Chinese businesses were exempted from complying with Zimbabwe’s Indigenisation and Empowerment Act, a mandatory regulation for foreign-owned companies to cede 51% of their company shares to indigenous people.
Youth Development, Indigenisation and Empowerment minister Saviour Kasukuwere this week confirmed some Chinese firms had been exempted from full compliance with the empowerment laws because they were supporting vital sectors of the economy.
Kasukuwere said the exemption was granted on the basis of a Memorandum of Understanding (MOU) the Chinese companies entered into with the government.
However, Industry and Commerce minister Welshman Ncube said he was not aware of any agreement signed between government and China over the matter.
“I am not aware of the letter and I am also not aware of the MOU,” Ncube said.
The move by Kasukuwere has reportedly caused ructions in government after it was discovered the indigenisation and empowerment laws were selectively implemented on targeted multinational companies operating in the country.
Investigations showed Kasukuwere wrote Tian Ze Tobacco, granting the Chinese firm exemption from fully implementing the indigenisation laws.
Some Chinese companies in other sectors of the economy have also been exempted.
The indigenisation and empowerment laws stipulate that foreign-owned companies with a threshold of $500 000 or more have to comply with the regulation.
But Kasukuwere said exemption was only granted to companies owned by nationals whose countries were not hostile to Zimbabwe by imposing targeted sanctions.
“Companies such as Tian Ze came into the country at a time when no one wanted to come in. They have been supporting our agriculture and our farmers, so we look at those things when considering whether to exempt them or not,” he said.
“It’s not every company in the agricultural sector that is exempted, we look at their disposition towards our people. Companies from countries which have put our country under sanctions are not considered.”
A letter dated July 4 2010, addressed to Tian Ze managing director Shao Yan reads:
“I refer to the letter submitted to my office on March 8, 2010.
“Having submitted your proposal, I hereby grant you exemption from full compliance with the Indigenisation and Economic Empowerment Act (Chapter 14.33).
This exemption has been granted on the basis of the Memorandum of Understanding you entered with the Government of Zimbabwe.”
Tian Ze Tobacco, which is one of the many Chinese firms that have been granted exemption from full compliance with the laws, has been involved in Zimbabwe’s tobacco industry since 2005.
Last year, the company bought 9, 5 million kg through its contracting operations and a similar quantity on the tobacco auction floors.
On the first day of the opening of the tobacco selling season in Harare last month, more than 300 tonnes of the golden leaf went under the hammer for between 50c and $4, 85 per kg.