Indigenisation breakthrough on cards

13 Oct, 2017 - 00:10 0 Views
Indigenisation breakthrough on cards Dr Sibanda

eBusiness Weekly

Africa Moyo
Government is close to finishing off the alignment of the Indigenisation and Economic Empowerment Act with the clarifications made by President Mugabe, as efforts to attract foreign investors intensify.
President Mugabe moved in to clarify the Indigenisation Act on April 11 last year after the chaos that ensued when Government insisted that foreign-owned firms should submit “acceptable” indigenisation plans by March 31, 2016.
The earlier deadline for submission of indigenisation plans was December 31, 2015 but Government moved it by another three months to allow those that had not complied to do so.
But after it appeared as if some foreign owned firms were considering halting production, and in some cases, pulling out of the country in search for better investment opportunities elsewhere, President Mugabe waded into the issue and clarified the Act.
In his clarification, President Mugabe said in the natural resources sector, Government and/or its designated entities, will hold a 51 percent stake while the investor gets 49 percent, adding that transactions in the sector are “non-negotiable”.
The President also said for existing businesses where Government doesn’t hold 51 percent shareholding, compliance with the indigenisation law would be through ensuring that the local content retained “in Zimbabwe by such businesses is not less than 75 percent of gross value of the exploited resources”.
Local content speaks to wages, salaries, taxation, community share ownership schemes and other activities such as procurement and linkage programmes.
In the non-resources sector, indigenisation plans would be “agreed upon through negotiations involving the relevant line ministers and private investors”.
The role of the Youth Development, Indigenisation and Economic Empowerment in this sector is to coordinate the “activities of the line ministries in the implementation of the policy through the relevant Cabinet Committee, which he chairs”.
The financial services sector is expected to contribute to the indigenisation policy through financing key economic sectors and projects, employee share ownership schemes, linkage programmes and other financial empowerment facilities as may be introduced by the Reserve Bank of Zimbabwe from time to time.
Despite the clarifications by President Mugabe, the Indigenisation Act is yet to reflect the changes, a move that has been blamed by experts for throttling foreign direct investment in the country.
However, Permanent Secretary in the Ministry of Youth Development Dr Desire Sibanda told Business Weekly last week that the ministry is working on the amendments to reflect the Presidential clarifications.
“The ministry is working on those clarifications . . . It is work in progress.
“I can’t give a deadline (for completion) but it’s (the issue) at a ministerial level at the moment. A lot of ground work has been done in terms of consultations; it’s now really at a ministerial level,” said Dr Sibanda.
Asked if the delays in aligning the Act with the clarifications by President are not responsible for scaring away investors, Dr Sibanda:
“It could be one (of them) but when the President made the clarifications; that addressed the concerns of investors.

“We should have seen investments flowing in if that was the main reason. But the clarifications went a long (in addressing investor concerns). Now it’s the legal side that we are talking about.”
But when it was put to Dr Sibanda that some investors insist that what President said is not in sync with what is obtaining on the ground, he said ministers responsible for their portfolios must play an important role in the exercise.
“The clarifications are saying the Ministry of Indigenisation remains the coordinator. You know, there are those terms which are used in the clarifications.
“So it is this ongoing process of aligning which I said is now at a Ministerial level but the clarifications, I think, went a long way in saying it is not a one-size-fits-all approach. That one was crystal clear.
“The Minister responsible for that portfolio will come up with an indigenisation plan and the Minister responsible for Indigenisation will coordinate that. So what remains now is to align in terms is statutes,” said Dr Sibanda.
He said the clarifications by President Mugabe have gone a long way in bringing about “harmony and a closer working relationship” between line ministries and the Indigenisation ministry.
Last year, FDI declined 16 percent to $319 million from $421 million in 2015, according to the World Investment Report prepared by the United Nations Commission for Trade and Development.
Although FDI flows into Southern Africa generally trekked south last year, Zimbabwe’s figures were the lowest.
Angola retreated by 11 percent to $14,4 billion while Mozambique recorded a 20 percent fall to $3 billion.
South Africa, which was up 31 percent, was at $2,3 billion in 2016 while Zambia recorded the sharpest decline of 70 percent by to a reasonable $469 million, mainly due to low commodity prices.
Some investors keen on Zimbabwe say apart from challenges with the Indigenisation Act, they are also unhappy with the bureaucracy associated with establishing and running businesses in the country.
Similarly, the high cost of utilities particularly water and electricity – whose supply can be erratic – is also blamed for holding back investors.
Government is currently working towards improving the doing business environment in the country, and several teams, led by the Office of the President and Cabinet, have covered reasonable ground in this respect.
Eight laws out of the 14 which have been blamed for stifling investment, have already been passed.
The laws passed so far include the Public Procurement and Disposal of Public Assets Act, and the Movable Property Securities Interests Act.
The Companies Act is also being worked on and expectations are high that a new law would be ready by end of year.

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