Mugabe defends new indegenisation law

Mugabe defends new indegenisation law
By Kingsley Kaswende in Harare, Zimbabwe
Thu 18 Feb. 2010, 18:10 CAT

PRESIDENT Robert Mugabe has defended the new indigenisation law that requires foreign-owned firms to cede 51 per cent shareholding to native Zimbabweans.

Prime Minister Morgan Tsvangirai last week dismissed as null and void the regulations of the Indigenisation and Economic Empowerment Act gazetted last month, which require all foreign-owned companies with assets above US $500,000 to surrender 51 per cent equity to black Zimbabweans.

President Mugabe, however, told journalists on Wednesday afternoon that only “stupid” people would consider the new law counterproductive.

“Forty-nine per cent is a hell lot of equity. Only stupid ones would consider that it scares away investment,” President Mugabe said in response to a journalist’s question regarding concerns that the law was scaring away the much-needed investment.

The law, which will become effective on March 1, was mulled by the ZANU-PF government two years ago and has faced resistance from the MDC section of the inclusive government.

The two parties to the inclusive government have failed to speak with one voice on the law since it was gazetted in January.

MDC has since called for the law to be withdrawn and refined, as it was allegedly passed without consultation with Cabinet.

“The MDC dismisses the clandestine and nicodemous gazetting of regulations calling for all foreign investors to cede 51 percent of their investment to ‘indigenous people,’” An MDC statement read in part.

“Youth and Empowerment minister Saviour Kasukuwere... has decided to rail-road controversial, anti-investment regulations without the knowledge of Cabinet and the head of government, the Prime Minister. It is simply a unilateral ZANU-PF Bill which has failed to meet not only the basic components of procedure, but has far reaching negative and dire consequences on the much-needed investment in Zimbabwe.”

According to regulations published by the government, companies would be given a grace period of 45 days to submit plans of how they intend to surrender the 51 per cent shares.

Companies will also be required to complete and submit to the government a form that gives the names, nationality and identity details of their shareholders, and whether they are “indigenous” or “non-indigenous” Zimbabweans.

Directors of companies that fail to meet this requirement will face a possible jail term of up to five years, the notice states.

The same penalty awaits whites who use black employees as fronts, according to the law. The country's minister of indigenisation will keep a list of “suitable candidates”, to whom shares can be ceded.