Government needs to continually appraise the indigenisation and economic empowerment law to ensure its efficiency, the Affirmative Action Group (AAG) has said.
This is in view of some huge mining conglomerates especially in the platinum sector, namely Zimplats and Mimosa, which are yet to agree on concrete compliance plans with the Government.
In an interview, AAG chief executive officer Dr Davison Gomo said although the indigenisation policy is “one of the best and key policies ever introduced by Government since 1980″, there was need for assessed on a constant basis.
“In order to make a firm judgment on the effectiveness of this policy, a detailed study based on decisions taken or not taken and an assessment of the overall policy objectives and decisions taken by government from time to time and the emphasis placed and not placed on some aspects of the policy will require to be subjected to serious scrutiny for resilience and consistency,” said Dr Gomo.
“What cannot be challenged however, is the Government irreversible commitment to the policy as the most effective tool to bring development to the majority by opening up the space to the indigenous community on a sustainable basis.”
The Indigenisation and Economic Empowerment Act, which was enacted in 2010, originally mandated that all foreign companies operating in the country to secure 51 percent ownership of shares by indigenous Zimbabweans through partnerships with business people, community share trusts and worker share trusts.
In announcing the 2015 National Budget last year, Finance Minister Patrick Chinamasa said the Government recognises that the 51/49% ownership structure “may not be achieved overnight.”
And suggested that “the period necessary for compliance with the law will be a matter for negotiation between the would-be investor and the respective/ relevant line Ministry responsible for the particular sector/sub-sector.”
Other observers however believe that an un-tinkered indigenisation policy will likely give investors more confidence.
“Investors we speak with cite a lack of assurance on property rights as the biggest risk in Zimbabwe. Our views of future economic performance will be hinged on the nature and form of the indigenisation law. We believe that an absolute and not a “subject to negotiation”
indigenisation law will have an enormous positive effect on capital flows and FDI,” said Ray Chipendo, lead researcher at South Africa-based Emergent Research.