Maravi

(HERALD) Foreign-owned firms prepare for empowerment legislation

Foreign-owned firms prepare for empowerment legislation
By Walter Muchinguri

SOME foreign-owned companies are beginning to take positions ahead of the enactment of the Indigenisation and Empowerment Bill into law. The Bill is awaiting presidential assent after it sailed through the Lower and Upper Houses. The Bill will seek to enforce the empowerment of indigenous people through the acquisition of majority shareholding in foreign-owned companies. It stipulates that at least 51 percent of a foreign company’s shareholding should be locally owned.

Although there are no notable empowerment deals that have been linked to the issue there has been indications that there have been movements in this regard. The country’s leading mobile services provider, Econet, which is one of the country’s largest black controlled group, recently confirmed receiving overtures from large international groups looking for an empowerment partner but said it has its own priorities and was, therefore, not interested in such deals.

Econet said the companies wanted it to take up a controlling stake in their businesses in Zimbabwe so that they could comply with the new legislation on empowerment.

"We have our own priorities as a company, and they are not about empowerment. If you see us acquire a stake in a business, it is because it fits into our own strategic plan, and it is likely to be something we were already working on for a long time," he said.

Impala Platinum (Implats), the majority shareholder in Zimbabwe Platinum Holdings (Zimplats), recently indicated that it had made concessions ahead of the implementation of the Bill.

The company recently reaffirmed that it had agreements in place that would be taken into account when Government assesses compliance with the Bill.

Under the agreement signed between the Government and Zimplats in May last year, the latter agreed to cede its mining claims in exchange for a combination of empowerment credits and cash.

The Government also agreed to recognise social spending by the company which included building infrastructure such as roads and schools for a combination of empowerment credits.

In this regard Zimplats agreed to release claims amounting to 36 percent of its resource base on the Great Dyke which comprise 51 million ounces of platinum or 99 million ounces of 4E (platinum, palladium. rhodium and gold).

Recently a diversified black-owned group Migdale Holdings acquired a controlling stake in leading freight concern Allan Wack and Shepherd.

Although both parties have indicated that it was a purely business transaction, the market was awash with speculation that the deal was structured with the new law in mind.

There have been other deals that have been cited but these have relatively been low key since they involve smaller companies.

A number of indigenous business people are believed to be lining up to take advantage of any opportunities that may arise as a result of the empowerment legislation.

Reserve Bank Governor Dr Gideon Gono in his Mid-Term Monetary Policy Review Statement proposed a gradual takeover process of companies depending on their capital intensity.

Labels: BEE, CEE, IEB, ZIMBABWE

posted by MrK @ 3:48 AM