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Zimbabwe's Indigenization Position on Foreign Banks Hailed

FILE: Customers waiting for their turn to withdraw money from the Bulawayo branch of the Metropolitan Bank.

Economic analysts have hailed Zimbabwe’s clarification regarding the operation of foreign banks and the controversial indigenization policy.

President Robert Mugabe explained on Tuesday that banks were governed by the Banking Act, and not the indigenization policy as argued by Indigenization Minister Patrick Zhuwao in his spat with Finance Minister Patrick Chinamasa.

Zhuwao had threatened to shut down foreign financial institutions operating in Zimbabwe that he said had failed to subject to black empowerment regulations mandating foreign firms to cede a 51 percent stake to locals.

“The banking sector shall continue to be under the auspices of the Banking Act, which is regulated by the Reserve Bank of Zimbabwe, and the insurance sector under the auspices of the Provident and Insurance Act,” Mugabe said.

“This policy position is essential for the promotion of financial sector stability, confidence and financial inclusion.”

He however, said these “institutions will, nonetheless, be expected to make their contributions by way of financing facilities for key economic sectors and projects, employee share ownership schemes, linkage programs and such other financial empowerment facilities as may be introduced by the Reserve Bank of Zimbabwe, from time to time.”

Commenting, economic analyst Masimba Kuchera said President Mugabe’s intervention will bring stability and certainty in the financial sector.

“We have said it before that banks are governed by the Banking Act, and by bringing clarity on this issue, the president has helped minimize the risk of people rushing to banks wanting to take their money,” said Kuchera.

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But Bulawayo businessman and former Affirmative Action Group official, Sam Ncube, said despite the clarity, the Indigenization and Economic Empowerment Act remains a disastrous law that’s scaring investors.

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