Chinamasa says there is no going back on indigenisation

Finance Minister Patrick Chinamasa today said there is no going back on the country’s indigenisation programme and those who had not yet complied will have to do so within the stipulated period.

Chinamasa made the clarification when he presented his 2014 budget. He said there were different policies for resource based investments and other investments.

“In the case of resource based investments, our contribution is the depleting asset in the form of the in-situ value of the mineral which will be our contribution to the 51% of the business. The investor who comes with capital, technology and managerial skills to exploit this depleting resource is entitled to 49% of the shareholding,” he said.

For other investments Zimbabweans had to pay for the 51 percent and the investors were free to choose their partners.

“With respect to the other sectors of the economy, the 51/49% share structure still applies. However, what needs to be clarified in this connection is that the 51% stake for Zimbabweans is not available for free where the enterprise does not benefit from a natural resource or raw material derived from Zimbabwe,” Chinamasa said.

There had been speculation that the cash-strapped Zimbabwean government was softening its stance on indigenisation and this was indicated by the appointment of soft-spoken Francis Nhema.

Below is Chinamasa’s clarification:

Clarification of Indigenisation & Economic Empowerment Regulations

Mr Speaker Sir, policies promotive of the participation of indigenous groups in main stream economic activities are not peculiar to Zimbabwe.

While in some countries these are motivated by the need to empower previously disenfranchised communities, in others, these are being pursued in line with those countries’ domestic strategic interests.

However, the challenge we have faced relates to perceptions, as well as elements related to interpretations over the application of our Indigenisation policy.

Mr Speaker Sir, a lot of clarifications are being sought by would be investors on our IEE laws and regulations.

As policy makers we have not also be speaking with one voice on this issue, a development that has tended to create and add to the confusion.

I feel I need to take this opportunity to clarify the position and set the record straight.

Confusion on over IEE seems to be emanating from the process rather than the Law.

The clarification I give is that implementation of our IEE laws and regulations will be undertaken under a sector specific approach that is guided by the following:

Resource Based Investments

In the case of resource based investments, our contribution is the depleting asset in the form of the in-situ value of the mineral which will be our contribution to the 51% of the business.

The investor who comes with capital, technology and managerial skills to exploit this depleting resource is entitled to 49% of the shareholding.

Other Investments

With respect to the other sectors of the economy, the 51/49% share structure still applies.

However, what needs to be clarified in this connection is that the 51% stake for Zimbabweans is not available for free where the enterprise does not benefit from a natural resource or raw material derived from Zimbabwe.

In the same vein, where the enterprise does not benefit from a natural resource or raw material derived from Zimbabwe, the business partners in the investment are free to make their own decisions on how and when, within the gazetted framework, the 51% contribution is to be financed or achieved.

Government does not expect this to happen overnight, but expects it to be a process which should ultimately lead to conformity with the Law.

It should also be clarified and understood, Mr Speaker Sir, that the investor has a priviledge of choosing his/her Zimbabwean partner. Only where this arrangement has failed would Government assist.

It is on the basis of the above clarification that Government is placing great importance on investment as a major driver of the ZIM-ASSET programme.

Both local and Foreign Direct Investment is most welcome, and vigorously promoted.

Zimbabwe remains one of the countries with the best investment policies, from a friendly Exchange Control regime on investment, to the diverse natural resource endowment.

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