Finance minister Tendai Biti says the market capitalisation of the Zimbabwe Stock Exchange (ZSE) has remained stagnant at $4,1 billion in the first quarter owing to the indifferent performance of the industrial index.
The mining index increased from 216, 82 points in January to 237,2 points in March this year benefiting from the firming of international prices.
The industrial index performance has remained flat at 160 points.
“The continued lack of clarity in the implementation of the indigenisation and Empowerment Act is severely frightening the potential investors in the country. This is affecting foreign direct investment, particularly in the mining sectors and other portfolio investment,” said Biti.
“Government therefore needs to speak with one voice and reassure the international community that the indigenistion and empowerment law is not expropriation.”
According to an extra-ordinary government gazette published last month, 51% of all foreign-owned mining companies with a net asset value of at least $1 is required to be held by either the National Indigenisation and Economic Empowerment Board or the Zimbabwe Mining Development Corporation or a Sovereign Wealth Fund that maybe created by a statutory instrument.
The 51% can also be transferred to an employee share ownership scheme or trust, management share ownership scheme or trust or community share ownership scheme or trust.
The minister said while it was good that the country was benefiting from firming international prices, this is “dangerous because we are getting value in the bubble of prices not production itself. If the gold and commodity prices were to slump we will be caught napping. We are getting value from value not from actual production”.