Govt amends Indigenisation Act

GOVERNMENT has amended the Indigenisation and Economic Empowerment Act in line with guidelines enunciated in the 2018 national budget statement.

Presenting the 2018 fiscal policy statement in December last year, Finance and Economic Planning Minister Patrick Chinamasa said Government, through the Finance Bill, was amending the Indigenisation and Economic Empowerment Act to restrict the 51/49 percent threshold to diamonds and platinum sectors only.

This means the 51/49 threshold will no longer apply to the rest of the extractive sector, nor will it apply to other sectors of the economy which will be open to any investor regardless of nationality. The newly promulgated 2018 Finance Act has since aligned the indigenisation regulation with the budget statement.

“Accordingly, any person is free to invest in, form, operate, and acquire the ownership or control of any business not included in Section 3 (1) or in the reserved sector of the economy,” reads part of the Finance Act on amendment to the Indigenisation law.

Finance and Economic Planning permanent secretary Mr Willard Manungo has said since the Finance Act and the Appropriation Act was in place, it was now paramount that all relevant parties play their roles in fully implementing the various reform measures.

“The promulgation of the Acts also heralds, in earnest, that Zimbabwe is now open for business and walking the talk under the new political dispensation,” he said.

“Among other measures, the Act amends the Indigenisation and Economic Empowerment Act to restrict compulsory indigenisation to those enterprises engaged in the mining of diamonds and platinum.”

Mr Manungo said the amendment was consistent with the objective of promoting the ease of doing business environment for attracting investment.

The budget contained a number of key reforms aimed at creating conditions for increased investment and production-led recovery, restoration of fiscal discipline and the requisite expenditure management interventions necessary for reorienting public spending towards support for developmental projects and programmes.

The amended Indigenisation Act also stipulates that the State shall secure at least 51 percent shares or other ownership interest of every designated extractive business, in this case platinum and diamonds.

“That is to say a company, entity or business involved in the extraction of diamonds or platinum shall be owned through an appropriate designated entity (with or without the participation of a community share ownership scheme or employee share ownership scheme or trust, or both.)”

Initially, the indigenisation law covered all sectors of the economy with foreign investors with businesses operating in Zimbabwe required to cede 51 percent shares to indigenous investors and this was blamed for scaring away potential foreign direct investment.

The amended Act further stipulates that every business owned by a person who is not a citizen of Zimbabwe that before the 1st of January 2018 commenced operations in the reserved sector of the economy, may continue to operate if among others, it is registered, and opens and maintains a bank account in accordance with the Bank Use Promotion Act. — @okazunga