Two weeks after it went into effect, the Zimbabwean indigenization and economic empowerment law, which requires foreign-owned firms to surrender 51 percent of their shares to indigenous black investors, has caused serious confusion among foreign investors especially foreign banks following conflicting statements from Minister of Finance, Patrick Chinamasa and Youth and Empowerment Minister, Patrick Zhuwawo regarding compliance.
This mix-up has caught President Robert Mugabe’s attention, who has since come out to clarify the law. In a signed statement dated April 11, 2016, President Mugabe claims that foreign banks remain under the ministry of finance and their compliance modalities will be different from other sectors.
Controversy
Two weeks after its implementation deadline serious controversy has arisen with government officials giving conflicting statements on its implementation. On April 2, Zimbabwe’s Minister of Finance said foreign banks would be considered compliant if they followed the plans they had submitted, but in a contradicting statement, Minister of Youth and Empowerment Zhuwawo said that the plans submitted by foreign banks were not acceptable.
This prompted the President to intervene through a signed statement sent to the media by Zimbabwe’s Information Minister, Mr. Chris Mushohwe saying;
“conflicting positions in the interpretation of the law have emerged, confusing Zimbabweans, current and potential investors, and further depressing market confidence”.
In September, 2015, the government of Zimbabwe had promised to make the controversial law more flexible in its efforts to encourage more investments amid a continuing economic crisis since the year 2000.
Currently, the international Monetary Fund (IMF) is engaging Zimbabwe, urging the government to make the empowerment policy reasonable.
Critics
A section of Zimbabweans, investors, and activists have fiercely opposed the law saying it is going to scare foreign investors away. The office of the Prime Minister, Morgan Tsvangirai had earlier released a statement saying that the Minister of Economic planning and Investment, Elton Mangoma, and the Minister of Youth development and Empowerment, Saviour Kasukuwere, had promised to relook at the empowerment law afresh.
In 2010, the Prime Minister’s spokesman, Mr. James Maridadi, said that Morgan Tsvangirai was of the view that the black empowerment legislation was counter-productive and he was not party to it.
Several foreign-owned firms in Zimbabwe have already cried foul over the controversial empowerment decree saying it is going to negatively affect their businesses.
“Our business will be affected by the new policy and we are considering how to comply with the government’s regulation before the deadline,” a member of Zimbabwe Nantong International- a Chinese construction company- told Global Times Sunday.
Critics further argue that the empowerment law is meant to reward President Mugabe’s friends and relatives. They dispute the government’s narrative that colonialism is the main cause of the current economic marginalization in Zimbabwe.
According to critics, the plight and poverty of the indigenous people in Zimbabwe and other African countries is as a result of misplaced priorities and retrogressive governance.
