Home » Business » Chinamasa On Indigenisation

Cabinet has directed the urgent realignment of investment and empowerment laws so that they reflect a 100 percent ownership of natural resources by Zimbabweans, with investors entering into profit sharing agreements. This is line with President Mugabe’s pronouncements that more Zimbabweans should participate in the economy.

Finance and Economic Development Minister Patrick Chinamasa told Parliament yesterday that the thrust of the indigenisation policy as pronounced by the President would ensure more economic participation by indigenous Zimbabweans and secure a win-win situation with investors.

Youth Development, Indigenisation and Economic Empowerment Minister Francis Nhema was tasked to look into the policy and ensure that it conforms with with the law.

Minister Chinamasa was responding to a question from the floor on the position pertaining to indigenisation laws in the wake of several reports that appeared in the media recently.

The proposed review of the indigenisation and economic empowerment policy moves from requiring at least 51 percent equity in the hands of indigenous Zimbabweans to ensuring they retain 100 percent ownership of their natural resources.

Government is in the process of clarifying the Indigenisation Act to ensure a sector specific approach that puts 100 percent ownership of resources in the hands of indigenous Zimbabweans, with the only debate pertaining to the percentage of sharing proceeds from the investment with investors.

As currently constituted, the Indigenisation and Empowerment Act requires all foreign-owned businesses worth at least US$500 000 to cede 51 percent shareholding to indigenous Zimbabweans.

But under the proposed arrangement, the resources are wholly indigenised as Government has identified the Production Sharing Model (PSM) and the Joint Empowerment Investment Model (JEIM) as the two vehicles through which the indigenisation policy would now be implemented.

The PSM is a broad cover for an assortment of production sharing agreements signed between Government and extraction companies concerning how much of a resource extracted from the country each will receive.

Under JEIM, outside mining, agriculture and particular tourism investments, indigenous Zimbabweans will be encouraged to enter into joint ventures as a way of generating capital to build wholly Zimbabwean-owned enterprises.

Minister Chinamasa said with respect to sectors like land, mines and wildlife, it should be understood that negotiations would be undertaken on the basis that Zimbabwe had 100 percent ownership on them. He said the framework should be guided by what President Mugabe said about the laws during the 34th Independence Day commemorations and at the Zimbabwe International Trade Fair in Bulawayo recently.

President Mugabe emphasised that the laws should ensure that Zimbabweans own 100 percent of the natural resources, while investors recoup their funds through profit sharing arrangements.

“Now, with respect to sectors outside these areas, we have recognised and appreciated that there is a conflict in the policy pronounced by His Excellency and the law and Cabinet took a decision that we should align the investment, indigenisation and empowerment laws to our policies,” said Minister Chinamasa.

“To this end, Cabinet directed Minister Nhema to take this issue with a view to align the law to the policy pronouncement and he has been asked to start clarifying that position at the Politburo.”

Minister Chinamasa said the amendments should be made in such a way that they were not ambiguous.

“We will as much as possible remove any discretionary powers that we will give to officials that could be a source of corruption. It is important that the policy is set out transparently in the law for anyone to see without having to hop from one official to another or from one Minister to another,” he said.

Minister Chinamasa said local participation was the underlying philosophy of indigenisation and people should know that investors were not philanthropist or charitable organisations, but were coming to make profits. Government, he said, was willing to work with any investor.

Minister Nhema said in an interview that the implementation of the Indigenisation and Economic Empowerment Act would be sector-specific and Government would continue to be guided by the law in all its future endeavours.

Government gazetted several Statutory Instruments since promulgation of the principal Regulations in 2010 indicating that implementation of the Act would not be one-size fits all.

The then Minister of Youth Development, Indigenisation and Empowerment Saviour Kasukuwere on October 28, 2011 gazetted an SI on Net Asset value, Lesser Share and Maximum Period for Business to Indigenise in the Manufacturing Sector.

He also gazetted another SI in 2012 for Net Asset Value, Lesser Share and Maximum period for Businesses to Indigenise in sectors like Finance, Tourism, Education and Sport, Arts, Entertainment and Culture, Engineering and Construction and Energy. Other sectors are Services, Telecommunications, Transport and Motor Industry Sectors.

Minister Nhema said his ministry believed in quiet diplomacy in its implementation of the law.

“The issue is that I speak softly on the same content and I believe our quiet diplomacy is working,” he said.

“Most companies have engaged us and we continue to engage them. But generally, we are happy with the response from our stakeholders. We have not moved away from the provisions of the Act.”

He said some companies in the financial services sector had submitted their proposals, while negotiations were still under way with other banks.

Minister Nhema said some foreign owned firms supported empowerment of indigenous Zimbabweans by providing money for training the youths and women through Vocational Training Centres.

He refused to comment on the mulled amendment to the Indigenisation and Economic Empowerment Act through two models: the Production Sharing Model (PSM), and the Joint Empowerment Investment Model (JEIM).

PSM would see Zimbabweans retaining 100 percent ownership of mineral resources and agricultural land, while sharing production would either be fixed or based on a sliding scale depending on the specific mineral or agricultural product and could be linked to profitability.

Source : The Herald

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