RSS 2.0 FeedAugust 2011 - Vol 36, Business , Financial and Property Indaba
Zimbabwe threatens to deal harshly with foreign companies
(Picture - Kasukuwere Gangster minister from Mugabe' ZANU PF Party)A Zimbabwean minister has warned that the seizure of foreign owned companies that fail to comply with the country’s empowerment laws will be more vicious than its land reforms that reportedly cost the economy US$12 billion in a decade.
Indiginisation and Economic Empowerment Minister Savious Kasukuwere said companies that fail to transfer 51 percent of their shareholding to locals will be dealt with harshly.
"The fight will overshadow the land reform programme as this one is much more sophisticated and is about serious wealth” he said.
Map of Zimbabwe
On August 19, the legal department in Kasukuwere’s ministry issued a 14 day ultimatum to Standard Chartered, Barclays Bank Zimbabwe, Murowa Diamonds, Pan American Mining, Zimplats, Blanket Gold Mine, Mimosa Holdings, Duration Gold Mine, British American Tobacco, Nestlé and Cargill Zimbabwe.
He said he had powers to withdraw their operating licences and warehouse their shares in a government trust, before passing them on to black Zimbabweans.
Under the country's empowerment laws, black Zimbabweans should acquire 51 percent of foreign businesses in the next five years.
But in a sign of major fissures within the regime of President Robert Mugabe over the implementation of the laws, Reserve Bank of Zimbabwe governor Gono urged Barclays and Standard Chartered banks to ignore the ultimatums.
“The Reserve Bank, which is the legal authority to issue or take away banking licences…, wishes to advise all stakeholders that it has neither given notice to, nor does it have any immediate or foreseeable intention to withdraw operating licences from, any registered financial institution,” he said in a statement.
Gono described Kasukuwere’s threats as “irrational exuberance” done by someone who did not understand banking.
The Zimbabwe Stock Exchange did not negatively respond to the ultimatums with analysts saying the market is now used to the threats as they had been there since 2009.
The indigenisation law is strongly supported by Mugabe but has created tensions within the unity government, with Prime Minister Morgan Tsvangirai arguing that it will discourage investment.
Mugabe says the regulations were meant to correct the economic imbalances created by Zimbabwe's colonial past.
