Indigenisation Regulations Suspended For New Investors
Harare, July 19, 2012 — Government on Wednesday clipped the wings of Youth
Development Indigenisation and Empowerment minister, Saviour Kasukuwere, in
a charm offensive to lure investors amid revelations that potential
investors were scared by the empowerment legislation.
The empowerment law states that locals should have 51% in all companies
operating in the country and had unnerved investors needed to help rebuild
the economy devastated by a decade of hyperinflation.
In his mid-term Fiscal policy presentation, Finance minister, Tendai Biti,
said government had agreed to exempt new investors from complying with the
clause that states that at least 51% should be given to locals to align the
empowerment of the people to the country’s efforts to attract new investors.
“In respect of new FDI, FDI will not have to comply with Section 3 of the
Indigenisation and Empowerment Act, that is, the 51% rule. However the
Indigenisation and Empowerment Act and the Investment Act should be amended
to require from foreign investor their own their localisation plans, be it,
listings or share employee trusts,” Biti said.
Biti said the latest measure was arrived after government agreed that the
country needs investors to expand the economy which has been
underperforming. He said he was revising growth projections to 5,6% from the
initial forecast of 9,4%. He said revenue collection would end the year at
US$3,4 billion down from the original US$4 billion due to the
underperformance of diamonds and the drought experienced this year among
others.
He said the first half of 2012 has been a sad balance sheet of unmarked
targets resulting in a long winter of despair characterised by low business
confidence and generally a business as usual approach.
He proposed austerity measures underpinned by a cash budget system. He said
the wage costs consuming over 70% of the expenditure costs are an elephant
in the living room so are foreign travel costs which at US$19 million
continue outstripping other expenditures.
Biti said ministries that are collecting revenue should remit it to treasury
accusing the ministry of Home Affairs singling out the Registrar General’s
Office and Police as notorious.
Biti said in the second half of the year, there will be a freeze on
recruitment and any dispensation will be subjected to concurrence of
Treasury and the Public Service Commission.
Meanwhile Prime Minister Morgan Tsvangirai who is currently touring Japan
said investors to Zimbabwe were expressing discomfort with the country’s
indigenisation laws.
In a statement,released by the Prime Minister’s spokesperson, Luke
Tamborinyoka, stated that throughout the meetings, the Japanese Minister and
the business
executives of leading corporate had expressed concern over the controversial
indigenisation programme, which they said affected both existing and new
investment from Japan.
“The indigenisation law is an obstacle to investment by Japanese companies.
We hope that you will review this law as it is affecting both prospective
and existing Japanese businesses,” the statement quoted Economy, trade and
investment minister, Yukio Edano.
Tsvangirai was quoted as responding: “We have many opportunities in mining,
agriculture, tourism and manufacturing and our quest to attract investment
has been marred by our bad politics and a poorly crafted empowerment law
which has largely scared away investors. It is the implementation that has
been chaotic, even though the law insists on ceding for value and mutual
discussions as a precondition.”
“We have successfully managed to mitigate the excesses of this law but
because we are an uneasy coalition, the ultimate answer will lie in a free
and fair election as a precondition for a legitimate government in
Zimbabwe.”
Tsvangirai will, on Thursday, hold a meeting with his Japanese counterpart,
Prime Minister Yoshihiko Noda. On Friday he will give a lecture at the
United Nations
University in Tokyo before proceeding to Wellington at the invitation of the
New Zealand Prime Minister, John Key. The Premier will complete his tour in
Australia where he was invited by the country’s Prime Minister Julia
Gillard.