition. Mr Biti could not be reached for comment. But an MDC insider said: “It is unlikely that Biti knew about this as he is desperate for investment into Zimbabwe.” Saviour Kasukuwere, the Zanu PF minister of Youth Development, Indigenisation and Empowerment, who is responsible for the regulations, said: “There were wide consultations with stakeholders ahead of publication of these regulations and there is flexibility available. “We are not trying to damage the investment climate in Zimbabwe.”


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