The amendments are in section 42 of the Finance Act [Act 1/2018] pages 19 to 30, which was gazetted as law in a Government Gazette Extraordinary dated 14th March. The amendments make sweeping changes and constitute a huge step in the Zimbabwe is Open for Business programme.
The complete Finance Act can be downloaded on the Veritas website [link]. Veritas will also soon post on its website an updated version of the Indigenisation and Economic Empowerment Act incorporating all amendments.
Brief Highlights of the Changes to the Indigenisation and Economic Empowerment Act
Limited application of the Act from now on
A new section 2A of the Act confirms that:
• the Act will henceforth apply only to the following businesses:
• a designated extractive business, i.e., one involved in the extraction of diamonds or platinum, and
• a business in one of the twelve reserved sectors of the economy [these sectors are now reserved for “citizens of Zimbabwe” [not indigenous citizens] and are specified in the amended Act itself – see below].
• accordingly “any person is free to invest in, form, operate, and acquire the ownership or control” of any other business.
Indigenisation of extraction of diamonds or platinum
The new section 3 of the amended Act is designed to ensure that in the course of time at least 51% of any designated extractive business is owned through an appropriate designated entity, with or without the participation of a community share ownership scheme or employee share ownership scheme or trust.
Compliance does not have to be immediate. The Minister responsible for the Act is empowered to give written permission to a business to comply with the Act over a period specified by the Minister.
There are three “designated entities” – the Zimbabwe Mining Development Corporation, the Zimbabwe Consolidated Mining Company and the National Indigenisation and Empowerment Fund.
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