“This act has been misinterpreted. Section 3 of this act says it shall be the endeavour of government to ensure that every company in Zimbabwe that is foreign-owned is at least 51%-owned (locally),” said Biti.
“The word endeavour denotes aspiration, it denotes an intention. So the provision is not worded in peremptory language.”
Peremptory language in legal terms relates to authoritative wording in a piece of legislation that is definite and not entitled to delay or reconsideration and therefore uses strong wording such as “shall”.
Said Biti, “The law does not say that every foreign-owned company shall be 51%-owned, the law says it is the intention to reach the destination of 51% ownership, so it’s discretionary. A peremptory interpretation is therefore wrong.”
But Kasukuwere recently published a notice saying that mining firms that failed to meet last year’s September 25 deadline should note that 51% of their shareholding would now be deemed to be owned by the State.
The banking sector has not been spared either as the minister vowed to take a controlling stake in the country’s foreign-owned banks.
Out of the 23 banks operating in Zimbabwe, four — Barclays, Stanbic, Standard Chartered and MBCA through Nedbank — are foreign-owned.
They have a combined market capitalisation of US$60 million.
The indigenisation and economic empowerment legislation has caused a great deal of consternation among international investors seeking to explore new and emerging markets, such as Zimbabwe.
Biti explained that both the law and the March 2010 regulations were very clear, providing evidence of there being no nationalisation in Zimbabwe.
“When shares are to be taken, they have to be ceded for value, for open market value and if there is contestation over the value of the shares, there is a right of appeal by the shareholder to the Administrative Court,” he said
“The Administrative Court is more or less on par with the High Court of Zimbabwe”, he added.
“Again I see a misinterpretation of the law to equate ceding to nationalisation or appropriation. This is very important in the banking sector,” he said.
‘don’t tamper with banking sector’
Biti warned against tampering with the banking sector arguing that capital was very fluid and fungible (the quality of being capable of exchange or interchange).
The Finance minister urged authorities to be cognisant of the important role that banks have been playing to keep the economy functioning.
After dollarisation in February 2009, government did not buy back the existing stock of currency with new currency.
“In a subverted way we nationalised people’s balance sheets without compensation, as a result bank assets were found with US$350 million in February 2009. Banks resultantly built an asset base on their own which they have been able to lend to the market,” Biti said.