The Zimbabwe government’s threats to seize control of foreign companies in Zimbabwe’s long “indigenisation” saga are mostly hollow, say lawyers monitoring the “chaotic” and “farcical” process of the country’s controversial indigenisation law.
The state’s latest threat is to seize assets in Zimbabwe owned by directors of foreign companies who failed to register plans of how they would “indigenise” their companies ahead of yesterday’s deadline. The previous threat earlier in March was to cancel the operating licences of foreign companies which failed to submit these plans.
According to the government, this earlier threat persuaded about 50 companies to produce some kind of documentation for the government before Easter. But none of these threats could be enforced on any company, said lawyer Derek Matyszak of the Research and Advocacy Unit, who has analysed this “chaotic” law for years.
The indigenisation policy emerged in 2008 and the law says black Zimbabweans must acquire at least 51% ownership of all foreign companies with a value of more than $500 000. But the problem is that new black shareholders must buy their majority shareholding.
Whatever few indigenisation deals were concluded in the past few years, details of how they worked out and what money changed hands has never been made public, Matyszak said. “Governmental pronouncements on indigenisation rarely accord with the law,” he added.
“Too often the debate about ‘indigenisation’ is carried out in ignorance of what the law actually says, whether the regulations actually conform to the enabling Act, and whether those tasked with implementing the Act actually have the power to do what they say they will do.”
Patrick Zhuwao, the present indigenisation minister, is President Robert Mugabe’s nephew. “He has no laws which would allow him to do what he threatens,” said Matyszak. A businessman in the financial sector, who asked not to be identified, said: “People are only a bit scared of him because of his relationship with his uncle, not because many believe he has the law to carry out what he threatens.”
One of Zimbabwe’s most senior businessmen, Mutch Masunda, who has headed of some of Zimbabwe’s largest companies and is a long established lawyer, said: “Nobody I know is sure about this law and the deadline as it all lacks any clarity, it lacks certainty, consistency, predictability and sustainability.”
He agreed with Matyszak that the situation regarding the indigenisation law was “farcical”. He and other businessmen and some of Zimbabwe’s most senior lawyers say the latest threats may be no more than an attempt to intimidate foreign companies into selling off shares in their businesses.
Source: The Citizen