Tuesday, March 02, 2010

Zimbabwe: White-owned companies forced to hand over 51 percent of their shares to black Zimbabweans

President Mugabe says the new law is designed to correct historical imbalances, while the MDC says the law is 'null and void

A law that forces white-owned companies to hand over 51 percent of their shares to black Zimbabweans has come into force. Most of the foreign companies affected are South African owned, which are supposed to be protected by a recently signed trade agreement.

There was confusion in the business sector, as recently published regulations supporting the so-called indigenization law came into effect.

Within the next 45 days, companies with assets of $500,000 or more have to submit forms reporting information on the race of present shareholders and their plans to hand over 51 percent of their assets to black Zimbabweans. Many people on the streets of Harare are not familiar with the new law.

Ministry of Health research officer Oswald Dziike was surprised when told about it.

"I have not heard anything about this bill," he said. "I do not know anything about this bill, so I cannot comment on it."

A salesman at a vehicle spare parts shop in central Harare, Costa Chipadze, said he is worried it would frighten away any new investors.

"It is actually a threat to investors, as has been currently enunciated by those ministers that are coming with it," he said. "They [investors] feel very much shied away by this because most of them will be having billions of money to invest, but the fact that as long as they sign their contract with the Zimbabwe government, definitely they will have lost," he said.

During his 86th birthday celebrations last weekend, President Robert Mugabe said there would be no going back on the new law.

He said indigenous Zimbabweans, those previously disadvantaged during the colonial era, must control the country's national assets. He said the new law was not nationalization.

"Like the land-reform program, it is designed to regress historical imbalances in the ownership of our economy," he said.

An influential investment newsletter distributed in Zimbabwe's business community said the law contradicts the recently signed South African-Zimbabwe trade agreement.

South African companies in business in Zimbabwe have not commented on the new law. South Africa is the largest foreign investor in Zimbabwe.

The shrinking number of white businessmen who are also Zimbabwe citizens and own smaller companies say they are worried about the new law. One, who asked not to be named, said many of his colleagues believed the new law is similar to the land-reform program that saw thousands of white farmers stripped of their land and assets beginning in 2000.

Another said he hoped the new law was only what he called "electioneering" by Mr. Mugabe's ZANU-PF Party, which says it is trying to boost its popularity since it lost the last elections in 2008.

The law was passed in 2008, before Mr. Mugabe entered the current coalition government with Prime Minister Morgan Tsvangirai. Mr. Tsvangirai's Movement for Democratic Change said the new law is "null and void."

David Clement
Published with the permission of
Voice of America

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