Indigenisation law ‘absurd’: Biti
by Business Reporter I Reuters
THE government's drive to force foreign businesses to give 51 percent of their shareholding to locals will benefit the few black elite and must be reviewed, Finance Minister Tendai Biti said on Thursday.
The controversial empowerment law is already being implemented in the mining sector, where South Africa's Impala Platinum was forced to hand over majority shareholding in its Zimplats unit to a state fund, employees and local communities.
Speaking at the Atlantic Council, a think tank and public policy group, Biti said while he agreed on the need for Zimbabweans to participate in the broad economy, the initiative being spearheaded by President Robert Mugabe's Zanu PF party would only benefit the black elite.
"The transfer is for value, which is good, but in a situation where the majority are poor, you are just transferring shares from a few rich white people to a few rich black people," said Biti.
"It wasn't well thought. Due process not being followed, we need to go back to the drawing board and say how can we empower our people.
“The best way to empower our people at this present moment in time is to expand our economy to create as many sectors as possible."
The exercise is widely seen as a ploy by Zanu PF to win votes in elections that must be held by next year with political reforms and a new constitution in place.
[Widely seen by whom? The MDC? Based on what evidence? - MrK]
The government, which plans to have completed the empowerment program in the mining sector by the end of this month, has given no indication how much it plans to pay for any stakes in Zimplats.
Zimbabwe has the world's second largest platinum deposits.
There is also pressure on the four foreign banks to hand over 51 percent of their shareholding, which is being vigorously opposed by both Biti and central bank governor Gideon Gono.
Illustrating what he said was the "absurdity" of the empowerment program, Biti said the four banks - which include Britain's Barclays and Standard & Chartered - have an average market capitalization of $60 million each.
To start a bank in Zimbabwe, the minimum capital requirement is $12.5 million, which means that anyone buying 51 percent of any one of the banks' shares would need to pay about $30 million.
"If you have $30 million, why not just start your own bank? The program has not been well thought out. ... How we are trying to do it is a disaster."
Empowerment Minister, Saviour Kasukuwere recently said he would now target the financial services sector after forcing the major mining companies to comply with the controversial law.
However, Biti and Gono have warned that applying the 51 percent quota to banking could adversely impact the country’s economic recovery.