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Zimbabwe's Deeply-Divided Cabinet Skirts Indigenization Debate

Zimbabwe's deeply-divided cabinet, meeting Tuesday following President Robert Mugabe’s return from Singapore, avoided the contentious issue of indigenization to focus on other social and economic issues.

Indigenization Minister Saviour Kasukuwere, who sparked the row, is said to be climbing down after intense pressure from his opponents in the inclusive government.

Cabinet sources told Studio 7 that on the agenda of the cabinet meeting was a report on inputs, mines, energy, cotton prices, parliament and the long-delayed new constitution.

The indigenization issue was shelved as it was feared it would only widen cracks in the unity government, the sources said.

Kasukuwere touched off a storm with a government notice last week ordering foreign banks to reduce shareholding in their Zimbabwe operations to the 49 percent within a year as required by the law.

But Prime Minister Morgan Tsvangirai - backed by Finance Minister Tendai Biti and Reserve Bank chief Gideon Gono - declared the notice "null and void."

The Tsvangirai camp is urging a cautious approach, arguing that applying the 51% local ownership threshold to banking could destabilize a sensitive and key sector of the country’s struggling economy.

Both Gono and Kasukuwere had promised to approach cabinet and President Mugabe to intervene.

But Kasukuwere, who had vowed to side-step Biti and Gono, and deal directly with the investors has reportedly climbed down saying he will now consult the two.

Economist Prosper Chitambara of the Labour and Economic Development Research Institute of Zimbabwe says Kasukuwere’s position is dangerous for the economy.