Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Zimbabwe Lawmakers Reject ‘Indigenization’ Regulations

Zimbabwe Lawmakers Reject ‘Indigenization’ Regulations

http://www.voanews.com/

August 10, 2011

Peta Thornycroft | Johannesburg

Zimbabwe’s President Robert Mugabe has long pushed for all foreign and 
locally-owned companies to be at least 51 percent owned by black 
Zimbabweans.  But legislation to advance that goal is having a hard time 
getting through the country’s legislature.  A multiparty legal committee has 
rejected draft laws on mine ownership and is set to send other so-called 
“indigenization” rules back to the drawing board.

Zimbabwe’s parliamentary legal committee has ruled that sections of new laws 
on “indigenization” of the mining sector violate the constitution and has 
sent them back for re-drafting.

This is the second time that the proposed laws, which have caused anxiety in 
Zimbabwe’s private sector, have been found to contravene the heavily amended 
constitution or other laws.

A parliamentary watchdog group, Veritas, reports the legal committee found 
the draft law infringed on the constitutional guarantee of freedom of 
choice, because the government sought to compel mining companies to transfer 
shares to partners it specified.

It also said the committee rejected the mandatory acquisition of shares by 
the state without provision for compensation.

The legal committee previously rejected the regulations for seeking to 
impose a heavy fine and jail terms of up to five years on companies which 
failed to submit indigenization plans on time.

The regulation was changed to say directors of companies should be liable. 
But “Veritas” says this will also be rejected when it comes before the legal 
committee, because office bearers can not be liable for a criminal offense 
committed by their organization if it is shown they took no part in the 
offense.

There are very few whites left in business in Zimbabwe and many top black 
management executives objected to the vision of company ownership promoted 
by President Mugabe’s ZANU-PF party.

Most economists say indigenization as originally proposed would inhibit 
foreign investment and domestic expansion at a time when the economy is 
still suffering wounds inflicted by the economic policies of the previous 
ZANU-PF administration.

About 60 percent of industries closed during the last five years of ZANU-PF 
rule, which ended in February 2009 when an inclusive government was formed.

The Movement for Democratic Change party of Prime Minister Morgan Tsvangirai 
narrowly won parliamentary elections in 2008.

ZANU-PF’s indigenization minister, Saviour Kasukuwere, was not available for 
comment Wednesday.

Insiders from the mining sector say about 170 mining companies submitted 
plans for indigenization earlier this year but that most proposed indigenous 
ownership of no more than 30 percent.

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