Maravi

Mugabe signs indigenous citizen empowerment Bill

Mugabe signs indigenous citizen empowerment Bill
By George Chellah in Harare, Zimbabwe
Tuesday March 11, 2008 [03:00]

PRESIDENT Robert Mugabe has finally assented to the controversial Indigenisation and Economic Empowerment Bill which seeks to have foreign-owned firms transfer at least 51 per cent shares into indigenous Zimbabweans’ hands. President Mugabe’s approval of the controversial Bill was announced in the recently published government gazette. Following the President’s approval, the Bill is now part of Zimbabwe’s laws.

The Act specifies that no restructuring, merger or de-merger shall be approved unless indigenous Zimbabweans hold 51 per cent shares in the resultant business.

It further states: “All government departments, statutory bodies and local authorities and all companies shall procure at least 51 per cent of their goods and services that require procurement in terms of the Procurement Act from businesses in which a controlling interest is held by indigenous Zimbabweans,” read the Act in part.

“Where goods and services are procured in terms of the Procurement Act from businesses in which a controlling interest is not held by indigenous Zimbabweans, any subcontracting required to be done by the supplier shall be done, to the prescribed extent, in favour of businesses in which a controlling interest is held by indigenous Zimbabweans.”

The Act also states that the Minister of Indigenisation and Empowerment shall conduct assessment ratings of every company and that the minister is empowered to review and approve indigenisation and empowerment arrangements.

President Mugabe recently emphasised the need for indigenous Zimbabweans to own businesses especially in the mining sector, which he said was involved in a lot of cheating.

Late last year, the Economic and Empowerment Bill created tension between the Zimbabwean government and foreign owned firms particularly on the clause of foreign firms floating at least 51 per cent shares to indigenous Zimbabweans.

But Zimbabwe’s Minister of Indigenisation and Empowerment Munyaradzi Mangwana maintained that the major objective of the Bill was to create an enabling environment for the enhanced participation of indegenous Zimbabweans in the mainstream economy or the commanding heights of the economy.

And submitting papers on the matter before a special parliamentary committee late last year, the Zimbabwean bankers warned that the draft law would affect the country’s depleted foreign investment inflows. They further cautioned the government that the 51 percent threshold was not sustainable hence it should be reviewed down to between 30 per cent and 49 per cent.

And submitting papers at the same forum, Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer Cain Mpofu also observed that the timing for the indigenisation of the Zimbabwean economy was wrong.

Mpofu said Zimbabwe attained independence in 1980 and that racial imbalances were part of the reason why the war of independence was executed.

“For that reason, the correction of the historical imbalances should have been placed on the strategic agenda at independence.

The timing, therefore, does not appear appropriate for the following reasons, the economy is in a tail spin, inflation is the highest in the world, international perception about proprietary rights protection in Zimbabwe is at its lowest,” Mpofu explained.

“The possibility of further capital flight from Zimbabwe is not far-fetched, the real crisis facing the country is not about indigenization but the crippling shortages facing the people, and the implementation of the SADC and COMESA free trade areas and associated reforms are imminent.”

He said in view of the current macro-economic environment, there was a real possibility that the Bill could influence systematic asset stripping by organisations.

Labels: ECONOMIC EMPOWERMENT, MUGABE, ZNCCB

posted by MrK @ 4:56 AM