THE current indigenisation policy is incompatible with Zimbabwe’s investment attraction drive and must be revised, a Cabinet minister has said.REPORT BY OUR STAFF
Economic Planning and Investment Promotion minister, Tapiwa Mashakada’s remarks come in light of reports that South African companies were closely monitoring their assets in Zimbabwe.
The companies are said to be “quietly” preparing to contest a government move that forces disposal of shares to Zimbabweans under the indigenisation policy.
South African companies with significant material exposure in terms of operations in Zimbabwe include Pretoria Portland Cement, Zimplats, owned by Implats and worth more than US$24 million, Tongaat Hulett, with sugar operations, wholly owning the Triangle Sugar operation and a 50,3% holding in Hippo Valley Estates.
Others include Standard and Nedbank which operates MBCA in Zimbabwe.
“Any policy is subject to changes, this (indigenisation) policy is not cast in stone. There are two options that government can explore. First, there is need to review thresholds with a view of lowering them in line with recommendations from sectoral committees,” he said, adding that the recommendations made were already being assessed.
“Secondly, there may be a need to temporarily suspend the policy which would facilitate much-needed FDI (Foreign Direct Investment) inflows and provide local industry with sufficient time to grow and recapitalise,” he said.
Zimbabwe’s return to political and economic stability three years ago, following the inception of the inclusive government attracted investors’ attention regionally and internationally, as they increasingly sought to advance their capital into emerging markets.
However, policy inconsistency has proved to be the bane of anticipated economic growth, as treasury recently revised projections downwards.
Government signed and ratified a number of Bilateral Investment Promotion and Protection Agreements (Bippas) with other countries, but the indigenisation policy which dictates that foreigners should cede 51% of their investments to locals has caused consternation within the investment community.
Under the indigenisation policy, South African companies holding considerable assets in Zimbabwe have been told to come up with a plan to dispose of 51% of them to Zimbabweans or face confiscation.
However, Mashakada said the bilateral agreement between Zimbabwe and South Africa would protect investors’ interests.
“The South Africa-Zimbabwe Bippa is still in full force and will be used as a basis of government’s commitment towards protecting investors’ interests,” said Mashakada.
The existing ratified bilateral investment treaty clearly prohibits the expropriation of South African assets in Zimbabwe.
The treaty allows parties whose interests have been violated to appeal to international dispute resolution centres at multilateral bodies such as the United Nations, in order to obtain recompense against any confiscation.
Youth Development, Indigenisation and Empowerment minister, Saviour Kasukuwere, said although he had not heard of any particular cases, the indigenisation policy would continue to subsist.
“Well, they can go ahead (and contest). The Bippa is very clear, but we are entitled to our rights as a sovereign nation. They can’t just say they would use the Bippa to undermine our rights,” he said.