Zimbabwe now wants 51% equity at zero cost

Published: 10 June 2013

The government is working on amending the controversial Indigenisation and Economic Empowerment Act to allow for non-payment of the 51% equity from foreign-owned companies, Fin24 reported.

According to state newspaper The Sunday Mail, the Zimbabwean government is working on a legislative framework through which locals will be able to use mineral resources on mining claims as a contribution for equity in foreign mining ventures, while also relegating the vendor financing model which was used in the acquisition of a stake in Zimplats.

The paper says the ministry of youth development, indigenisation and empowerment is working with the attorney general's office to legislate the proposed amendments.

"Presently, the Indigenisation and Empowerment Act (especially Chapter 14 of 2007) does not allow for the expropriation of shares by the government for indigenisation purposes but allows for shares to be acquired at fair market value.

"However, the proposed amendments that are expected to be finalised soon are designed to ensure that 'the people of Zimbabwe benefit fully, and without cost whatsoever, from enterprises that exploit their God-given natural resources'," says the paper.

A white paper from government seen by The Sunday Mail reportedly indicates the desire to "revise materially" the policy and law on indigenisation and empowerment.

"The Ministry and Government of Zimbabwe would like to revise materially, the policy and law on indigenisation and empowerment with respect to the acquisition of 51 percent shareholding in all non-indigenous businesses operating in the country.

"The motivation for this position arises out of the desire to ensure that the people of Zimbabwe benefit fully, and without cost whatsoever, from enterprises that exploit their God-given natural resources.

"Government's endeavour in this regard is to realise shareholding in such non-indigenous businesses in exchange for natural resources, thereby creating enterprise partnerships between non-indigenous investors and indigenous entities based on contribution of resource of capital in the measure reflected in by our 51/49 percent law," read the white paper.

President Robert Mugabe is on record on as saying the value of minerals underground should be used as the payment contribution for the 51% indigenous shareholding.

In March this year Mugabe attacked Empowerment Minister Saviour Kasukuwere, saying he was wrong to sign off the Zimplats indigenisation compliance deal which has left the taxpayer facing a possible $350m hit.

During an interview with state media to mark his 89th birthday, Mugabe said mineral resources belong to Zimbabwe and should make up the country's 51% contribution to the business.

He said Kasukuwere made a mistake when he agreed the Zimplats deal.

- fin24

Tags: Empowerment,