Indigenisation regulations could undermine investor confidence thereby posing a serious threat to the country’s economic recovery if there is no implementation plan to ensure the process is well-coordinated and guarantees fairness to all parties, a prominent businessman and banker has said.
In an interview, Trust Bank group chief executive William Nyemba said the action plan should result in broad-based distribution of capital income to help drive Zimbabwe’s economic recovery.
Nyemba said given some of the unique resources Zimbabwe possessed, the indigenisation laws should not deter genuine investors.
“I think the indigenisation process is largely misunderstood due to the haphazard manner in which it has been promoted and unfortunately this has only served to fuel fears on the part of investors. Its effects will be largely determined by the implementation plan. Given some of the unique resources we have in the country, this law should not deter genuine investors,” said Nyemba.
Mining firms have been given up to June 2 to submit their indigenisation plans for consideration. Firms that fail to disclose their share-transfer plans within the stipulated period face prosecution.
However, critics believe the empowerment law flies in the face of the government’s campaign to lure foreign investors into the economy.
The Chamber of Mines has proposed trimming the indigenisation quota to a minimum of 26% with the balance of 25% made up of credits arising from corporate social investments such as roads, schools, dams and hospitals that most major mining firms have over the years built for local communities.
Nyemba also said targeted sanctions on President Robert Mugabe and his top Zanu PF hierarchy had diminished foreign investment in Zimbabwe.
Regarding recent developments at ReNaissance Financial Holdings (RFHL) and ReNaissance Merchant Bank Limited, Nyemba said:
“We continue to monitor compliance and we have solid internal structures that safeguard stakeholders’ interests, especially in credit management which helps to mitigate credit and liquidity risks that you have highlighted.”
Nyemba, a renowned banker, fled to South Africa with a number of top bankers and businessmen in 2004 at the height of the banking crisis.
The bankers accused government of hounding them out of Zimbabwe while the government claimed they were corrupt and incompetent.
For the full interview see Tuesday’s NewsDay online.