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Old Mutual & Zimbabwe Government in Deal on Indigenization Equity Stakes

Zimbabwe Indigenization Minister Saviour Kasukuwere said policy holders will take a 10 percent stake and workers 9 percent with the rest placed with a youth empowerment fund and unidentified investment partners

Zimbabwean Indigenization Minister Saviour Kasukuwere said Thursday that under the deal his ministry reached this week with with Old Mutual the insurer has agreed to put 25 percent of its equity into the hands of workers, pensioners, policy holders, a youth development fund and black Zimbabwean investors.

Under the agreement which could provide a template for the indigenization of non-mining firms, Kasukuwere said policy holders will take a 10 percent stake and workers 9 percent with the rest placed with the youth empowerment fund and investment partners.

Kasukuwere declined to go into detail as to the investment partners. But sources say said they are likely to be drawn from the Affirmative Action Group membership.

The minister said further discussions in November will determine the disposition of another 26 percent equity making a total of a controlling 51 percent stake.

Kasukuwere told VOA Studio 7 reporter Blessing Zulu that the company is proposing to set up an agricultural and infrastructural fund for Zimbabwe as well.

Old Mutual Managing Director Luke Ngwerume in a statement Thursday said the indigenization plan is broad-based and will stimulate the economy.

“We are very encouraged that the plan presents significant and far-reaching opportunities for Old Mutual to play its part in the sustainable development of the Zimbabwean economy and its people,” Ngwerume said.

Economic commentator Rejoice Ngwenya said the plan is workable.

Economist Eric Bloch said the deal will undermine Old Mutual’s financial position. “We can’t expect companies to simply give people their net worth as gifts because commerce and industry require capital injection and not just a change of ownership,” said Bloch.

Meanwhile, Meikles Africa Limited, operator of the well-known Harare hotel, announced that it will transfer a 10 percent equity stake to its workers.

Executive Director Onias Makamba said the workers are currently looking for funds to pay for the shares, valued at some US$6 million on Thursday.