Foreign mining companies to be forced to sell majority shares
By Tererai Karimakwenda
02 February, 2011
The government has announced that laws requiring foreign mining companies to
sell a majority of their shares to locals will be gazetted by the end of
February. In a statement published in the state-run Herald newspaper on
Wednesday, the Indigenisation and Empowerment Minister, Saviour Kasukuwere,
said consultations were at an ‘advanced stage’ and new regulations would be
gazetted no later than the end of February.
A controversial Indigenisation and Economic Empowerment Act, requiring all
businesses to give 51 percent of their shares to locals was signed into law
in 2008, but the government has not yet acted on it. Economists and civic
groups in the country have been very critical and described the move as just
another ZANU PF ploy to loot successful businesses to enrich top officials
and their cronies.
Kasukuwere said the regulations require 100 percent local ownership of
alluvial diamond mines and other minerals must be 51 percent owned by
Zimbabweans. New mining projects must also be 51 percent locally owned.
Economic analysts have insisted that foreign owned businesses in the country
will shut down and potential investors scared off by such policies. They
fear it will be the beginning of the end for foreign owned businesses in
Zimbabwe.
“People accept that there is a need for empowerment and for sharing wealth
and resources. The problem in Zimbabwe is the issue of motive and a lack of
strategic thinking,” said economic and political analyst, Bekithemba
Mhlanga. “It is this haphazard , unclear thinking that will upset the
international community and investors.”
Mhlanga said it is unfortunate that Canadian mining firms are now taking
their operations to Eritrea. Botswana and Mozambique have also gained from
bad policies in Zimbabwe.
Meanwhile the economic planning and investment promotion Minister, Tapiwa
Mashakada, told Reuters news agency that the China Development Bank is
willing to invest up to US$10 billion in Zimbabwe, particularly in mining
and agriculture.
“China is looking into mining development, as well as agriculture,
infrastructure development and information communication technology,” said
Mashakada, who was attending a business conference in Harare.
But China has been criticized globally for ignoring human rights abuses, in
order to support its huge need for natural resources. The Chinese have also
protected Robert Mugabe by voting against punitive action at the United
Nations Security Council.
Analyst Mhlanga said the Chinese companies come into Zimbabwe with an air of
superiority and do not abide by local rules and regulations. “In terms of
our own moral platform we must ask where do we stand with China,” asked
Mhlanga. He believes we must set clear rules and regulations for China
regarding minimum wages, health and work conditions.
He said the Chinese have not made any significant contributions to the
economy in Zimbabwe. “They start off selling cheap zhing zhong products to
flea markets and move on to tuck shops. The only major investment they ever
made was the national sports stadium, and that is falling apart,” said
Mhlanga.
According to the Reserve Bank of Zimbabwe, mining output grew by 47 percent
in 2010 and is expected to grow by at least 44 percent in 2011. But with
policies requiring ownership by locals appointed by ZANU PF, the wealth from
Zimbabwe’s minerals will do nothing more than benefit those who are already
rich.