A new retrogressive economic empowerment law in Zimbabwe that seeks to
grab 51 percent ownership of all international firms operating in the country was set in motion today, Monday.
All foreign firms have from Monday 45 days to meet a government directive to draft plans on how they will cede controlling stake to blacks.
Failure to comply with it could mean up to five years in prison.
But the regulations are silent on where impoverished locals will get money to pay for stake in firms that is expected to run into billions of United States dollars.
Panic has grabbed the economic sector with weekend reports that top
government officials from Mugabe’s ZANU PF have positioned themselves
to take over some companies, including banks.
“There is uncertainty within the business sector and we are engaging
government on this, to say why don’t we set these regulations aside for now and focus on attracting investment,” Kumbirai Katsande, who heads the Confederation of Zimbabwe Industries said.
Financial institutions like British-based Standard Chartered Plc and Barclays Plc and mining houses Anglo Platinum Limited (Angloplat), Impala Platinum Holdings (Implats) and Rio Tinto all have operations in Zimbabwe and are easy targets in the empowerment drive.
Morgan Tsvangirai, the prime minister and leader of the Movement for
Democratic Change, said the law was “null and void” as it was not debated by the new cabinet.
Mugabe defended the law at his 86th birthday celebrations on Saturday,
saying they were designed to broaden Zimbabwean participation in the
“This law will enable us to examine every large company in the country
and determine whether the ownership principle has been observed,” Mugabe told a crowd gathered in Bulawayo, Zimbabwe’s second largest
Renowned economist John Robertson say it will not be business as
usual from Monday in Zimbabwe. “If there is anyone who doubts ZANU PF’s resolve, they only need to look at the land invasions, which caught everyone by surprise” said Robertson.
After invading White farms, new black farm owners abandoned most of the vast farm lands that they had appropriated for themselves due to lack of technical know-how. A situation that led to widespread food shortages. It is widely believed that the indiginization law will destroy the Zimbabwe business environment in the same manner.
Mugabe’s band of supporters, led by war veterans and youth militia, shocked the world in 2000 when they invaded white-owned commercial
farms, in a spree that left dozens of farmers dead and started the country’s isolation by the West.
The free-for-all farm take-overs disrupted commercial agriculture, which is yet to recover a decade later.
Also Read: Foreign and Nigerian businesses to face indigenization law