Youth, Indigenisation and Economic Empowerment minister Patrick Zhuwao yesterday said $93 million can be raised from the proposed empowerment levy on companies that are not indigenised.
BY XOLISANI NCUBE
Zhuwao told journalists that under the proposal, all foreign-owned companies would be levied 10% of their gross income towards the youth empowerment fund and the figure would increase yearly as a way of forcing companies to cede the majority stake to locals.
The levy, Zhuwao said, would be part of measures to raise internal resources to fund the indigenisation programme and would be distributed through community share ownership schemes.
“This is a recommendation from technocrats within the ministry. In fact, it is a provision in the law which we just want to implement and make operational,” he said.
“According to the law, there are discounts that are offered to companies that indigenise. For example, if you indigenise 100%, you will get 100% discount and if you indigenise 40%, you will get a discount equivalent to that.”
Zimbabwe in 2008 enacted the indigenisation law to compel all foreign-owned entities to give away at least 51% of the stake to locals, but the law has faced resistance and been blamed for low foreign direct investment.
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But Zhuwao said the law would not be changed and instead firms that were not in compliance would have to pay 10% of their annual income to the empowerment levy in the first year and 12,5% the following year.
“If it was me, I would just indigenise and stay away from the problem of paying the empowerment levy. It doesn’t make business sense to pay the empowerment levy when you have an option to indigenise,” he said.
