Mugabe, Tsvangirai find common ground on black empowerment

13:16, March 13, 2010      

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Zimbabwean President Robert Mugabe and Prime Minister Morgan Tsvangirai appear to have found common ground with regards to the issue of black empowerment, with both agreeing that the policy should enhance indigenous participation in the economy.

However, they still have to agree on how best to implement the policy as they try to strike a balance between black participation in the economy and the need to attract foreign investors.

Mugabe remains vociferous, to the extent that he has become anti-white, in his bid to implement the policy, while Tsvangirai is taking a cautious approach, lest the policy scares away foreign investment much needed to help turn around the country's economy.

Since the then entirely Zanu-PF government led by Mugabe moved to promulgate an indigenization law in 2007, Tsvangirai's MDC party, then in opposition, and the investor community had opposed it because of lack of clarity on how it would be implemented.

The law requires companies to submit forms declaring their shareholding structures within 45 days from March 1, 2010.

The intention is that indigenous people should hold 51 percent shareholding in all existing and new multinational businesses.

Businesses that do not meet the 51 percent indigenisation requirement will be expected to submit a plan on how they intend to meet the requirements within 45 days from March 1, and those with acceptable reasons will be afforded an extension not exceeding 30 days.

Also, all existing businesses with a threshold of 500,000 U.S. dollars should, within 45 days from March 1, 2010, declare their shareholding status to the indigenisation minister through a prescribed form.

Current entities will be given a five-year period from March 1, 2010 to comply, while new businesses will also be given five years from date of commencement of business.

Both existing and potential investors have expressed concern over the new regulations. Mugabe has said indigenization laws should not be viewed as obstacles to investment promotion but as promoting the greater participation by Zimbabweans in the economy and as a democratization of economic activities.

When indigenization and economic empowerment minister Saviour Kasukuwere gazetted the indigenization regulations in January, a war of words erupted between him and investment promotion minister Elton Mangoma, with the latter arguing that they would push away investors. Mangoma is a member of Tsvangirai's party, which also criticized the regulations.

"The MDC views these provocative and anti-investment regulations as a deliberate attempt to undermine the country and its people. At a time when Zimbabwe desperately needs foreign direct investment, it is an affront to recovery efforts for the Ministry of Youth and Indigenisation to nocturnally and unilaterally gazette these anti-people and anti-Zimbabwe regulations," the party said.

It alleged that the people who were intended to benefit from the new regulations were not ordinary people, but those in Mugabe' s inner circle. However, party leader Tsvangirai was this week singing a different tune as he sought to assure investors that there was nothing sinister about the new regulations.

"I want to assure you that there is no intention on the part of the government to undermine investment, but to promote broad based indigenization and empowerment.

"Sometimes investors get alarmed when a policy is announced without clarification, but I want to assure you that the policy is in the best interests of the people of Zimbabwe. The policy intends to enhance local participation and, of course, not the enrichment of a few people," he told a symposium on public-private partnerships in Harare on Thursday.

Even as early as last year, Tsvangirai had expressed support for the regulations, provided they were implemented in a transparent manner.

He told a mining conference in September that he supported the policy, but wanted its implementation to be fair, transparent and in line with international norms.

"To remove the uncertainty around the policy of indigenization, it will be based on ensuring that ordinary Zimbabweans benefit from the country's mineral endowment and participate at all levels in the business of mining and mineral exploitation."

He argued that no right-thinking Zimbabwean, or any person from anywhere in the world, could see fault in such an approach if it was implemented fairly, transparently and in line with accepted international norms.

Now that the policy is being explained, there is a bit of thawing by skeptics who had seen it merely as a way to expropriate wealth from foreign companies. It is now clear that investors will get a fair return on their investments following a valuation of their worth.

However, while the government is still to agree on how the new law should be implemented, Kasukuwere has not indicated that the process has been suspended.

He has emphasized though that no shareholding will be taken for free and all transactions will be on a commercial basis. If there are valuation disputes, the Administrative Court will decide.

Source: XInhua
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