Harare to restrict foreign investors
South African and other foreign businesses involved in agriculture and retailing in Zimbabwe are uncertain about their future in the country after the government issued new indigenisation guidelines reserving those sectors for local investors.
Foreign retailers in Zimbabwe include Pick n Pay as well as other smaller retail and wholesale outlets run by Chinese, Indian and Nigerian nationals. The fuel retail industry has also been reserved for locals, raising potential problems for foreign companies in the industry such as Total and Puma.
The new guidelines, announced on Monday by President Robert Mugabe’s nephew, Patrick Zhuwawo, gave a deadline of March 31 for foreign companies in Zimbabwe to submit empowerment plans.
The guidelines document says “no new non-indigenous businesses will be allowed to invest in the reserved sector unless under special cases” and the areas now restricted also include advertising agencies, cigarette manufacturing, milk processing, estate agencies and road transportation.
Zhuwawo, who considers himself the new sheriff in town, said he did not expect foreign companies in Zimbabwe “to remain defiant and non-compliant”, following previous disagreements with other foreign firms such as Impala Platinum.
Other foreign companies in Zimbabwe include Standard Bank owned Stanbic, Barclays Bank Zimbabwe, Standard Chartered Zimbabwe, Nedbank owned MBCA, units of Tongaat Hulett, PPC Zimbabwe and Anglo Platinum among others.
The new guidelines also re-enforced Mugabe’s position that there would be no financial compensation for majority shares ceded by foreign mining companies under the contentious black economic empowerment policy.
“As we move forward, the emphasis is on implementation of the indigenisation law starting with the submission of the Indigenisation Implementation Plan, which every company affected should submit as soon as possible, but no later than March 31, 2016,” Zhuwawo said.
Positively though for the foreign companies, the government is now accepting empowerment credits as part compliance with the policy that was first promulgated in 2007.
Previous indigenisation deals signed between the government and South African platinum miners – Impala Platinum, Aquarius Platinum and Anglo Platinum – are being reviewed and renegotiated.
Undertaking of specified development work in the community in which the business in question carries on its business, beneficiation to a specified extent of raw materials, the transfer to a specified extent of new technology to Zimbabwe by the business in question and the employment to a specified extent of local skills will now be considered for compliance, according to the new measures.
“This is one of the sticking issues that each year there is always a new direction on the policy framework. We are hoping companies can speedily deal with this issue and that the government respects and honours whatever agreements would have been reached, so that business can move forward with planning for investment in a secure and certain environment,” a business leader told Business Report yesterday.
Under the new policy measures, state corporations and other state linked organisations now have the leeway to take over the majority shares ceded by the foreign companies affected by the empowerment drive. These include the National Indigenisation and Economic Empowerment Fund, the Sovereign Wealth Fund, Employee Share Ownership Trusts, Community Share Ownership Trust, the Zimbabwe Mining Development Corporation and others. The Zimbabwe Consolidated Diamond Company is also among companies mandated to partner foreign companies.