[ 2011-09-24 ]

Zimbabwe deadline for foreign firms looms
HARARE (AFP) - Foreign companies operating in
Zimbabwe have until Sunday to hand in plans to
sell majority stakes to local blacks, under a law
that has alarmed investors, who are uncertain how
the rules will work.

The government's order for the transfer of
51-percent ownership has been called the final
phase of "economic emancipation", after
controversial land reforms targeting white-owned
farms a decade ago. But analysts are sceptical.

"There is no way the locals and the government
have the money to buy shares in the companies.
Everybody knows that," Anthony Hawkins, a
University of Zimbabwe economics professor, told
AFP.

The indigenisation drive could hurt the economy in
the same way as the land reforms, which sparked an
economic nose-dive after supporters of President
Robert Mugabe violently seized white-owned farms,
he warned.

"My concern is that this is much more of a
political policy and it will have an economic harm
just like the land reforms. It looks like they are
doing this for the elections," said Hawkins about
polls expected next year.

"This will reduce the amount of investment in the
country as the new owners will not have the money
to, for example, expand projects. The community
does not have the money, as well as the workers
and the government is broke."

The push is without the violence of the land
seizures, which Mugabe said was a way to correct
colonial-era wrongs, but there are mixed signals
on how the law will be implemented.

Indigenisation Minister Saviour Kasukuwere has
warned that non-compliant companies risk
nationalisation.

But certain firms have arranged their own deals
and deadlines ahead of Sunday's cut-off date,
making the government appear flexible on how the
law is implemented.

British insurer Old Mutual will carry out a first
phase to hand 25 percent of its local concern to
black Zimbabweans. South Africa's Impala Platinum,
Zimbabwe's biggest foreign investor through its
Zimplats subsidiary, has been given until November
15 to outline its plans.

William Black of the South African company
Investec Securities said the compulsory 51 percent
stake is too high and will put off foreign
investors.

"Investors can choose globally where to put their
money and countries shouldn't make it too
difficult for foreign investors if they want to
attract that money," said Black.

He said most companies can only invest in big
projects in countries where there is certainty and
security for their profits and operations.

Kasukuwere has argued that the law is not aimed at
victimising foreign companies, but rather to fight
poverty and to put control of the economy in local
hands.

"I want to say in many instances after having
worked in many of the mines for 30, 40 years, many
of our people are retired in abject poverty in
rural communities. We expect to see an empowered
worker in our nation," Kasukuwere said.

But Ray Valentin, an official of Africa Minerals
Resources mining company, said Zimbabwe's
indigenisation laws would "stifle" investment at a
time the government is trying hard to lure foreign
companies to help revive the country's economy.

"Mining companies traditionally are looking for
much larger stakes than 51 percent or 49 percent,
simply because of the risk involved in project,
funding issues and operating the mine et cetera."

Valentin said his plans to invest in Zimbabwe had
to be put on hold since the push to make companies
comply with the indigenisation regulations.

"At the moment we haven't invested much at all. We
were planning to invest a large amount of money in
the coal mining area but we have now decided to
probably focus on Mozambique," Valentin said.

Source - AFP

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