Industry Minister Mike Bimha on Tuesday confirmed that Zimbabwe has all but abandoned its populist indigenization policy that has been blamed by many for spooking foreign investors resulting in Harare’s failure to lure foreign direct investment as the economy continues to decline.
The indigenization law compels foreign-owned firms in key sectors of the country’s economy such as mining to transfer majority to indigenous Zimbabweans.
The government has in the past tried to amend the controversial Indigenization and Economic Empowerment Act but failed to pacify investors with Australia last week asking Harare to clarify the law at a mining conference in Perth, the capital of western Australia, next month or risk losing out on much-needed foreign direct investment if it does not repeal or amend the policy as a matter of urgency.
Bimha told VOA Studio 7 that the 51 percent requirement will now only apply to mining.
Under the law, foreign and white-owned companies with assets of more than $500,000 must transfer or sell a 51 percent stake to blacks or the Zimbabwe’s National Economic Empowerment Board.
The country has the world’s second largest chrome and platinum reserves as well as other minerals like diamonds, nickel, coal and gold though its economy is facing a lot of challenges.
It is currently under a Staff-Monitored Program agreed with the International Monetary Fund, which it owes millions of dollars in arrears and unpaid loans.
The country’s wage bill gobbles 70 to 80 percent of its revenue at a time when the IMF, World Bank and other international finance institutions predict that Zimbabwe’s economy will grow by less than 2 percent this year owing to lack of foreign direct investment and other factors.
Government has acknowledged that the economy is not performing well with over 20,000 workers sent home in the past few weeks by companies failing to run their operations due to lack of capital.