Making the 2018 National Budget Presentation on Thursday afternoon, Finance Minister Patrick Chinamasa submitted a Finance Bill amending the Indigenisation and Empowerment Act. The Bill to take effect from April 2018.
We have been imploring the government to amend that Indegenisation Act if we are to attract investment into Zimbabwe. The effect of requiring foreigners to give up 51% ownership of their companies is that they lose control of those companies by giving up over half of the voting rights.
Imagine pumping in millions into a company only to lose the power to make decisions that affect that company right from the onset. If the Zimbabweans who obtain the 51% decide to go in a direction the foreigner does not agree with it, there is nothing the he/she can do. Imagine a foreigner setting up a fuel company and having the Zimbos choosing to go into clothing.
That’s an extreme example but considering the foreigner really did not have the luxury of choosing just which Zimbabweans to partner with it is not too far fetched. They would usually be conjoined to corrupt politicians who were the only ones who could buy the 51% stake.
The proposed Finance Bill makes for pleasant reading. The following are the provisions contained in it:
The Extractive Sector
Diamonds and platinum are the only sub-sectors designated as ‘extractive.’
Accordingly, the proposed Amendments will confine the 51/49 Indigenisation threshold to only the two minerals, namely diamonds and platinum, in the extractive sector.
The 51/49 threshold will not apply to the rest of the extractive sector, nor will it apply to the other sectors of the economy, which will be open to any investor regardless of nationality.
The Reserved sector is only for Zimbabwean citizens, and for non-Zimbabweans, entry into the Reserved sector will only be by special dispensation granted by Government.
As we seek to attract both local and foreign investments, existing and potential investors become fully guided by the Amendments we seek to effect through the Finance Bill that is being brought to this August House.
There you have it. The investor chasing requirement that foreigners give up 51% ownership of their companies to Zimbabweans now only applies to those extracting diamonds and platinum. For all other businesses the requirement is to be lifted, from gold extractors to retailers.
As you saw investors should be guided by the provisions of the Bill which means we can take it as a done deal.
Let the investment flood in.
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