Maravi

(TALKZIMBABWE) Indigenization Act passed

Indigenization Act passed
Ralph Mutema
Tue, 09 Feb 2010 23:06:00 +0000

ZIMBABWE has passed a law that compels all businesses with assets worth more than $500,000 to be 51 percent black-owned within five years.

The law, aptly titled as the Indigenization and Empowerment Act (IEA), published in the Government Gazette, comes into effect March 1 and stipulates prison sentences of up to five years for non-compliance.

IEA states that “every existing business” must submit forms detailing ownership of companies by April 15, along with plans for the disposal of 51 percent of their shareholdings to black Zimbabweans.

Businesses that fail to comply after a 30-day reminder will be guilty of an offense and liable to a fine and or a jail sentence of as much as five years, according to the gazette.

Foreign investors also need to meet an ''empowerment quota.''

The law, was passed by parliament in 2008 but was not immediately signed into law by President Mugabe.

IEA had been on hold until supplementary regulations were drawn up by the government. It was published in an official (public) gazette at the end of last week, with no need for any further formal announcement.

The new law may affect companies including Anglo Platinum Ltd., Impala Platinum Holdings Ltd. and Aquarius Platinum Ltd., three of the world’s four biggest producers of the metal, which all own mines in the southern African nation. Old Mutual Plc, Africa’s biggest insurer, owns properties and a life-insurance operation in the country.

Zimbabwe has the world’s second-largest reserves of platinum and chrome, after South Africa, along with deposits of gold, coal, diamonds and nickel.

Indigenous Zimbabweans are defined as anyone who before independence from colonial Britain in April 1980 was "disadvantaged by unfair discrimination on the grounds of his or her race and any descendant of such person". This includes the majority of black people who could not access the means of production and who were treated as second class citizens by the apartheid regime of Ian Douglas Smith.

There is still debate on how exactly the 51 per cent stake will be acquired by indigenous people. But under neighbouring South Africa's black empowerment programme, banks have leant large sums to black businesses to enable them to buy shares in major companies, often at a discount.

The Minister of Youth Development, Indigenisation and Empowerment, Saviour Kasukuwere, said the indigenization law should not worry investors.

His ministry is responsible for the regulations.

He said: "There were wide consultations with stakeholders ahead of publication of these regulations and there is flexibility available.

"We are not trying to damage the investment climate in Zimbabwe."

Prime Minister Morgan Tsvangirai summarily dismissed the passing of the IEA as "null and void".

"I am in charge of all policy formation in cabinet and neither myself nor the cabinet were shown these regulations before they were gazetted," Tsvangirai said in a statement.

"They were published without due process ... and are therefore null and void," he said, although the assent is only given by the president and parliament passed the IE bill back in 2008.

The publication of the IEA follows the appointment of the National Indigenisation and Economic Empowerment Board as provided for by the Indigenisation and Economic Empowerment Act.

The Board was appointed in January this year.

The 13-member board has representatives from interest groups, indigenisation and empowerment experts and other key sectors such as women, youth, the disabled and ministries of Economic Planning and Investment Promotion, Mines and Mining Development and Industry and Commerce.

Labels: BEE, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE)

posted by MrK @ 1:57 PM