Monday, June 03, 2013

(NEWZIMBABWE) Govt to enforce 50pc local procurement

28/05/2013 00:00:00
by Business Day

THE government is to restrict foreign procurement of raw materials and other equipment by companies to 50% as part of efforts to enforce a statutory instrument giving preference to local suppliers. It has emerged, however, that the new measures will also be factored into planned amendments to the indigenisation and economic empowerment law promulgated in 2007.

The amendments, according to Empowerment Minister Saviour Kasukuwere, will rule out monetary compensation for shares ceded by foreign mining companies. Kasukuwere has now said the government is working on measures to restrict the procurement of raw materials and other equipment from foreign suppliers to 50%.

"With greater understanding that local ownership is pivotal to our economic growth and prosperity, the time has now come for public and private companies to put in place policies and programmes that give preference to our local suppliers and manufacturers," Kasukuwere said at a procurement conference held in Harare on Monday.

He said: "Fifty percent (of all procurement by companies in Zimbabwe) must be procured from companies that are controlled by indigenous Zimbabweans."

Many local manufacturers and companies remain bogged down, however, by low capacity use as a result of power cuts, limited access to capital and obsolete equipment.

"The only problem is that we may find the local suppliers out of stock," independent economist Moses Moyo said. "We must first fix our industry and manufacturing sectors so that we capacitate the local suppliers."

Earlier this year, government officials criticised South African retailer Pick n Pay - which now has two branded stores in Zimbabwe under a partnership with TM Supermarkets, in which it owns a 49% stake - for picking most of its stock from foreign suppliers.

Government statistics say Zimbabwe imported $8.2bn worth of goods in 2012, compared with exports worth $5bn.

Foreign companies such as Impala Platinum, PPC, Old Mutual and Anglo American Platinum - which all have operations in Zimbabwe - have already been forced to cede 51% shares to local groups under the empowerment policy.

Investment analysts and other experts say the law scares away much-needed investment.

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