Harare, Zimbabwe — 19 March 2012 – Zimbabwe’s forcing of foreign companies to hand over a 51% stake in their operations will scare away much-needed investment, with no clarity on how the cash-strapped state will fund its big stick approach.
This is the view expressed here by analysts who say that the government’s assurances that its indigenisation policy is not a nationalisation drive are unlikely to soothe nerves, after platinum giant Impala Platinum Holdings capitulated last week having been threatened with a state takeover of its local subsidiary, reports Fin24 quoting news agency AFP.
“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 of how it will pay for the shares taken, or even how the process will be undertaken.
Negative ripples from the indigenisation policy have been felt with key projects put on hold because investors are not keen to invest without a controlling stake, said analyst Erich Bloch.
“We have lost the potential to attract investment. The indigenisation policy is ill-advised and damages the economy,” he added.
"Which investor would want to invest where half of his investment will be taken and wouldn’t have a say in the running of their businesses?"
The plan for Zimplats, the local subsidiary of South Africa-based Implats, transfers 10% of shares to workers, 10% to a community trust in Ngezi where its mine is located, and 31% to a National Indigenisation and Economic Empowerment Fund.
The companies like Implats are meant to be compensated, but questions have been raised about how Harare will be afford to pay for the shares in the local arm of the world’s second-largest platinum miner.
Source: Fin24. For further details click here.