Despite reports that the Zimbabwean government is mulling over accelerating the implementation of the Indigenisation and Economic Empowerment Act passed in 2007, many foreign firms continue to operate their businesses.
Lured by the ever increasing attraction of the Zimbabwean economy, which has been propped up by the economic stability brought about by the unity government, foreign economic players are making inroads into the Zimbabwean market.
For example, the British American Tobacco company under its Zimbabwean subsidiary, BAT Zimbabwe, this year purchased 15 million kilograms of tobacco. According to Lovemore Manatsa, the BAT managing director, the company will consume just 10% of the crop and will export the rest to other BAT operations worldwide.
Mining company, Zimplats, which is owned by South Africa’s Impala Platinum also recorded impressive gains and is reportedly seeking to increase platinum mining in the country and production at some of its mines.
The Zimbabwe Stock Exchange also roared back to life this week after reports that Prime Minister Morgan Tsvangirai has re-joined the unity government which he had boycotted for three weeks.
In an interview with The Sunday Standard, Bulawayo-based economist, Dr Eric Bloch, said that the proposed law is largely speculative and hyped by the media, adding that the business community will only respond to it when it is published.
“For now the focus is on economic recovery,” he said.
A report by the Confederation of Zimbabwe Industries (CZI) shows that factory-capacity utilisation in the country is up to 32% from less than 10% before the unity government, which is an encouraging sign for investors.
Dr Bloch warned that South Africa, Zimbabwe’s largest trading partner in the region, will be watching the empowerment issue closely, especially since they have several interests in the country.
“Zimbabwe must be wary of scaring off investment. Empowerment must be acceptable to SA as well. Our version of their Black Economic Empowerment initiative must not scare them off,” he said.
The Indigenization and Economic Empowerment Act proposes for a 51 % transfer of shares in foreign companies to indigenous black citizens in as little as 60 days.
Fears are widespread that the move to acquire shares in foreign firms will benefit those in Mugabe’s inner-circle rather than indigenous citizens whose interests the Act purports to serve.
Similar empowerment campaigns in the past have yielded little benefit to the country.A botched attempt in 2000 at empowering blacks in Zimbabwe under the land reform programme by President Robert Mugabe’s government has been marred by corruption and multiple farm ownership by ZANU-PF members, eventually reducing Zimbabwe to a beggar-state.