UK says Zimbabwe's indigenisation is still not clear enough
Zimbabwe’s bid to clarify its contentious local ownership law does not go far enough to clear the air, according to the United Kingdom, a traditional source of key investment in Zimbabwe’s financial, mining and manufacturing sectors.
Zimbabwe has maintained strong commercial ties with former colonizer Britain despite the relationship being fraught since 2000 over long-ruling President Robert Mugabe’s drive to seize white-owned farms to resettle landless blacks. The UK, along with the EU and the United States, imposed sanctions on Mugabe and his inner circle more than a decade a ago over alleged rights abuses.
Despite this, major British or UK-related businesses, including Barclays and Standard Chartered banks, Unilever, British American Tobacco and BOC gas, remain in operation in Zimbabwe, dominant in their respective sectors.
The UK has softened its stance against the Mugabe government — which has slowly implemented some reforms, including a new 2013 constitution — has blessed two investment tours by British businesses over the past two years following a 20-year hiatus and is also actively encouraging British investment in Zimbabwe.
Zimbabwe, whose economy shrank by as much as 40 percent between 2000-08, is also courting foreign investment, but a 2008 local ownership law, which requires majority black control of foreign-owned businesses, has spooked existing and potential investors.
The southern African country is also mending its ties with the International Monetary Fund (IMF) in a bid to restructure its $9 billion foreign debt, a stumbling block to any fresh international loans.
Zimbabwe’s bid to clarify its local ownership law was a key target it set itself under its IMF staff monitored programme. The country is also seeking to improve on its foreign direct investment flows, which at just under $600 million in 2015 remain among the lowest in the region.
“The United Kingdom welcomes the intention of the Government of Zimbabwe to simplify and clarify the indigenisation regulations. Policy consistency on the implementation of the Act is fundamental to the ability of Zimbabwe to attract much needed investment,” the British government said in a statement released by its Harare embassy on Monday.
“While such efforts are commended, we remain concerned that some elements of the guidelines need further elaboration. We therefore welcome the Zimbabwean government’s plans to consult further with the business community.”
The UK’s dissatisfaction with Harare’s bid to clarify the indigenization policy only echoes similar sentiments expressed by the European Union chief representative to Zimbabwe, Phillipe van Damme, who has raised fresh questions over the policy.
Van Damme took to Twitter to raise questions over a proposed ‘empowerment’ levy to be paid by firms deemed non-compliant with the mandated local ownership threshold, among other issues.
A public spat over the policy, pitting two members of Mugabe’s cabinet – finance minister Patrick Chinamasa and indigenization minister Patrick Zhuwao – resulting in two slightly different ‘ownership guidelines’ being issued in less than two weeks, have not helped clear the confusion.
While there are no fundamental differences between the two sets of guidelines, the fact that the revised text dropped, from the list of objectives for the new guidelines, a reference to “encourage private sector investment, might not escape eagle-eyed investors. Nor would the fact that an expanded list of ‘objectives’ seems to give priority to raising cash for a raft of state-run funds and firms.-The Source