THE National Indigenisation Economic Empowerment Board (NIEEB) has so far approved 775 applications from companies in reserved sectors of the economy since January, as it intensifies the campaign to have companies comply with the country’s controversial empowerment rules.
BY VICTORIA MTOMBA
The reserved sectors are meant for locals and they include: transportation, retail and wholesale trade, barber shops, hair dressing and beauty salons, employment agencies, estate agencies and valet services.
Also included are bakeries, tobacco processing, advertising agencies and the provision of local arts and crafts and marketing and distribution of the same.
NIEEB expects to consolidate figures from the other sectors by May, according to Theresa Chifamba, head of compliance at NIEEB.
“We have so far approved 775 companies from January and we are yet to process a few more which are less than 20. The foreigners in the reserved sectors, we are keeping them, but they are required to look for partners,” she said.
Chifamba said since 2013, there were no applications that had been approved for foreigners in the reserved sectors of the economy.
“We are working on logistics to see on the reporting, but we are able to consolidate all the processes of indigenisation,” she said.
“We have lined up meetings after the Independence [holiday] and the Zimbabwe International Trade Fair and when this is done, we should have a laid-up procedure from a specific point.”
This comes as President Robert Mugabe intervened last week to stop the feuding between his two ministers — Patrick Chinamasa (Finance) and Patrick Zhuwao (Youth Development, Indigenisation and Economic Empowerment).
The two ministers were arguing over the implementation of the policy which is meant to ensure that at least 51% of shareholding in companies with a net asset value of $500 000 and above is in the hands of locals.
Mugabe said conflicting positions arose in the interpretation of the indigenisation law and economic empowerment policy creating confusion “among Zimbabweans, the business community, current potential investors, thereby undermining market confidence”.
“This situation has also led to the increase in the cost of doing business, thus further weakening the country’s economic competitiveness,” Mugabe said.
Mugabe said for existing companies where government did not have 51% ownership, compliance with the indigenisation and economic empowerment policy should be through ensuring that the local content retained in Zimbabwe by such businesses was not less than 75% of gross value of the exploited resources.
He said local content referred to the value retained in Zimbabwe in the form of wages, salaries, taxation, community ownership schemes and other activities such as procurement and linkages.
“Government shall, from time to time, decide and publish in the Gazette, any changes to the list of businesses falling under this sector to the extent that the indigenisation and economic empowerment Act may not sufficiently conform with this policy position. I have directed that the law be amended or changed forthwith accordingly,” Mugabe said.
A local economic analyst said the only positive thing in Mugabe’s speech was the correction that the banking sector fell under the Reserve Bank of Zimbabwe Act and not under any other law.
“It is interesting that he says the law [Indigenisation Act] would need amendments. In terms of law, that Act was poorly enacted [and was] full of contradictions, but we don’t know what and how the current government understands should be amended. There is a lot to be done to clarify chaos in this law,” the analyst said.
On March 22 this year, Cabinet gave a nod to the closure of companies that would have failed to comply with the indigenisation law by April 1 2016.
Analysts say the empowerment law inhibited government efforts to attract foreign direct investment (FDI) needed to reboot the economy. Despite Zimbabwe offering a stable currency and low inflation, investors have continued giving the country a wide berth.
Zimbabwe last year attracted FDI of $545 million — which is the highest it has received since the country dollarised in 2009.
However, the figure is insignificant compared to South Africa ($5,7 billion), Mozambique ($4,9 billion) and Zambia ($2,4 billion).
Zimbabwe has rolled out an ambitious plan to improve on the ease of doing business and to attract FDI that has eluded the country in favour of neighbouring countries.