President Robert Mugabe on Friday appeared to signal a U-turn on the government’s indigenisation policy.
The Standard Editorial
Officially opening the Trade Fair in Bulawayo, he urged investors to bring in money to Zimbabwe, without fear of the empowerment policy that forces foreign companies to cede majority 51% shares to Zimbabwean partners.
Mugabe claimed the indigenisation law had been misunderstood and misrepresented by the country’s detractors.
This was the second time in a few days that Mugabe made a speech that sought to project Zimbabwe as a safe investment destination. The speeches, tailor-made to appeal to foreign investors to rescue Zimbabwe from total economic collapse signified by a severe cash crunch, will not help unless his administration abandons populist policies that have scared away investors.
Investors are neither fools nor idiots, and therefore will not invest in a country where the expropriation of their businesses remains a possibility.
Former Minister of Youth Development, Indigenisation and Empowerment, Saviour Kasukuwere has shown that Zanu PF is determined to take over every mine and every bank from foreigners.
Investors will also be disappointed by Government and Indian investor Essar Holdings’s failure to agree on a way forward after signing a deal in 2011 worth US$750 million meant to revive Zisco Steel, once a leading integrated steel producer in Africa.
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Although the company’s name changed to NewZim Steel, nothing has materialised to date as the Indian firm has not started operations owing to government’s failure to release iron ore mining claims, which were clearly part of terms for the takeover agreement.
The agreement stated that the investor would take over the foreign debt and also assume 60% of the local debt while government would pay off the remaining 40%. This deal remains in limbo.
This matter, and the uncertainty faced by mining companies required to comply with the indigenisation laws, need to be resolved first before Mugabe can reassure other investors that their investments will be safe in Zimbabwe.
