April 1 Deadline Closes in on Zimbabwe’s Foreign-Owned Businesses

Fredrick Ngugi Mar 31, 2016 at 01:28pm

March 31, 2016 at 01:28 pm | Money Moves, News

Fredrick Ngugi

Fredrick Ngugi | Contributor

March 31, 2016 at 01:28 pm | Money Moves, News

The government of Zimbabwe has reiterated its intention to clampdown on foreign firms that fail to surrender 51 percent of their shares to Zimbabwean shareholders by April 1, 2016. Speaking to journalists in Harare on Wednesday, Youth, Indigenisation and Economic Empowerment Minster Mr. Patrick Zhuwawo urged foreign companies to comply with the directive before deadline, after which time their licenses will be revoked.

“Comply by that date or close shop,” the minister said.

There is no accurate estimate of the number of foreign firms that are likely to be affected by this directive.

The contentious decree came into place in 2010, compelling foreign companies to relinquish 51 percent shares to their Zimbabwean partners. Critics argued the move was aimed at rewarding Zimbabwean President Robert Mugabe’s cronies and scaring away foreign investors. Since its implementation in 2010, the law has seen a dramatic decrease in foreign investments with analysts predicting a further drop mainly due to the unpredictability of investment policies.

After disputed elections in July 2013, Mugabe opened a new parliamentary session with vows to press ahead with the initiative. A report published in September of that year by South China Post quoted Mugabe saying that “the indigenisation program is to be pursued with renewed vigor.” The now 92-year old president promised to make Zimbabwean investors significant shareholders and not mere bystanders to the operation of the national economy.

The latest implementation is happening at a time when the rate of unemployment is at an all-time high. Drought and inflation continue to afflict the country as well. Although the law targets main sectors of the economy, a number of agricultural and manufacturing firms were exempted. It remains unclear if these exemptions will be revoked.

Most viewed

Conversations

Must Read