Foreign firms face Harare deadline
THE Zimbabwean government has set its sights on the forcible implementation of its 51% indigenisation law.
The cabinet this week issued a circular that empowers line ministries to cancel the operating licences of all firms across various economic sectors that miss a March 31 deadline to meet the terms of the legislation.
The empowerment law compels all foreign-owned firms to hand over a controlling stake to indigenous Zimbabweans. The economic sectors affected include retail, construction, mining, agriculture and financial services.
The cabinet “unanimously passed a resolution directing that from April 1 2016 all line ministries proceed to issue orders to licensing authority to cancel licences of non-compliant business within their respective sectors of the economy”, part of the circular reads.
A major showdown is looming as government officials insisted this week that ample time had been given for companies to comply with the regulations, which were announced at the beginning of the year.
According to figures from the Zimbabwe Investment Authority, so far only 50 foreign-owned firms have adjusted their operations to comply with the local empowerment laws.
Economists have warned that a crackdown on companies would bode ill for the economy, which is already reeling from widespread company closures, a persistent drought, a liquidity crunch and food shortages.
Tony Hawkins, an economics professor at the University of Zimbabwe, said the latest announcement showed the “policy contradiction” prevailing in the government, because ministers recently had been courting foreigners for investment.
However, Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao said the law was the law and had to be respected.
“Well, laws must be adhered to. We must never breed lawlessness as a nation. The failure to adhere to the laws of our land must attract immediate consequences that must be severe and dire enough to ensure that the law is respected and adhered to.
“It’s either you comply or you close shop,” Zhuwao said.
Earlier this month, the PROMISES: Zimbabwe’s President Robert Mugabe Zimbabwean government gave the green light for the cancellation of the licences of seven mining companies on the diamond fields of Marange.
That action is fresh in the minds of foreign companies, which are treading cautiously as Thursday’s indigenisation deadline approaches.
The 51% indigenisation law was the anchor of the campaign strategy that helped President Robert Mugabe win re-election in 2013.
His ruling Zanu-PF party is desperate to be seen to be implementing its election promises, as rival political parties emerge and a fresh election in 2018 inches closer.
Opposition Movement for Democratic Change spokesman Kurauone Chihwayi said Mugabe had set his sights on foreignowned firms to help maintain his grip on power.
“It is a tragedy that those superintending over this country think it is alright to play Russian roulette with the country and its citizens’ economic welfare by chasing away foreign investors instead of embracing them,” Chihwayi said.
This comes “at a time the country is in desperate need for foreign direct investment in order to get it back to its feet”.
South African firms that have operations in Zimbabwe include retailer Pick n Pay, cement maker Pretoria Portland Cement and platinum miner Zimbabwe Platinum, which is a unit of Impala Platinum. In the financial services sector, MBCA bank, a unit of Nedbank and Stanbic, also has operations in the country.
Those who are superintending this country think it is alright to play Russian roulette