Zimbabwe has threatened to close 9,000 foreign owned firms after they ignored a deadline to submit plans on how they intend to release some of their shareholding to locals.
President Robert Mugabe’s government wants the foreign owned companies with a value of over $500,000 to transfer 51 per cent of their shareholding to locals.
The tough regulations which were initially introduced in March were reviewed last month after causing a split in the unity government.
But despite the changes to the legislation that allow for exemptions to be made on companies who do considerable community service, the government has done little to re-assure sceptical investors.
The Zimbabwe Stock Exchange (ZSE), which was consistently among the top performing bourses in Africa at the height of the country’s economic problems has lost about US$1 billion in revenue since March.
State media reports indicated that only 480 out of a provisional list of 9,577 companies had submitted proposals on how they intend to empower locals.
Youth Development, Indigenisation and Economic Empowerment Minister Savious Kasukuwere said the companies that continued to defy the law would be closed down.
“If the companies do not comply, we will take legal action,” he told The Sunday Mail newspaper. “Currently we are in the process of sending forms to companies to comply within 30 days.
“If they don’t comply within 30 days, we will cancel their licenses, if they are in trading.
“They will also appear before the courts.”
He said the majority of the companies in the mining industry had not complied with the regulations.
The regulations have also been blamed for the slow pace of the country’s economic recovery with Finance Minister Tendai Biti being forced to revise the projected economic growth from seven percent to 5,4 per cent this year.
The southern African country is just emerging from a decade of economic decline blamed on President Mugabe’s policies that included the seizure of white owned farms that started in 2000.