From tomorrow – the first day of March – a dark cloud will hang over foreign-owned businesses in Zimbabwe because the controversial Indigenisation and Economic Empowerment Act kicks in.
The regulations require that all businesses with an asset value of at least $500 000 are obliged to comply with the 51 percent indigenous shareholding requirement within a period of five years.
Businesses are required to declare their shareholding status within 45 days from March 1 2010 through an IDG 01 form, and new businesses are required to do that within 60 days.
Those that cannot meet the required 51 percent are expected to submit their indigenisation plans together with their IDG 01 forms within 45 days.
Another concern for potential investors and foreigners with businesses in Zimbabwe was the reservation of certain business sectors for investment by indigenous Zimbabweans.
These include agriculture, transport, taxis, buses, and car hire, retail, wholesale trade, barber shops, hairdressing and beauty salons, employment agencies, estate agents, valet services, grain milling, bakeries, tobacco grading and packaging, tobacco processing, advertising agencies, milk processing, provision of local arts and craft, and marketing and distribution.
Those businesses that also front and furnish false information in their indigenisation plans shall be charged with criminal offences and punished with a fine not exceeding level 12 or imprisonment for a period not exceeding five years or both.
Zanu PF has endorsed the implementation of these measures that could negatively affect investor confidence. But the MDC-T has said the Minister of Youth Development, Indigenisation and Empowerment Savior Kasukuwere has prematurely gazetted the regulations.