Business
Zimbabwe insists that indigenization is not nationalization
Zimbabwe’s forcing of foreign firms to hand over a 51 percent stake will scare away much-needed investment, with no clarity on how the cash-strapped state will fund its big stick approach, analysts say.
The indigenization legislation stipulates that locals should have controlling shareholding in all foreign-owned companies operating in Zimbabwe.
The government’s assurances that its indigenization policy is not a nationalization drive is unlikely to soothe nerves after platinum giant Implats capitulated on Tuesday after being threatened with a state take-over of its local subsidiary.
“It is doing so much damage to the country in terms of attracting investors for job creation. The policy is very bad,” said Harare-based economist John Robertson.
The controversial law orders foreign-owned companies, such as mines, banks and retailers, to submit plans on how they will give up a majority share to locals.
But the government has yet to come up with a clear-cut explanation how it will pay for the shares taken or even how the process will be undertaken.
The confusion comes as Zimbabwe seeks massive investments to rebuild its economy, which was devastated by a land reform programme in which white-owned farms were seized, and sanctions were subsequently imposed on the country by most western nations.
