Zimbabwe softens stand on foreign company seizure

HARARE
Zimbabwe says it will no longer force foreign owned banks to cede majority of their shares to locals, a signal that President Robert Mugabe’s government is softening its stance on company takeovers.

According to Zimbabwe’s controversial indigenisation laws, foreign companies have to transfer 51 per cent of their shareholding to locals as part of an empowerment drive.

Finance minister Patrick Chinamasa on Tuesday said he had been encouraging foreign banks to invest in Zimbabwe.

“I am very aware that with each increased injection of capital by foreign banks, that will lead to a dilution of the local participation.

“I am quite comfortable with that dilution because it increases the volume of credit to the productive sector at a time our own people have no capacity to buy the equity,” he said.

Mr Chinamasa said the transfer of shares to locals to reach the 51 per cent threshold would be done over a period of time.

He said Indigenisation minister Francis Nhema would soon present to cabinet a plan tackling sector by sector.

“There is no one-size-fits-all. The only application of the one-size-fits-all is that all sectors of the economy will have an equity model but what threshold will depend on sector to sector.

“What we have said is that we want to encourage local participation.They will do it on the basis of a given framework, and also they pick up their partner and also they decide the price,” Mr Chinamasa said.

Last Friday, President Mugabe in his Independence Day speech said the indigenisaton programme had been misunderstood.

He said not all foreign companies were targeted for takeovers in a significant climb down from his usually confrontational speeches.

“Now in implementing the indigenisation programme, there has been some confusion.

“We have said where big companies have been established mainly on the basis of our natural resources, in mining, in agriculture, manufacturing, we demand that Zimbabweans, either through the government or through our people, should have 51 per cent or not less than 51 per cent.”

President Mugabe added: “But if a company is established and is getting raw materials from outside and the raw materials are not Zimbabwean, take the case of aluminium, we don’t have raw materials for it; if the raw materials come from Tanzania, which has it and if a company establishes itself here in Willowvale, we cannot demand 51 percent.

“You can negotiate with the company in the usual way what percentage we should have and it’s up to the company and yourselves establishing the percentages respectively you should share.”

The indigenisation laws that followed on the veteran ruler’s violent seizure of white owned farms for redistribution to landless blacks has been often cited as the reason there is minimal foreign investment in Zimbabwe.