Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Indigenisation deprive Zim of $6,3bn

Indigenisation deprive Zim of $6,3bn

By Taurai Mangudhla, Business Writer
Monday, 05 March 2012 13:02

HARARE – Zimbabwe’s financial services sector has missed out on $6,3 billion 
worth of lines of credit from international banks due to uncertainty posed 
by the country’s indigenisation programme, economist Erich Bloch has said.

The Bulawayo-based analyst, told businessdaily two major foreign banks 
withdrew their intent to lend money to local financial institutions last 
year when Indigenisation minister Saviour Kasukuwere announced he was 
targeting banks, in implementing the Indigenisation

Act, after mining and manufacturing sectors.

The Act compels all foreign owned firms to cede at least 51 percent 
shareholding to Zimbabweans.

“I can’t tell you the names of the banks because I was told in confidence. I 
am sorry I can’t do that, but it is true they wanted to give the country 
$6,3 billion lines of credit last year,” he said.

Bloch also said a mining company lost investment to the tune of $6,3 million 
from foreign investors in the same period as implementation of the 
empowerment laws in the mining sector commenced.

“I can’t expose the miner’s name for the same reasons,” he added.

Miners, Zimbabwe Platinum Mines and Mimosa Platinum Mines have each to date 
relinquished 10 percent stakes to locals under the community share ownership 
schemes and made a $10 million cash donations to operationalise the 
community trusts.

The economist was quoted by the foreign print media saying government’s 
failure to raise money for locals’ equity was the major challenge with 

Zimbabwe has struggled to attract funding to setup its Sovereign

Wealth Fund which will be used to acquire equity in foreign companies by the 

He said foreign companies and potential investors had taken a wait and see 
attitude amid government’s threats to take over foreign businesses.

The negative effects of the Indigenisation Act come at a timer the country, 
facing acute liquidity challenges after introduction of a multiple currency 
regime in 2009,  is in desperate need for capital to turn around its 
economic fortune.

The mining sector remains underutilised and undercapitalised, particularly 
the gold sector which is at 40 percent capacity utilisation.

Banks are currently struggling to raise enough capital as required by law.

Three local banks are in a rush to meet the country’s minimum capital 
requirement by April and save their operating licences.

The three — Genesis Investment Bank (GIB), Royal Bank (royal) and Zimbabwe 
Allied Banking Group (ZABG) $12,5 million minimum capital requirements for 
commercial banks and $10 million for merchant banks.

Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono said the financial 
institutions would not be allowed to conduct business affective April if 
they fail to officially conclude capitalisation plans, including acquisition 
and mergers, by March 31.

“ZABG which had a negative capital of $15,35 million as at  March 1, 2012, 
is currently finalising negotiations with two potential investors namely, 
Unicapital Finance of Mauritius, Swiss-based company AFG Global and a local 
company Trebo & Khays (Private) Limited. The transactions are expected to be 
consummated by 28 March 2012,” said Gono last week.

Trebor and Khays is owned by Mines minister Obert Mpofu and his wife 

“GIB remains undercapitalised with negative capital of $3,2 million. 
Negotiations with SwissCharge of Zambia and a consortium of local investors 
for a capital injection of $20 million are currently underway,” added Gono.
GIB has continued to make losses, resulting in the group seeking foreign 
investors to recapitalise the unit.”

The central bank chief said; “Royal Bank which currently has capital of 
$3,42 million is pursuing mergers with two local banking institutions with 
combined capital of $34 million. In addition, the bank is also finalising an 
agreement with a local pension fund for equity participation of $5 million.

The recapitalisation initiatives are expected to be concluded by March 29, 


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