The Zimbabwean economy is at a Tipping Point and will be crashing down in a few days’ time following the new indigenization demands by president Robert Mugabe’s nephew Patrick Zhuwao that any company that fails his Indigenisation Compliance should not open for business on April 1st.
The phenomenon has since been labelled the indigenization Fools Day demand.
As companies were by the state media said to be in a frenzy of activity working around the clock to submit indigenisation and empowerment proposals before the Thursday deadline, it turned out many are in fact waiting to close down in protest.
As the law has been twisted and shifted over several years, investors have reacted negatively against the economy and the recent development analysts say we will see the worst in the decline.
The Indigenisation and Empowerment Act – enacted in 2008 and operationalised on March 1, 2010 – requires foreign-owned companies valued at more than US$500 000 to be at least 51 percent owned by indigenous Zimbabweans.
Last year, Government directed all foreign firms to submit their indigenisation proposals by December 31, 2015, but the deadline was extended to March 31, 2016. Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao last week said any company that failed to submit a proposal would not open for business on April 1.
He indicated that Statutory Instrument 21 of 2010 in fact specified that companies should have submitted their plans by March 1, 2015. Government feels that some companies have been dragging their feet, opting instead to pay the Indigenisation Compliance and Empowerment Levy in the hope that the law would be reviewed.
The government in an apologetic news article claimed that the Empowerment Levy, designed as a disincentive to firms that failed to submit proposals by the deadline, was scrapped last week.
But MDC Spokesman Kurauone Chihwayi said “it is a tragedy that those superintending over this country think it is alright to play Russian roulette with the country and its citizens’ economic welfare by chasing away foreign investors instead of embracing them, at a time the country is in desperate need for foreign direct investment in order to get it back to its feet.
“It makes for tragic reading seeing that this matter is cause for divisions even within ZANU PF itself.
We are not fooled, we are aware that President Mugabe and Zhuwao have run out of ideas on how to loot funds for self -enrichment after exhausting diamond and other public revenue for decades, and now are after fleecing foreign firms through the shoddy implementation of the Indigenisation law. The people of Zimbabwe must not for one moment believe the lie that this is being done with their best interests at heart, in our view it is just a retirement package plan for ZANU PF big chefs who can sense inevitable defeat come 2018, who as usual are not bothered by the catastrophic effects on the ordinary suffering Zimbabweans.”
Meanwhile Zimbabwe National Chamber of Commerce president Mr Davison Norupiri was quoted by the state media saying that that most foreign companies were preparing their proposals before the deadline.
“Quite a number of foreign-owned companies are actually preparing to make their submissions; they are prepared to comply before the deadline. There is no resistance as such but you find that there are some processes; each and every company has its own policies and consultations which have to be made with head offices. So they are consulting. Quite a number of our members had already complied. Remember, deadlines were set before, during Minister Kasukuwere’s time, and our members had already complied. It is only a few who are now working with their foreign offices in order to regularise. So there is no resistance whatsoever, we have not yet received any records of resisting compliance but we have received records of seeking clarification,” said Mr Norupiri.
Similarly, Chamber of Mines of Zimbabwe CEO Mr Isaac Kwesu said mining firms would submit proposals as the first stage of complying with Indigenisation and Economic Empowerment Regulations.
He noted that the Thursday deadline was not for full compliance but rather for submission of proposals.
“When submitting the proposals, it does not mean the proposals must be accepted. I think there is some misconception around those issues. One can even submit the proposal and say I am not indigenising; it’s a proposal.
I am just quoting the minister’s statement (when he announced the framework); you would have complied with the first stage, so I don’t think this would be a big issue because in the past, most miners submitted their proposals, only that these proposals were being declined or rejected. All they have to do is resubmit because what they submitted in the past expired. . . but I think it’s something that can take a few minutes to come up with a proposal and submit something to say ‘this is what we want to do’. We agree or disagree,” said Mr Kwesu.