Zim­babwe says for­eign banks can keep ma­jor­ity stakes, for now

Daily Trust - - REUTERS -

Zim­babwe will let for­eign­ers keep ma­jor­ity stakes in banks for now be­cause lo­cals have no money to buy shares, the fi­nance min­is­ter said on Wed­nes­day, sig­nalling a pause in Pres­i­dent Robert Mu­gabe’s black eco­nomic em­pow­er­ment drive.

But Patrick Chi­na­masa said the govern­ment would not amend on plans to force for­eign min­ing com­pa­nies to sell at least 51 per­cent of their lo­cal hold­ings to Zim­bab­weans un­der the em­pow­er­ment pro­gramme, known lo­cally as in­di­geni­sa­tion.

The south­ern African coun­try, which ditched its hy­per-in­flated lo­cal cur­rency in 2009, is fac­ing a se­ri­ous dol­lar crunch as a re­sult of lack of for­eign donor sup­port and in­vest­ment, and some smaller lo­cal banks are strug­gling to stay afloat.

The law oblig­ing for­eign-owned firms, in­clud­ing mines and banks, to sell at least 51 per­cent of their stakes to blacks was passed as long ago as 2008.

Dur­ing cam­paign­ing for last July’s elec­tion, which he won in a land­slide, Mu­gabe promised to en­force it un­der the em­pow­er­ment ban­ner.

Chi­na­masa said that, with se­vere liq­uid­ity short­ages in the econ­omy, for­eign banks had the ca­pac­ity to ne­go­ti­ate lines of credit re­quired to re­vive lo­cal in­dus­tries and agri­cul­ture.

“I am quite com­fort­able with for­eign own­er­ship in the banks be­cause at this time our people have no ca­pac­ity to buy eq­uity,” Chi­na­masa told Reuters.

“But it is tem­po­rary and we are not look­ing for a ‘one-size-fits-all’ ap­proach.”

For­eign banks ac­tive in Zim­babwe in­clude units of Bar­clays Plc and Stan­dard Char­tered Plc as well as South Africa’s Stan­dard Bank and Ned­bank. None have made in­vest­ments in the coun­try’s lo­cally-owned banks.

Chi­na­masa said In­di­geni­sa­tion and Eco­nomic Em­pow­er­ment Min­is­ter Fran­cis Nhema would present the cab­i­net with plans defin­ing thresh­olds and time­lines for for­eign-owned com­pa­nies to com­ply with the em­pow­er­ment law.

Chi­na­masa de­clined to say if the own­er­ship law would be amended but said the rules for the min­ing sec­tor would re­main un­changed.

“We have been very clear on the min­ing sec­tor that this is our re­source and our people have to ben­e­fit by be­ing ma­jor share­hold­ers,” he said.

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