The ManicaPost
President Mugabe recently said Government will amend the Indigenisation and Economic Empowerment Act to bring it in line with a policy clarification he issued in April this year. President Mugabe issued the policy intervention following a row played out in the media pitting Youth Indigenisation and Economic Empowerment Minister Patrick Zhuwao and Finance Minister Patrick Chinamasa over application of the law to the natural resources and financial sectors.
On issuing the clarification, President Mugabe acknowledged that the conflicting positions on the interpretation of the empowerment law created confusion among current and potential investors thereby undermining market confidence.
In the April policy clarification, the President announced that where Government does not have 51 percent ownership, compliance with the Indigenisation and Economic Empowerment Policy should be through ensuring that the local content retained in Zimbabwe by such businesses is not less than 75 percent of gross value of the exploited resources.
The local content is in the form of wages, taxes and procurement. However, in new investments in the mining sector government and its designated entities would hold a 51 percent stake with the remaining 49 percent belonging to partnering investors.
In the financial sector, foreign banks would continue operating under the Banking Act which is regulated by the Reserve Bank of Zimbabwe. However, President Mugabe told both houses of Parliament that amendments would be made to the Act.
“It will be recalled that I issued a statement to clarify government’s position regarding the Indigenisation and Economic Empowerment Policy on 11th April, 2016.
“The relevant Act will thus be amended to bring into consonance with the enunciated policy position,” he said while opening the fourth session of the eighth Parliament.
President Mugabe said the economy was facing a number of challenges and clarification of the indigenisation law would ensure improved foreign investment, a key enabler to economic growth.
Zimbabwe has been losing out on foreign investment due to various reasons including portrayal of the country as an unsafe investment destination by western media and the pessimistic approach towards the Indigenisation and Empowerment Act.
But, to its credit government has been initiating a raft of measures to improve the country’s investment climate.
“Our economy faces a number of challenges which include the subdued aggregate demand, liquidity constraints, high interest rates, subdued foreign direct investment and limited fiscal space.
“This too, is further compounded by low revenue collections arising from depressed production, rampant revenue leakages as well as poor mineral commodity prices on the global market,” he said.
“Government, in the context of the ZimAsset is implementing a battery of initiatives to address the prevailing economic challenges.
“For instance it has embarked on the Ease of Doing Business Reforms with the objective of improving the local business environment that stimulates investment inflows.” – New Ziana
