Mugabe Warns Zimbabwe’s Indigenization Policy Could Push Out Investors
Zimbabwe’s President Robert Mugabe has warned that an indigenization policy, similar to South Africa’s black empowerment policy, that aim to transfer shares from foreign-owned firms to locals is likely to push out foreign investors seeking to set up in the country.
Mugabe said the policy will confuse potential investors and make it hard for Zimbabwe to compete for foreign investment with other Sub-Saharan Africa countries, Reuters reported.
Zimbabwe had given foreign companies in the country a March 31 deadline to submit empowerment compliance plans or risk being shut down.
“This has caused confusion among Zimbabweans, the business community, current and potential investors, thereby undermining market confidence,” Mugabe said in an April 11 statement.
Mugabe clarified the position regarding implementation and indigenisation compliance by the foreign firms, including banks and mining companies.
He said the foreign banks remained under the control of the Finance Ministry and also clarified that their compliance modalities would be different from those of the other sectors, Zimbabwe Independent reported.
“The banking sector shall continue to be under the Banking Act, which is regulated by the Reserve Bank of Zimbabwe,” said Mugabe in a statement on Tuesday after a cabinet meeting.
Several foreign banks, mostly from neighbouring South Africa, have operation in Zimbabwe.
Foreign banks operating in the country include international finance institutions Standard Chartered and Barclays as well as regional bank, Ecobank, CABS, in which Old Mutual has a stake, Nedbank (which controls MBCA Bank) and Standard Bank (which controls Stanbic Bank).
Mugabe said existing mining companies will be allowed to operate if they retain 75 percent of their earnings in Zimbabwe.
The stance taken by the nonagenarian leader to clarify the controversial policy, which forces foreign-owned firms to cede 51 percent shareholding to locals, is seen by many as a departure to his ruling party, Zanu PF, populist policies that saw white farmers ejected from their farms in the dawn of the 21st century, Daily News reported.
According to statistics from the United Nations Conference on Trade and Development (Unctad), Zimbabwe has been missing out on the annual $54 billion foreign direct inflows into Africa with the country only getting $510 million in 2015 — ranking low among its rich and emerging neighbours such as South Africa, Botswana, Zambia, and Mozambique.