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Zimbabwe PM Tsvangirai Woos Foreign Investors, Downplays Indigenization

  • Staff Reporters

Mr. Tsvangirai faced the unenviable task of talking up investment in Zimbabwe while a minister from President Mugabe's ZANU-PF party was threatening a South African-based company with seizure of assets

Zimbabwean Prime Minister Morgan Tsvangirai on Thursday called on businesses in the Southern African region and beyond to start investing in Zimbabwe though he admitted the indigenization program of his partners in government makes that problematic.

Mr. Tsvangirai faced the unenviable task of talking up opportunities in Zimbabwe while a minister from President Robert Mugabe's ZANU-PF party was threatening a South African-based company with seizure of assets if it resisted indigenization.

"There is no need to wait. Consider Zimbabwe. That's where you make money," Mr. Tsvangirai declared to the business audience.

He downplayed the scope of indigenization. "It is political rhetoric," he told the conference. "The indigenization law as it currently is - there is no talk of nationalization. There is no talk of grabbing property," Mr. Tsvangirai said.

"No one, in the indigenization law says that you shall grab people's property, that you shall nationalize. In fact, you buy equity at value. We can't criminalize investors."

But Mr. Tsvangirai said his government would seek to promote "local participation by Zimbabweans - it is what we will encourage."

But even as the prime minister wooed investors at the conference, Indigenization Minister Saviour Kasukuwere was again threatening Zimbabwe Platinum Holdings and 30 other foreign mining companies that have not yet submitted indigenization plans.

The country's Indigenization and Economic Empowerment Act calls for foreign companies to put a controlling equity stake in their Zimbabwe operations in local black hands.

Kasukuwere rejected part of a proposal from Impala Platinum, Zimplats' parent, and gave the company until next Wednesday next week to hand over 29.5 percent of its operation. Thirty other companies also risk losing their assets if they do not comply.

Impala Platinum said Thursday that it will not leave Zimbabwe despite Kasukuwere’s demands to hand over a majority stake in Zimplats.

Most mining companies have offered equity stakes of between 25 and 30 percent.

But Kasukuwere told VOA there is is no going back on the 51 percent equity policy.

Economist and former Employers Confederation of Zimbabwe president Callisto Jokonya said discord within the government over indigenization - launched by President Robert Mugabe's ZANU-PF party but opposed in practice if not in principal by the co-governing Movement for Democratic Change - is discouraging foreign investment.

Foreign investors said they are reluctant to venture into Zimbabwe’s lucrative but volatile mining sector due to policy inconsistencies, political instability and lack of transparency in the implementation of the black economic empowerment program.

According to the latest Frazer Institute Annual Survey of Mining Companies, the majority of respondents said political instability remained the major constraining factor in investing in the sector followed by regulatory hitches tied to the indigenization scheme.

The Zimbabwe Chamber of Mines has already expressed concern over the recent hike in mining exploration fees, saying this would make the sector unattractive to investors.

The government recently increased application fees for a platinum prospector’s license to US$500,000 from US$150. A number of other mining fees underwent similar hikes.

Political commentator Nkululeko Sibanda said the Frazer Institute’s survey is a true reflection of foreign investors’ perceptions of the Zimbabwe environment.

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