Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Zim empowerment law must respect property rights – IMF

Zim empowerment law must ‘respect property rights’

HARARE, ZIMBABWE – Apr 05 2011 12:55

The International Monetary Fund (IMF) on Tuesday urged Zimbabwe to respect 
private property rights as it implements a new law forcing foreign companies 
to sell majority shares to locals.

“Alignment of indigenisation and empowerment objectives with respect for 
private property rights and the need to attract domestic and foreign 
investment … would be essential to strengthen the business climate and 
boost economic growth,” an IMF delegation said after a mission to Harare.

Zimbabwe’s controversial Indigenisation and Economic Empowerment Act 
requires all foreign firms valued at more than $500 000 to sell a 51% stake 
to locals.

Last month, the government published new rules expanding the law to all 
foreign-owned mines.

Analysts say the new rules are the latest attempt by the government to 
squeeze cash out of the mining industry after hiking exploration fees by 2 
000% to $1-million in February.

Financing gap
The IMF also said the Southern African country, which is recovering from a 
decade-long economic and political crisis, still faced a large financing gap 
this year despite a favourable economic climate.

“Despite historically high commodity prices … and impressive progress in 
revenue mobilisation, a relatively sizable fiscal financing gap would emerge 
in 2011,” it warned.

The IMF official who led the delegation to Harare said the government needed 
to crack down on corruption and tighten its spending.

“The fiscal gap could be eliminated through the removal of ‘ghost workers’ 
from the payroll, reinforced controls on employment levels and a reduction 
in low-priority transfers to state-owned enterprises,” said Vitaliy 
Kramarenko, IMF mission chief to Zimbabwe.

The global lender also called on the country to make its labour laws more 
flexible and improve its governance of the diamond sector, which was banned 
from exporting in 2009 over concerns about human rights abuses at mines.

Finance Minister Tendai Biti has predicted Zimbabwe’s economy will grow 8% 
to 15% in 2011 on the back of increased tobacco production and mining 

But he warned the anticipated growth could be derailed if the country 
proceeds with plans to hold elections later this year, ending a 
power-sharing government between veteran President Robert Mugabe and 
long-time rival Morgan Tsvangirai that has been credited with restoring 
stability. — AFP


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