I am pleased to be able to extract the following paragraphs from today's NewsDay:
Government freezes indigenisation
Government says it has shelved its indigenisation legislation until “the local economy recovers” and will be selling least 10 parastatals to foreign investors, ceding controlling stakes way above the statutory ceiling of 49%.
The landmark policy climb-down comes as a shock to everybody who heard government officials swearing categorically and repeatedly at every public forum that the country would never recoil from the programme, treating it with the same sanctity they gave the fast-track land reform programme.
The Act, which had been dormant since its promulgation in 2007 until government launched general regulations in January this year, prohibits foreigners from owning and controlling more than 49% of Zimbabwe-registered companies.
The statutory regulations currently under surgery obliged every firm with a net asset value of at least $500 000 to comply with the legislation.
In an interview, Industry and Commerce minister, Welshman Ncube, said Cabinet had agreed to waive the Indigenisation and Economic Empowerment Act for the time being and allow for flexibility in its application across sectors after noting its discouraging effect on foreign capital, considered critical for the economy’s recapitalisation and recovery.
“Until such a time when the economy recovers and rebuilds capacity, it’s not possible for every sector to achieve 51% (minimum indigenisation equity),” Ncube said.
“We need foreign investors with the balance sheet and the capacity. If locals had the capacity, would we struggle to build new power stations or to rebuild our railways and roads? But the capacity is not available locally. That’s why we have to engage foreign investors.”
The indigenisation legislation is widely blamed for soiling Zimbabwe’s investment profile and increasing country risk for one reason: no investor, local or foreign, would invest where board control is not guaranteed.
Selected paragraphs reproduced from NewsDay’s front page lead story, Tuesday December 7 2010