Indigenisation Rules

BILL WATCH 29/2012

[2nd July 2012]

Indigenisation Rules for Finance and Education Sectors and 7 Other Sectors

General Notice 280/2012

[available from [email protected]]

In General Notice [GN] 280/2, gazetted on Friday 29th June, the Minister of Youth Development, Indigenisation and Empowerment,

citing sections 5(4) and 5A(4) of the Indigenisation and Empowerment (General) Regulations as amended as its enabling legal framework [Note: the legality of sections of these regulations has been questioned], lays down rules for the implementation of indigenisation in the nine sectors outlined below:

1.   Finance, covering “all financial institutions”

2.   Tourism

3.   Education and Sport

4.   Arts, Entertainment and Culture

5.   Engineering and Construction

6.   Energy

7.   Services

8.   Telecommunications

9.   Transport and Motor Industry.

The Schedule to the GN has nine numbered Parts, one for each of the affected sectors.  All but the Finance sector are broken down into sub-sectors.   Each Part lays down in tabular form the following requirements for the sector or sub-sectors concerned:

·      the minimum net asset value above which a business is required to comply with the principal regulations [in some cases only $1,00]

·      for a few sub-sectors, a quota for indigenous Zimbabwean shareholding that is less than 51%

·      the maximum period a business may continue to operate before it attains the relevant indigenisation and empowerment quota [in all cases this is set at only 1 year]

There are no definitions for any of the terms used to describe the sectors or sub-sectors. 

Legality

Like last year’s GN 114/2011 referring to mining sector indigenisation, this GN is likely to be criticised as ultra vires and invalid, void for vagueness, and perhaps unconstitutional by legal practitioners.  It is also likely to attract an adverse report from the Parliamentary Legal Committee.

It remains to be seen whether affected businesses will institute court cases test to the legality of the GN.

Veritas makes every effort to ensure reliable information, but cannot take legal responsibility for information supplied