Daily trading volume at the Zimbabwe Stock Exchange plunged from US$2 million US$500,000 from Monday to Tuesday after regulations governing indigenization of companies took effect, sources said Wednesday.
Economists said the slump in activity on the exchange reflected investor fears that traded companies could sustain heavy losses under indigenization, directly due to the requirement that indigenous black Zimbabweans must hold a 51 percent stake in companies within five years, or indirectly due to the hit to the economy.
Economist Prosper Chitambara of the Labor and Economic Development Research Institute of Zimbabwe told VOA Studio 7 reporter Gibbs Dube that the government should consult widely before it fully implements the indigenization law.
Chitambara said the law is being implemented at a time when Zimbabwe is struggling to recover from serious economic problems that many observers say resulted from fast-track land reform since 2000.
“I think the government has to go back to the drawing board because these regulations came into force without the due diligence of consultations,” he said.
Economist Rejoice Ngwenya said the law will mainly benefit senior officials and supporters of President Robert Mugabe's ZANU-PF party as the majority of Zimbabweans do not have the means to raise funds to buy shares in companies slated for indigenization.
All businesses with assets of US$500,000 or more, publicly traded or privately held, must report on their shareholding structures within the next six weeks to the National Indigenization and Economic Empowerment Board set up by Indigenization Minister Saviour Kasukuwere one week ago.
Under the Indigenization and Economic Empowerment Act of 2007, indigenous Zimbabweans must hold a controlling stake in all companies though some exceptions will be made if they are determined to be in the best interests of the country.