THE government is revising the stringent conditions set by the Indigenisation and Economic Empowerment Act because they are scaring away investors, a Cabinet minister has said.
Report by Nduduzo Tshuma Staff Reporter
Economic Planning and Investment Promotion minister Tapiwa Mashakada said this on Wednesday evening at the Bulawayo Publicity Association’s 80th annual general meeting at a city hotel.
He was responding to questions on how the country expected to attract investors amid threats of company seizures by the government.
“I will be the first to agree that indeed the indigenisation law is in conflict with investment promotion, especially our insistence on 51% (local ownership) because the message I am getting from investors is: ‘Look, minister, if you take 51% from me, you take the controlling interest and I can’t bring my money because you have taken 51%’,” Mashakada said.
He said there were discussions between him and Indigenisation minister Saviour Kasukuwere to ease regulations so that “we are not hard and fast — we allow companies to engage and give them more time and flexibility to indigenise”.
He said indigenisation of companies was not necessarily about selling 51% shareholding, but “you can indigenise very well at 10% and 20% and still serve the community, so we are revisiting that hard-and-fast rule of 51%.
“In fact, the Ministry of Indigenisation is on record exempting other companies from the requirements of 51%.
“The hard-and-fast 51% will not work. What we need is to grow the economy first, create jobs, more wealth, then we can talk about distribution. It is better to start distributing an elephant and not a rat.”
Mashakada said indigenisation was good and had been done by many countries, but had to be carried out in a manner that did not scare away investors.
“We must not initiate it in a manner which has got nationalisation undertones, expropriation undertones,” he said.
“We have agreed as the government that we have to revisit our approach on this one, which is positive.”
Mashakada said as minister, he was happy that even in the midst of rhetoric and threats, no company had been seized or expropriated.
“We have not nationalised or expropriated any company. It has remained as threats, but those threats are not good for investment, so we are trying to harmonise investment and indigenisation so that they do not conflict,” he said.