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Silently, The Changes To The Zimbabwean Indigenisation Law Have Been Made Into Law

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One of the most topical issues raised in the 2018 National Budget by Patrick Chinamasa is the issue of the indigenisation law amendment. The amendments that were tabled signaled a very significant departure from the Robert Mugabe regime by the Emmerson Mnangagwa government.

When he presented the budget in parliament, Chinamasa promised that the legislative processes to reform this piece of law would be done in the first quarter of 2018. The promise has been kept. We all thought the changes would be on the Indigenisation Act itself but the changes came through the back door somewhat.

The changes to this law were hidden in the annual Finance Act which usually deals with just taxation issues. Like a regular act that it is the Finance Act passed through parliament without much debate. The changes were gazetted as law on the 14th of March.

It’s surprising why the government did not make much noise about this law coming into effect seeing that it is probably the most radical and popular change they have made so far. Mnangagwa is on a crusade declaring that Zimbabwe is open for business. If anything would prove his sincerity on this it would be changes to the indigenisation law. If I were him I would have blown the trumpet on the 14th.

What are the changes made? To be honest, for all intents and purposes the indigenisation law as instituted by Bob is as good as repealed.

Only diamond and platinum extraction to have any stipulated restriction

Any investor from any part of the world is now free to incorporate, acquire or control any business they so wish and have as much shareholding as they wish. This is only restricted when it comes to the mining of diamonds or platinum. These are the only two types of businesses in which there is a 51% local shareholding stipulation.

Not so strict even for diamond and platinum

Even so, for diamond and platinum mining the provision says the 51% ownership of these operations by the local designated entities would be achieved through the course of time. The designated entities can include community share ownership trusts or employee share ownership schemes or non of these. The responsible minister has been given the job to work out those kinks with foreign companies in these sectors or those that would come in.

Reserved sectors

The following 12 sectors are reserved for Zimbabwean citizens. However, foreigners who were in these sectors before 1 January 2018 will continue running their businesses. Any new foreigners who want part in those sectors will have to apply and may be granted under special circumstances. The 12 sectors:

·        Transportation – passenger buses, taxis and car hire services;

·        Retail and wholesale trade;

·        Barber shops, hairdressing and beauty saloons;

·        Employment Agencies;

·        Estate Agencies;

·        Valet Services;

·        Grain milling;

·        Bakeries;

·        Tobacco grading and packaging;

·        Advertising Agencies;

·        Provision of local arts and crafts and their marketing and distribution;

·        Artisanal mining.

The law is not racial anymore

The previous Indigenisation and Economic Empowerment Act reserved the same sectors above for locals. However, the old act stated that these sectors were reserved for ‘indigenous locals’ and now the new law states that the reserved sectors are for Zimbabwean citizens. This means anyone of any race as long as they hold Zimbabwean citizenship and usually this would include permanent residents.

Defining things in broad terms like ‘citizen’ is a step in the right direction

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5 thoughts on “Silently, The Changes To The Zimbabwean Indigenisation Law Have Been Made Into Law

  1. I think this law need amending. The only question is why didn’t Zimbabwe follow the Botswana model. Who is going to own the 51% of the diamond mines? Create a 50:50 Joint Venture like Debswana Diamond Company (Pty) Ltd is a unique partnership between the Government of the Republic of Botswana and De Beers Group of Companies. The company was incorporated on 23rd June, 1969 under the original name of De Beers Botswana Mining Company (Proprietary) Limited.

    1. The Debswana model works if you don’t have a government entity already existing (and failing) in the mining sector. In the Debswana case, De Beers has the management contract; so besides equity related earnings the company also get to be paid for the management of the mine(s). In the Zimbabwe case this difficult/ hampered by the existence of the ZMDC. The incompetence of this organisation is there for everyone to see. The various recent JV with the ZMDC have seen the SOE take technical control of the operations. Not bad if they were up to the task but unfortunate if they are not (as we have come to see).

  2. Thank you Mr ED & company. This is highly commendable.
    Next deal with all looters (on the list) and then repeal POSA & AIPPA.

  3. The amendments are not “hidden”. It is standard practice to amend laws and regulations via the Finance Act.

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